Paper Topic:

Financial management for hospitality and hotel managers

Financial Management for Hospitality and Hotel Managers

1

Budgeted Profit Loss Account for the year ending 30th June 2009 2 . Assumptions and Comments

It is assumed that percentage of cost of goods sold (CGS ) to revenue for each responsibility center has remained the same as in 2008 . Accordingly Gross profit ratio is also the same as in 2008

Depreciation on all assets (including refabricated assets ) has been taken as 3 .5 of revenue for each center other than store rentals

It is assumed that Repair and maintenance expenses will be 1

/3rd of expenses in 2008 . This is because all assets have been refabricated

At the given information Fine Dining , Bistro , and Coffee shop are not meeting 35 target of operating profits . Also short by 735000 to achieve the target 35 of shortfall in by drastic cut in Salaries and Wages . If a cut of 10 is made on Salaries and wages in all responsibility centers , not only operational profits of all centers will be 35 of revenue , but overall company profits will exceed the target 20 of investments . The budget after such cuts is shown hereunder

Budgeted Profit Loss Account for the year ending 30th June 2009 3

Room Rates for 2008 based 65 Uniform Occupancy

There are 100 single and 200 double rooms and last year revenue was . As double room rate is 15 more than single then ratio of revenue distribution between is calculated as under

Single Double Assuming rack rate 100 115

No . of rooms 100 200

Revenue per day 10000 23000

Revenue at 65 occupancy 6500 14950

Revenue ratio 1 : 2 .3

Therefore or Rounded to nearest 500 3848000 8850000 (A

No . of Rooms 100 200

Yearly occupancy 36500 73000 (B (no . of rooms 365

Room rate 100 occupancy 106 121 (A /B

65 Occupancy 23725 47450 ( C (65 of 36500 (65 of 73000

Therefore average

Room rates are (rounded 163 187 (A /C

4

Report

Introduction

The average room rate of single and double occupancy has been calculated in this write up on the assumption of uniform 70 occupancy through out the year . Various measures to maintain 70 occupancy in slow period have been suggested in the write up

Contents

Introduction

Assumptions

Occupancy Suggestion to maintain occupancy

Assumptions

Assume that single room rate is 100 , then at 20 double room surcharge the double room rate is assumed at 120 . As there are 100 single and 200 double rooms , revenue each day is calculated as 10000 (100 100 ) for single rooms , and 24000 (200 120 ) for double rooms

Occupancy There are two important features that will matter in the calculations of 70 of occupancy . One is that loss of tourist group of Ruritania . The other is that an operator from Britstralia guaranteed 1500 double room per annum at 50 of the rack rate . The 70 occupancy is calculated as under

Single Double

Assuming rack rate 100 120

No . of rooms 100 200

Revenue per day 10000 24000

Revenue at 70 occupancy 7000 16800

Revenue ratio...

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