Essay about case two European hotel groups

2252 Words Dec 25th, 2013 10 Pages
CASE: TWO EUROPEAN HOTEL GROUPS

CONTENT
1
Financial statements ........................................................................................................................ 3

1.1 Impact of operating leases ............................................................................................ 3 1.2 Depreciation rates ......................................................................................................... 3 1.2.1 Accor ...................................................................................................................... 3 1.2.2 NH
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This is not mentioned in the financial statement of Accor. We only know that most leases are signed on more than 9 years.
-­‐ The way of determining the purchase option price is not comparable. The financial statement of Accor mentions that the purchase option price corresponds to either a pre-agreed percentage of the owners original investments or the property’s market value when the option is exercised. Although we know that 12% of the leases from
NH Hoteles include a purchase options, nothing regarding purchase options is stated in the financial statement.
-­‐ The minimum future operating leases are not comparable. Accor doesn’t include the lease agreements lasting less than 3 years. NH Hoteles does include all the lease agreements. Furthermore Accor mentions that they have taken the closing exchange rate in account for future leases in foreign countries, this is not the case for NH
Hoteles. Finally, Accor doesn’t mention if they have calculated the present value or not whereas NH Hoteles records the operating leases as the present value of the future lease payments using an interest rate in line with the weighted cost of capital and they additionally include guarantee fees commitments.

1.2 Depreciation rates
1.2.1




1.2.2






Accor
Buildings and capitalized construction-related costs: 50 years for upscale and midscale hotels; 35 years for economy hotels
Building improvements, fixtures