Financial management in Tourism Report 2022

Running Head: Financial management in Tourism
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Financial management in Tourism

Financial management in Tourism 2
Table of Contents
Introduction............................................................................................................... 3
Hotel Background....................................................................................................... 3
Ratio Analysis............................................................................................................ 3
Profitability............................................................................................................ 4
Liquidity............................................................................................................... 5
Solvency............................................................................................................... 6
Efficiency.............................................................................................................. 7
Market Value Ratios................................................................................................. 8
Recommendation on buying and selling............................................................................ 9
Conclusion.............................................................................................................. 10
References.............................................................................................................. 11
Appendix 1........................................................................................................... 13

Financial management in Tourism 3
Introduction
Financial performance of an enterprise can be calculated with the help of the different
techniques. The overall comparison is also necessary to find out the position of the company
with respect to the previous year and at the same time against the performance of the
competitor. In this report a detailed analysis of the Wyndham Hotel as well as the Hilton
Hotel is carried out. The financial analysis of this hotel includes the ratio analysis and the
interpretation, the relevance of the future cash flows which have been forecasted and the
overall recommendation on which hotel is performing better from the point of the view of the
investors (Revelli & Viviani, 2015).
Hotel Background
Hilton Worldwide Holdings Inc which was formerly known as the Hilton Hotel
Corporations is an American based Multinational Hospitality Company which is engaged in
the business of the hotel and the resorts. The name was found in the year 1919 by the Conrad
Hilton, as the hotel runs on his name. The headquarters of the hotel are situated in Virginia.
From the record of the September 2018, the portfolio of the hotel in inclusive of 5500
properties and over 894000 rooms which accumulates to total 109 countries and territories.
Hiltons are bifurcated according to the needs such as full operating service hotel, Focused
service providers, All suites, Lifestyle, Timeshare and much more (Hilton Holdings, 2018).
On the other hand the Wyndham Group is also one of the chain which is based in the
United States engaged in the same business of the hotel and the resorts chain. It is located
over 9000 locations with 4800 properties in the portfolio, thereby covering the 75 countries at
present. The founder of the Wyndham Group was Trammell Crow and this hotel came long
after the Hilton in the year 1981, a roundabout 38 years ago. This hotel promotes the lodging,
franchising, rental vacation facilities, vacation ownership and exchange (Wyndham Group,
2018).
Ratio Analysis
Ratio analysis is one of the measurements that is used by the tourism and the
hospitality sector to find out the range at which the hotels are currently operating in terms of
the competitors against the different parameters. These parameters can be bifurcated on the
basis of the profitability, solvency, liquidity, investment opportunities and the overall

Financial management in Tourism 4
efficiency of the organizations. In this section the neck to neck analysis of the Hilton as well
and Wyndham group have been undertaken in order to understand which project is more
beneficial from the point of view of the investment considering the other factors as well.
Further the discussion has also been carried with regards to each ratio individual to have an
in-depth knowledge of each area (Amendola, Restaino & Sensini, 2015).
Profitability
Profitability is one of the major metrics that can be used to gauge the presentation of
the business. The five noteworthy proportions of that can portray the productivity of the
business is Return on absolute resources, Return on Equity, Operating Profit Margin, Net
Profit Margin and Gross Profit margin. The purpose of the calculation of the profitability
ratios is to understand the numbers and how much beneficial thy can be for the investors as
profitability is one of the major concerns of theirs. These categories have been analysed for
the Hilton and Wyndham group below (Arif, Noor-E-Jannat & Anwar, 2016).
Profitability Hilton
Wyndha
m
operating margin
operating
income 1441000 396000 39.3% 30.9%
total revenue 3668000 1282000
Net margin Net income 769000 162000 21.0% 12.6%
total revenue 3668000 1282000
return on net asset Net income 769000 162000 45.7% 39.0%
(fixed asset +net
working
capital ) 1682000 415000
From the table above the net profit margin of the Hilton is 21% and that of the
Wyndham is 12.6%. The net profit margin indicates the proportion with respect to the sales
and this is due to the increase in the sales from the previous year. Moreover the other
operating expenses have also decreased from $228000 to $136000; this gave a jump in the
net margin of the Hilton hotel (Hilton Holdings, 2018). In case of the Wyndham the net profit