You will use scenario 1 to answer the first 15 multiple choice questions:
You will use scenario 2 to answer questions 16-30:
Scenario 1
You are planning to open a new 150 room, full-service boutique hotel with 8,000 square feet of meeting space, a 100-seat restaurant, and a 75-seat lounge in Dania Beach Florida. You want to determine the feasibility of this proposed hotel.
Your proposed hotel will have to compete for guests with three other well established hotels in the area which have the following current annual operating statistics. No other hotels are planned to open in the area before your proposed hotel opens. One additional hotel with 250 rooms and similar facilities is planned to open in the area one year after your proposed hotel is scheduled to open.
Hotel A – 250 rooms – 70% occupancy – 20% Corporate, 50% Group, 30% Leisure
Hotel B – 200 rooms – 80% occupancy – 30% Corporate, 20% Group, 50% Leisure
Hotel C – 150 rooms – 75% occupancy – 20% Corporate, 10% Group, 70% Leisure
Scenario 2
You are preparing financial projections for your proposed hotel. For each of the following line items, which method would be your PRIMARY way of analyzing it? Please Note: It is possible that you may use another method to check your projection, but please indicate the PRIMARY way that you will make the projection based on class discussions and recommendation by your esteemed professor:
What is the current annual overall occupancy % for the entire existing competitive set of hotels?
70%
72%
75%
80%
82%
Question 2
3.3 / 3.3 pts
When your proposed hotel opens, how many rooms will there be in the defined competitive set of hotels?
500
750
1000
1500
Question 3
3.3 / 3.3 pts
Your proposed hotel opens, what will be its fair-share percentage of the demand for hotel rooms be?
20%
30%
40%
50%
Question 4
3.3 / 3.3 pts
If your hotel gets exactly it’s fair share of demand and assuming the leisure segment of the market is projected to have 90,000 occupied room nights in the year your proposed hotel opens, how many room nights of leisure demand would go to your hotel in that year?
18,0000 occupied room nights
27,000 occupied room nights
36,000 occupied room nights
45,000 occupied room nights
Question 5
3.3 / 3.3 pts
If you believe that your proposed hotel is NOT as competitive in attracting group guests as the other hotels in the defined competitive set, then which penetration rate below would you choose to apply to your proposed hotel’s fair-share of the group segment of the market?
90%
100%
110%
120%
Question 6
3.3 / 3.3 pts
If you believe that your proposed hotel is MORE competitive at attracting leisure guests than the other hotels in the defined competitive set, then which penetration rate below would you choose to apply to your proposed hotel’s fair-share of the leisure segment of the market?
90%
100%
110%
120%
Question 7
3.3 / 3.3 pts
A new 250 room hotel opens in Dania Beach one year after your proposed hotel opens. How many rooms will there be in the defined competitive set of hotels after this new hotel opens?
500
750
1000
1500
Question 8
3.3 / 3.3 pts
What will be your proposed hotel’s fair-share percentage of the market demand for hotel rooms in the area after the new 250 room hotel opens?
15%
25%
35%
45%
Question 9
3.3 / 3.3 pts
If you calculate that, overall, your proposed hotel will penetrate at a rate of 120% of its fair share in its third year of operation, what percent of total market demand will your proposed hotel capture?
15%
18%
20%
23%
Question 10
3.3 / 3.3 pts
Assuming the total market demand for hotel rooms during your proposed hotel’s third year of operation is 250,000 occupied room nights, and your calculated penetration of your proposed hotel’s total fair-share is 120%, what would be the total projected occupied room nights that your proposed hotel would expect to capture?
37,500 occupied room nights
45,000 occupied room nights
50,000 occupied room nights
57,500 occupied room nights
Question 11
3.3 / 3.3 pts
Based on the same assumption as in question 12, what would your hotel’s occupancy be in that year?
68%
82%
91%
105%
Question 12
3.3 / 3.3 pts
If you project that your proposed hotel will achieve 75% occupancy when it stabilizes, and generate $6,160,000 in rooms revenue, what average daily rate (ADR) will your hotel achieve?
$100
$125
$150
$175
Question 13
3.3 / 3.3 pts
If you project that your proposed hotel will achieve 75% occupancy when it stabilizes, and generate $6,160,000 in rooms revenue, what will be its RevPAR?
