Coral Divers Resort
Mr. Jonathan Greywell is contemplating a business decision in which there are four realistic options. He is the owner of Coral Divers Resort, located in the Bahamas on the island of New Providence. He caters to customers looking for a resort package that includes diving. This case discusses a decline in revenues for the three-year period of 2005-2007. His options include: selling the resort, partnering with another business, focusing on higher margin business, or improve his current business to be more competitive.
Selling Coral Divers Resort
The most significant reason to sell the business is the declining revenues. However, Greywell would need to find another means of income such as another…show more content… Another factor to consider in making this decision is whether Rascal’s is worth the 30% commission. The fees for families (i.e. more people per room, etc.) when compared to the operation expenses keep the profit margin the same with the added benefit of a unique identity in the market.
Higher Margin Adventure Diving Adventure diving generates a higher margin and therefore it is a good idea for Greywell to consider adding it to the mix of dive offerings. However, it cannot be considered without weighing the risks involved. Coral Divers Resort has an excellent reputation and careful consideration should be given as to how to protect this intangible asset. Adventure dives would need specifically trained and experienced dive masters. Simply training existing employees might pose an additional risk since they aren’t too excited about diving with sharks and also lack experience that might be helpful for safety issues.
Within an hour’s distance away, competitors are already a part of this market and bringing in $115 per adventure dive which is $50 above the regular dive experience. An additional $600 per week can be earned on two days per week with an average of 6 customers each of those days. Despite hiring or training costs and additional $31,200 in revenue can be generated, after the expenses for shark food and the special dive suit. Perhaps more adventure dive business is possible, yet this