...I. Economic Benefits Leasing The first and most obvious benefit of leasing the space is the significantly lower capital expenditure at period zero. The capital expenditure for the leasing project is more than half of that of the building a business project. This means that there are less upfront payments as well as less potential debt. Additionally, the guaranteed lease payments indicate a consistent cash flow for the hotel regardless of the success of the pub venture. In comparison, depreciation is also lower from a leasing standpoint due to the lower initial capital expenditure. As the main responsibility of running the business is outsourced to the leasing company, this initiative also incurs less annual costs in terms of raw materials needed to run the business in addition to less operating expenses for the hotel. This situation proves to be a very safe investment for the hotel, as they are taking on minimal costs and have a guaranteed income of capital through the lease payments. Building This initiative proves to be more risky than leasing; nonetheless offers a higher return. The initial capital expenditure is double that of leasing the space, however it does give the hotel full earnings of all future revenue. While incurring additional raw material and operating costs throughout the year, this initiative does prove to be more expensive with a higher degree of labor required. That being said, if run properly the venture is projected to turn a much higher profit...
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...Wang for class discussion. This Case is not intended to show effective or ineffective handling of decision or business processes. This case is part of a project funded by a teaching development grant from the University Grants Committee (UGC) of Hong Kong. © 2001 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise (including the Internet) - without the permission of The University of Hong Kong. Ref. 01/108C 1 KO WANG SU HAN CHAN PHUKET BEACH HOTEL: VALUING MUTUALLY EXCLUSIVE CAPITAL PROJECTS Mike Campbell, General Manager of Phuket Beach Hotel, paced his office and considered an offer made by Planet Karaoke Pub. Planet Karaoke Pub was expanding fast in Thailand. It was looking for a venue in Patong beach area for setting up another outlet, and was eyeing an unused space owned by the Hotel. At this point, the space was located on the second floor of the main building and was very much under-utilised. It was reserved for the construction of an alley linking to a new wing for the hotel, which would not be completed until two years later. Planet Karaoke Pub offered to sign a four-year lease agreement with the hotel for renting part of the unused space. It proposed to pay: • a monthly rental fee of 170,000 baht for the first two years; and • thereafter, a 5% increment for the next two years. In order...
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...Financial Management. EBS ML. 4th course students. Case study. Phuket Beach Hotel. Valuing Mutually Exclusive Capital Projects. Questions 1. Please asses the economic benefits associated with each of the capital project. What is Initial Outlay? What are the incremental cash flows over the life of the project? What is an appropriate discount rate to use for discounting the cash flows of the project? SN 1 and SN 2 - 40% 2. Are the project comparable based on the standard NPV measure, given that they have unequal lives? What adjustment or alternative method is required in comparing such project? - 10% SN 3 3. How sensitive is your ranking to changes in the discount rate? What other "key value drivers" would affect the attractiveness of the project like patronage factor; amount of upfront investment; cost of capital, any of the key value drivers? Please estimate the sensitivity of your result to a change in any of the key value drivers. - SN 4 - 30% 4. Which project should the hotel undertake? Why - 10 % In case of Hotel, I would like to recommend to lease the Bar. First of all because of Payback period is much shorter ib both scenarios (discounted and nondiscounted).secondly Profitability ratio is also much higher, due to the fact that less investments are required to undertake the project. However the main draw back is EAA which is segnificantly lower as well as ROI. In conclusion, I may say that, in short prospective Lease is option is optimal, however in long term build...
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...Case 10:Phuket Beach Hotel VALUING MUTUALLY EXCLUSIVE CAPITAL PROJECTS Case Overview Planet Karaoke Pub Project Lives Monthly rental (5% increment for 3rd and 4th year) 4 years 170, 000 (THB) 770, 000 to 1, 000, 000 (THB) 55, 000 (THB) Up front renovation cost (Depreciated over the life of project - straight line method with zero salvage value) Overhead expenses Repair and maintenance cost 10, 000 (THB) / year Case Overview Beach Karaoke Pub Project Lives Up front investment (Equaled depreciation) 6 years 800, 000 to 1,200 000 (THB) 900, 000 (THB) 4, 672, 000 (THB) Other investment (Equipment and chairs) (Depreciated over the life of project - straight line method with zero salvage value) Estimated total sales (1st year) (5% average growth per annum) Operating costs: Food and beverage costs Salaries Other operating costs 25% of sales 16% of sales 22% of sales Repair and maintenance cost 10, 000 (THB) / year Case Overview Beach Karaoke Pub Capital structure (75% equity & 25% debt) Debt – loan from Siam Commercial Bank – interest rate 10% Hotel owners’ cost of equity - 12% Corporate tax rate – 30% Future profits – discounted 5% Risk factor – 25% Conservatism- risk factor (consideration due to the negative factor for pub) Question 1 Assess the economic benefits associated with each of the capital projects. What is the initial outlay? What are the incremental cash flows over the life of the project...