$ 75
$ 94
$112
$131
Question 14
3.3 / 3.3 pts
In the written report, your review and discussion of the proposed hotel’s location should include:
its proximity to the nearest airport.
the surrounding area’s unemployment rate.
a map showing the roads leading to the proposed hotel’s site.
historical sales data for the retail stores in the area.
all of the above.
none of the above.
Question 15
3.3 / 3.3 pts
In doing your projections of demand during the analysis, which of the following would you look at as most important in projecting how fast Group demand will grow in the future :
cruise line statistics indicating how many passengers departed from the cruise port
airport statistics indicating how many passengers arrived at the airport
convention center statistics indicating how many people attended events at the convention center
office space statistics indicating how much office space was being occupied in the area
Question 16
3.3 / 3.3 pts
Remember to start using Scenario 2 for the following questions
Food and Beverage REVENUES:
Per occupied room
Per available room
Percent of total sales
Percent of total revenue
Question 17
3.3 / 3.3 pts
Other Operated Department REVENUES, including Telecommunications, Valet, Audio/Visual rentals and services, Retail Store sales, etc.
Per occupied room
Per available room
Percent of total sales
Percent of total sales
Question 18
3.3 / 3.3 pts
Rooms Departmental EXPENSES
Per occupied room
Per available room
Percent of room revenues
Percent of total sales
Question 19
3.3 / 3.3 pts
Food and Beverage EXPENSES
Per occupied room
Per available room
Percent of food and beverage revenues
None of the above
Question 20
3.3 / 3.3 pts
Other Operated Department EXPENSES
Per occupied room
Per available room
Percent of other operated department revenues
a & b
Question 21
3.3 / 3.3 pts
Administrative and General EXPENSES
Per occupied room
Per available room
Percent of total revenues
Percent of total sales
Question 22
3.3 / 3.3 pts
Sales and Marketing EXPENSES:
Per occupied room
Per available room
Percent of total revenues
Percent of total sales
Question 23
3.3 / 3.3 pts
Property Operations & Maintenance EXPENSES
Per occupied room
Per available room
Percent of total revenues
Percent of total sales
Question 24
3.3 / 3.3 pts
Utility EXPENSES
Per occupied room
Per available room
Percent of total revenues
Percent of total sales
Question 25
3.3 / 3.3 pts
Management Fees
Per occupied room
Per available room
Percent of total revenues
Percent of total sales
Question 26
3.3 / 3.3 pts
Property Taxes
Per occupied room
Per available room
Percent of total revenues
Research with Tax Assesor’s Office to base it on other nearby hotel’s tax amount
Question 27
3.3 / 3.3 pts
If, when you inflate your financial projections, you inflate your revenues at 5% annually and you inflate your expenses at 3% annually, your projection will show that your hotel:
Becomes less profitable over time
Becomes more profitable until the 3rd year and then becomes less profitable
Becomes more profitable over time
None of the above
Question 28
3.3 / 3.3 pts
Your banker is trying to decide if your proposed hotel is a feasible project to make a loan to. The projected total cost of the proposed hotel is $20 million. You are requesting a $12 million loan. What is the loan-to-value percentage that the banker needs to consider:
40%
50%
60%
70%
Question 29
3.6 / 3.6 pts
Your banker needs to determine if your proposed hotel will be able to cover the debt service payments if the loan is provided. A $12 million loan with a 9% interest rate which is amortized over a 20 year period will result in monthly debt service payments of $108,000. Your financial projections indicate that your proposed hotel is expected to generate $2 million annually in net operating income. The banker will need a debt service coverage ratio (DSCR) of at least 1.40 to approve the loan. What DSCR will the banker calculate for your proposed hotel based on your financial projections and the loan terms provided.
1.22 – banker will not approve the loan
1.34 – banker will not approve the loan
1.43 – banker will approve the loan
1.54 – banker will approve the loan
Question 30
4 / 4 pts
According to Judy Singer – spa consultant, hotel and resort spas should be designed and operated to:
Serve as an amenity to the guest – does not matter how much money they lose during operations
Be an attraction to draw business – never expect to actually make any profit – target should be “break even”
Serve as a profitable operating department of the hotel or resort
None of the above – markets have changed – hotels and resorts do not need Spas any longer since there are so many outside ‘day spas’
b & c