1.0. Introduction Financing in hospitality industry, like in many other industries is of utmost importance and should be handled with extreme caution as it represents success or failure of the business. The following paper focuses on the most important aspects in financing in hospitality. 1.1. Available options for finances in hospitality Options Advantages Disadvantages Banks • Relatively low interests rates. • With adequate collateral loans from banks can be used as capital. • Require a long list of qualifications before a loan s granted. • Risk of losing property used as collateral in case default in payment of the loan occurs. Personal funds. • No monthly payments of loans • Complete control of the business’ finances. • Difficult to expand if all the funds were used a s capital. • No benefits of financial analysis offered by banks or other financial institutions. Alternative methods • Best suited for financial emergencies in a business. • Used for any expansion that would be required in a business. • Does not require collateral • Relatively high interest rates. • Best suited for already established businesses. • No risks of losing property as there is no need for collateral Just like in any other industry, businesses in hospitality industry require finances for capital and especially for expansion. In a bid to seek for finances the first option that most people turn to is the banks; however due to the numerous qualifications that banks require
Karen Daniels , president of Borders Hotel Corporation (BHC) , has to investigate three financing alternatives in order to evaluate their impacts on viability of the BHC
Be Our Guest is a growing firm specializing in providing high-end equipment and services to catering firms. The company is considering its financial needs and appropriate capital structure to ensure available funding for growth and flexibility as well as to meet the day-to-day needs of its highly seasonal business. This paper attempts to analyze the key success factors of the firm and assess the appropriate funding levels from both the company?s perspective as well as that of the bank.
he goals of chapter 2 are to introduce you to the financial and management reports you will encounter during your hospitality career and to teach you how to read and interpret them. The more you advance within your company, the more you will rely on these reports to succeed. The more familiar you are with the financial statements, management reports, and control systems presented in this chapter, the better your chances will be for promotion and the more effective you will be as a manager. We begin the chapter with a brief review of the accounting principles and system of accounts that provide the foundation for the preparation of financial statements. We discuss new accounting rules affecting the hospitality industry today, and then focus the balance of the chapter on the management reports and control systems that will help you make informed financial business decisions and become a successful hospitality manager.
Corporate financial decision is a crucial component of strategies that firms adopt to access funds in the external capital market to undertake new investment, for dividend payments, to maintain capital structure, for acquisition purposes, cash savings as precaution, among others. UniHost Corporation; the largest motel and hotel franchise in Canada is faced with a requirement to raise capital. UniHost is involved in the development, syndication, franchising and management of motels and hotels in Canada of which most are flagged under the Quality and Comfort brands. There are several options that the corporation can apply to raise capital ranging from debt financing, convertible bonds and high yield debt (DeThomas, 1992). The strengths of these financial options are outlined and the reasons for their recommendation in this situation are outlined in the succeeding paragraphs.
Developing a business plan for an existing business or conducting a feasibility study for a new venture requires a thorough analysis of market conditions. Market conditions in your area have a significant impact on the profitability of your hotel or motel. The strength of the local lodging market affects how many rooms you can sell and the rates that you can charge. This guidebook will help you analyze your market so that you can gauge the potential of your operation and make more informed operating and investment decisions. On the pages that follow are a series of checklists to help you collect and analyze information as part of a hotel/motel market analysis. The checklists, tailored to the hotel/motel
Our team chose the hotel industry in the United States for our economic analysis. The hotel business has existed since the earliest times, and has influenced the development of the economy since the founding of this country.
The Hotel is situated in the bustling East Cork market town of Midleton, located just 14 miles (15 mins drive)
1).The relationship between Hospitality and Tourism: Tourism and hospitality go hand in hand, the hospitality industry offer services like accommodation, transportation, food and beverage, recreation and leisure. Tourism is the activity by the tourists where they engage in travelling to destinations where they want to experience recreational and leisure activities and most of the time avails of accommodation, food and beverage. The hospitality industry is the supplier of the services for tourism. The meaning of hospitality is providing a safe and enjoyable environment for patrons. It also means responsibly serving liquor, to ensure that patrons do not become unduly intoxicated and subsequently a problem for management, staff and the
We look the two business lines in more details. Hotel & restaurant line dominants Whitbread 's business. Based on company data, the hotel & restaurant segment yields a considerably higher pre-tax operating profit than Costa. However Costa is growing much faster in recent 5 years. In response to customers ' welcoming, Costa contributes more to the group 's total earnings than before. Revenue distributions by business is shown in Figure 2:
There can be collateral risk when the value of the collateral falls below the replacement cost of the securities. In case of a settlement
WMCHI’s net income for 2008 improved by .004 points, but reflected a 50% decline on its ability to use its assets as a source of revenue. Moreover, because of the company’s heavy reliance on borrowings from financial institutions to support its expansion, the return on their stockholder’s equity also went down by more than 50% of 2007’s figures. We can surmise that the company’s operating profit is not sufficient to give its shareholders a satisfying level
As an employee of Alpha Beta services my aim is to help small business owners or people think of starting a business within the hospitality industry by informing them of the funding available for these businesses and income generation for businesses and service industries. With small businesses or people thinking of starting a business is probably always the biggest problem. Below is a list of some of the most popular funding and start-ups available:
The ability to control finances effectively is a hugely important part of running a successful hospitality business. The control of finance determines the cash flow of the business whether positive or negative. A variety of procedures can be optimised to suit each business. These procedures pay dividends when selecting goods and developing a specification, as well as costing dishes, menus and functions.
From a funding and capital sourcing perspective, a more knowledgeable, more experienced hotel owner class was beginning to emerge, which will have a greater influence on the future growth and sustainability of the sector
Owned hotels is not a scalable business model with the constraints of capital and also low returns business. Hotel Services / Royalty based business model offering them scope for improving the scale, higher margins and profitability. Even though improvement in margins and profitability ratios is positive, steep rise in debt is a key concern. As the company is aggressively growing its assets, the need for higher capital is consistently raising. As the company is spending over and above its internal accruals, the debt is constantly inching up. However, if the increase in cash flow from operations outpaces capex requirement, positive free cash flow will be generated. This will help in the re-payment of debts.