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...Chapter 2 Literature review This chapter reviews related literatures on overview of International and Thai tourists, general information about Phuket, current situation of tourist industry, attractions and activities, concept of tourist behavior and tourist perception, marketing concept, as well as previous research. Its purpose is to provide general knowledge and overall concept regarding the theories and previous research related to this research. 2.1 Overview of International and Thai tourists According to Tourism Authority of Thailand (2011), the international tourist arrivals to Thailand figure for 2011 reached 19.09 million, an increase of 19.84%. The number of tourists had shown an accumulative growth rate over the first ten months. The flooding crisis late in the year, however, slowed down the growth in the number of tourist arrivals in October, and caused shrinkage of 18% in November 2011. Fortunately, all market groups still retained an increasing growth at the good level, including East Asia at a 32.30% increase, ASEAN at a 21.96% increase, the Americas at a 12.85% increase, Europe at an 11.40% increase, Africa at a 6.73% increase, and the Middle East at a 5.95% increase. Domestic tourism by Thais in 2011 was estimated at 98 million tourists/trips, generating an income of 407.6 million Baht which was less than the target of 421.1 million Baht. The purchasing power dramatically shrank in the second-half year due to the flooding crisis, which abruptly halted...
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...12/29/2014 Remembering Tsunami 2004: Phuket bounces back from disaster Asia | The Star Online Remembering Tsunami 2004: Phuket bounces back from disaster by stephen fein Just as popular: The Phi Phi Islands were badly devastated by the tsunami waves but recovered very quickly. Koh Phi Phi is pictured above, 10 years on. — Phuket Gazette/The Nation Tourism industry insiders who have monitored trends in the Phuket tourism industry over the past 10 years describe the recovery after the worst natural disaster to ever hit the region as ‘remarkable’. THAI tourism industry icon Wichit Na Ranong, managing director of the luxurious Indigo Pearl resort at Nai Yang Beach in Phuket, says, “I would say we had a very fast recovery after the tsunami. In fact, I think it may be the fastest recovery ever anywhere after a disaster of this kind. I think the industry had almost recovered after two years and was fully back to normal after three, with continuous progress after that.” Asked if there are still fears among tourists of another tsunami, he says, “Not at all. After just a few years, any such fears just faded from people’s minds.” A series of “tourism road shows” abroad and good cooperation among local and national authorities also helped assuage any such concerns, he says. Wichit says that it is still difficult to think back on some of the things he had witnessed after what he describes as a “tragic, tragic event”. Like most people in Phuket, he didn’t even know what a “tsunami”...
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...Using Case Studies in Real Estate and Finance Courses By Su Han Chan Department of Real Estate The Preliminaries Setting expectations Focus is on decision making Requires judgment No “right” answers Setting ground rules The student contract (4Ps) Knowing your participants Selecting cases and readings Using a mix of short (“breather”) and long cases Assigning a term project Case seminar series_Su H Chan A Short Case Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects* (4 pages) Synopsis Phuket Beach Hotel has an opportunity to lease its underutilized space to a karaoke pub and earn a rental income. Alternatively, the hotel could develop the unused space and create its own pub. The general manager of the hotel must decide which of the two capital projects to recommend to the hotel owners. This case presents sufficient information to build cash flow forecasts for each project and to rank the mutually exclusive projects using various evaluation criteria. *The case is available from HBSP.com Case seminar series_Su H Chan Using the case Undergraduate, graduate, and executive levels Exposes students to a wide range of capital budgeting issues Questions built into the case Student group presentations (2 teams presenting the same case) Class members evaluate team presentations Instructor debriefs case Lessons learned Evaluator__Please write your name on the back__________________ Group ___________________________ Grading Checklist for...
