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Why the answer is letter D. Company A’s lower voluntary employee turnover rate will likely increase valuation? How will performance on SASB metrics impact Company A’s valuation as compared to Company B? A. Company B’s higher percentage of revenue from leisure customers will likely decrease valuation. B. Company B’s lower reclamation rate of hotel room keys will likely increase valuation. C. Company A’s lower percentage of revenue from coastal regions will likely decrease valuation. D. Company A’s lower voluntary employee turnover rate will likely increase valuation

Why the answer is letter D. Company A’s lower voluntary employee turnover rate will likely increase valuation? How will performance on SASB metrics impact Company A’s valuation as compared to Company B? A. Company B’s higher percentage of revenue from leisure customers will likely decrease valuation. B. Company B’s lower reclamation rate of hotel room keys will likely increase valuation. C. Company A’s lower percentage of revenue from coastal regions will likely decrease valuation. D. Company A’s lower voluntary employee turnover rate will likely increase valuation

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter4: Profitability Analysis
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Problem 27PC: Starwood Hotels (Starwood) owns and operates many hotel properties under well-known brand names,...
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Why the answer is letter D. Company A’s lower voluntary employee turnover rate will likely increase valuation?

How will performance on SASB metrics impact Company A’s valuation as compared to Company B?
A. Company B’s higher percentage of revenue from leisure customers will likely decrease valuation.
B. Company B’s lower reclamation rate of hotel room keys will likely increase valuation.
C. Company A’s lower percentage of revenue from coastal regions will likely decrease valuation.
D. Company A’s lower voluntary employee turnover rate will likely increase valuation

Company A Company B Revenue (in millions) $1,840 $6,420 Number of Hotel Rooms 92,896 128,234 Average occupancy rate 71% 82% |% Locations owned (as opposed to leased) 65% 30% % of revenue from leisure/tourism customers 35% 72% Percent of revenue from: Mountain regions 30% 15% • Landlocked, non-mountain regions • Coastal regions • 60% • 10% • 45% • 40% | Total energy consumed (in thousands of gigajoules) 5,132 3,725 Reclaim rate of hotel room keys 79% 31% Total water withdrawn (in thousands of cubic meters) 12,120 8,478 Water withdrawn in regions with high/extremely high water stress (in thousands of cubic meters) 2,545 2,296 Voluntary employee turnover rate for hotel employees 60% 95% Total employee workplace injury rate (incidents per thousand hours worked) 1.2 0.4
Transcribed Image Text:Company A Company B Revenue (in millions) $1,840 $6,420 Number of Hotel Rooms 92,896 128,234 Average occupancy rate 71% 82% |% Locations owned (as opposed to leased) 65% 30% % of revenue from leisure/tourism customers 35% 72% Percent of revenue from: Mountain regions 30% 15% • Landlocked, non-mountain regions • Coastal regions • 60% • 10% • 45% • 40% | Total energy consumed (in thousands of gigajoules) 5,132 3,725 Reclaim rate of hotel room keys 79% 31% Total water withdrawn (in thousands of cubic meters) 12,120 8,478 Water withdrawn in regions with high/extremely high water stress (in thousands of cubic meters) 2,545 2,296 Voluntary employee turnover rate for hotel employees 60% 95% Total employee workplace injury rate (incidents per thousand hours worked) 1.2 0.4
Case Analysis Hotels & Lodging industry Key revenue drivers in the Hotels & Lodging industry include consumer and business discretionary spending, domestic and international travel, and consumers' sense of financial security. Major costs include wages and purchases (room supplies, food, and beverages), which together account for over 60% of revenue. Since the industry is very capital-intensive for hotel owners, some companies have transitioned their business models away from direct property ownership to hotel management via franchising and third party property ownership. Hotel and lodging companies have relatively large consumption of, and dependence on, energy and water resources though they are not the industry's greatest source of operating costs. Variability in energy prices or water availability impacts financial results or even the ability to operate. In the U.S., the average retail price of electricity for the commercial end-use sector was 7.25 cents per kilowatt-hour (kWh) in 2001 and is projected to increase to 18.5 cents per kWh by 2040, representing a 2.4% increase annually. The industry also relies heavily on human capital for guest services and daily operations. These jobs typically require long working hours and are filled by a large percentage of women and immigrants. Furthermore, as approximately 80% of all tourism takes place in coastal areas, the industry faces challenges from shifting weather patterns and rising sea levels. Below is information from two companies in the Hotels & Lodging industry, which may or may not be material. Note that determining the average number of occupied rooms requires multiplying the average occupancy rate by the number of hotel rooms
Transcribed Image Text:Case Analysis Hotels & Lodging industry Key revenue drivers in the Hotels & Lodging industry include consumer and business discretionary spending, domestic and international travel, and consumers' sense of financial security. Major costs include wages and purchases (room supplies, food, and beverages), which together account for over 60% of revenue. Since the industry is very capital-intensive for hotel owners, some companies have transitioned their business models away from direct property ownership to hotel management via franchising and third party property ownership. Hotel and lodging companies have relatively large consumption of, and dependence on, energy and water resources though they are not the industry's greatest source of operating costs. Variability in energy prices or water availability impacts financial results or even the ability to operate. In the U.S., the average retail price of electricity for the commercial end-use sector was 7.25 cents per kilowatt-hour (kWh) in 2001 and is projected to increase to 18.5 cents per kWh by 2040, representing a 2.4% increase annually. The industry also relies heavily on human capital for guest services and daily operations. These jobs typically require long working hours and are filled by a large percentage of women and immigrants. Furthermore, as approximately 80% of all tourism takes place in coastal areas, the industry faces challenges from shifting weather patterns and rising sea levels. Below is information from two companies in the Hotels & Lodging industry, which may or may not be material. Note that determining the average number of occupied rooms requires multiplying the average occupancy rate by the number of hotel rooms
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