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...author chose to write from these perspectives because both characters are greatly affected greatly by the main plot, though dealing with it in two different situations. Sam is experiencing the entire story from Phuket, Thailand, where they are hit with a tsunami. Beth was in New York at her dorm, first learning about the tsunami from her boyfriend, Tad. Both characters have different feelings about what has happened, and we, as the readers, get to hear both perspectives. 2. The story takes place on the one hand in Phuket, Thailand during Christmas break of 2004, and on the other side of the world in New York, where Beth's dorm and university are located. The difference that the setting makes is that if most of the characters were not located in Thailand where the tsunami happened, and majority of the story did not take place there, we would only be privy to secondary information of what was happening. Beth was only able to watch the huge tsunami unfold on television, being an unbelievable 27-hour flight away from the wave. Sam having been in Phuket even before the tidal wave hit was a primary witness in the events that occurred on that historic day. He could actually see the fear on peoples' faces as they watched the water withdraw further and further, leaving a wider beach, creating a massive wave that came in and took thousands of lives with it, and changed the ones of those still living forever. 3. The moment that the main challenge starts is about a third of the way...
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...customer can use it to connect to our hotel. 4. there are online thai gay magazine. * Special events: like gay/lesbian celebrate events：17，May. We will provide the celebration in that day. * Endorsements: we can invite popular gay or lesbian star to do it。 Spend money one time, we can earn more. * Newspapers: every month we can put our news in the magazine or newspapers. Not only put on local magazine or newspaper. And also we can put outside countries. * Incentive like discounts (i.e., coupons), free items, or a contest. Free wifi * Held in physical environments at special events such as concerts, festivals, trade shows. Place : We choose the place is patong hill villa. About Patong | Map About Patong About Phuket | | Patong is Phuket’s main tourist centre. Patong is sits half way down of the island’s, and it is in a famous west coast with its fabulous sandy beaches and picture postcard sunsets. Patong is very busy town, exciting and alive with a resort atmosphere by...
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...1. How will you make the consumers stay in Thailand for one month? The first thing I would have to do is to learn about the consumers. There are four of them namely Alan, Phil, Stu and Doug. As we see in the movie Alan is the happy-go-lucky one that would do anything just to have fun not thinking of the consequences at hand. Stu is the clueless one that is always influenced by his friends in doing stuff that would lead one thing to another. Phil on the other hand is the laid back one but is the one who keeps the group together when things go bad. And finally, Doug is the responsible one that stays behind and helps the others in getting out of the mess they are in. Now that we know all of our consumers’ behavior, we can determine their attitudes and personality. Having been to Bangkok, the neon lit signs are as eye catching as bright lights from camera flashes. This will be the perfect place to bring the friends so they would be amazed and excited by the new environment. Bangkok has a lot of bars and strips that can excite ones desire to mingle and do whatever one wants to do. Girly bars and strip clubs are easy answers to their animal instincts but to truly catch their attention, the exotic environment of Bangkok would be the answer to everything else. The friends will be looking for something that is not in America. Their curiosity will be the way to keep them in Thailand for one month. Bangkok’s tourism industry boasts of animal attractions like the snake farm, elephant...
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...The, enclosed, beach is silent. The bright ball blinds you as it emerges; it rises like a yellow lollipop on the distant horizon. Crashing against the shore, small waves wash the night's debris onto the land. Untouched golden sand covers the floor as far as your eyes can see. Soothing, a gentle sea breeze rustles through your hair. Beach shops prepare for their day of excited costumers bustling in and out of their small seafront shops. Opening their doors, they bring out all of there beach products looking out to the sea you can see the large cruise ships on the worlds edge. Abandoned, nothing there apart from a few sea gulls pecking at the rubbish left by yesterday's visitors. Empty crisp wrappers, chocolate wrappers, ice cream papers and half eaten cones scatter the yellow sand. Young children stumble onto the moist sand, with small buckets and spades in their hands, they shout and talk in excitement. Damp sand is forced between their toes. Straight away, the young children put on their swimming costumes and are smothered with thick white sun screen, to protect them from the bright sun. Children running towards the shoreline; their parents struggle onto the sand, loaded like camels with everything they will need for their day. Sandwiches, cold drinks, wind breakers, towels all bagged up and slung over both shoulders. A hot sea breeze rushes through the visitor's hair, as you stand there you can taste the salt in the air because it is so strong. The sound of the waves crashing...
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...swim until we were exhausted. Games would last until we could hear our parents yelling for us to return to the home for the diner, and even then most of us would wait a while longer until we were "in trouble" for not listening. The parents generally didn't mind because they knew we were having a great time. The years grew on and we still played, but more of the kids stoped playing or moved so the games were not exciting as when we played as kids. The the beach provided entertainment for everyone. Whether for the older folks relaxing in the sand and tannning or getting their feet just wet. young kids playing in the shallow water, where you can see to the bottom of the ocean. swiming with the small fish nipping at their feet. My generation prefered the wild side of the beach and we would swim out as far as we could, with crashing waves and the adrienline running the farther we went. Nothing can match the feeling after a good long day at the beach. Usually lunchtime\dinner was spent eating fresh fish and fried plantes by the beach. Panama city the captial of panama is definitely a veery busy city. No matter where I go, I can see confusion that never seems to end. There seems to be an endless amount of cars flowing through the streets and honking horns. vendors on every corner selling everything from food the clothes. traffic as...
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...in the world has a place where they can go to relax. Where they can forget about all their worries and just breathe in some fresh air and not have to think about what needs to be done and when. To many, the beach is the ultimate place for relaxation. As you stroll along the beach you can feel the sand in your feet and the waves hitting your legs. Under the surface you can feel your feet step on little seashells as you walk. When building a sandcastle the sand sifts right through your hands. Walking on the boardwalk there are too many smells to remember them all. The smell of the ocean salt is the most prominent. The smell of French fries, and Fresh popped popcorn fill the streets. What you see when your visiting the beach is simply amazing. Watching all the little children run around in the waves and building sandcastles. Adults are rubbing sunscreen all over themselves and their children. The waves crashing down out in the ocean are breathtaking. If you’re lucky you may even be able to see dolphins swimming in and out of the water. The beach is just one of the world most relaxing destinations. Whether you’re in Ocean City, New Jersey or The Dominican Republic. What you see, touch, and feel when you’re at the beach will be forever unforgettable. To me, the beach is the best place on...
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...smell reminded me of my vacations to Florida over winter break. I will never forget the fresh smell of the air when we stepped off the airplane. I could see my grandparents from across the crowded airport. I would always be so excited to step on the soft, white, sandy beach. The first thing I would do is change into my bathing suit and run out to the beach. My sister and I would spend the day splashing in the salty water, until we were too tired to keep our heads above the water. Then we would lie on the soft damp sand and take a nap. It felt so good to have the bright sun blazing down on me. My favorite thing to do was build gigantic sand castles on the beach. My sister and I would have contests to see who could build the tallest sand castle. The grains of sand glistened in the sun like a diamond ring. I will never forget how the gigantic orange trees towered over me. Every day my grandpa would pick me an orange; they were so juicy! Every time I think about an orange, my mouth waters, and I think of how sweet they taste. Normally bedtime was a problem for me, but in Florida I fell right to sleep every night. I would leave the windows wide open, and I would fall asleep to the waves crashing on the sandy beach. I could hear the birds chirping outside my window along with the rustling of the wind. In the mornings we would walk to this little breakfast place called Bagel Snack. I would usually get a bagel and cream cheese, but sometimes I would live on the edge and get...
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...dunes. in addition, the rapid shoreline erosion in Assateague Island is due to the starvation of sand blocked off by the Ocean City inlet jetties. One big problem is that People's activities are often conducted without an adequate understanding of coastal geology and processes. As a result, they can lead to unforeseen degradation of coasts. Even human actions intended to save or improve the coast may inadvertently increase erosion. Scientific investigations are starting to provide the crucial . If we go into more details of how human activity have hurt the environment of the coastal regions we can not forget about the oil pipes, shoreline can be detrimental to many human activities. Leisure activities are obviously affected. Going to the beach, swimming in the sea, recreational fishing, diving, surfing, sailing all become impossible amongst oil slicks, causing economic and social consequences which can be very significant in popular tourist regions. Another example is the Gulf of Mexico, where 30 - 40%...
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