HTM 490 - Hospitality Simulation Management Report Evaluation

This report analyzes a hospitality simulation, addressing key aspects of hotel management. It begins with an evaluation of the hotel's performance against competitors, focusing on occupancy, ADR, and REVPAR. The report then delves into financial management, evaluating investment management using financial ratios like current ratio, quick ratio, debt-equity ratio, debt ratio, and equity multiplier over a five-year period. The analysis includes commentary on the strengths and weaknesses of the hotel's financial position. Finally, the report addresses the challenge of increasing weekday sales, recommending effective advertising campaigns based on effectiveness and cost-effectiveness, with a focus on public relations agencies.

Running head: HOSPITALITY SIMULATION MANAGEMENT
HOSPITALITY SIMULATION MANAGEMENT
Name of the Student
Name of the University
Author Note

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Solution to answer no. 1
According to the occupancy criteria, the hotel demonstrates 93.1 persons against the
competition of 76.5 which is 122% of the market competition. The ADR or average rate paid
for rooms sold for the hotel is $123.09 against the market competition of $105.3 which is
116.9% of the market competition. The REVPAR of the revenue per available room criteria
of the hotel demonstrates $114.66 against the Index of 142.3%.
Solution to answer no.2
The management of the Investment are done with the help of the following ratios,
which are as follows:
Current Ratio: Current ratio demonstrates the capability of an organization to pay off its
short-term liabilities (Xu et. al. 2014). The Current Ratio over the years is showing a
declining trend from 2.01 in 2015 to 1.98 in 2019 signifying the decline in the ability of the
hotel to pay off its short-term liabilities.
Quick Ratio: It demonstrates the capability of the firm to meet its short-term liabilities with
the help of the most liquid assets excluding the inventories. The quick ratio as well is
depicting a declining trend from 1.97 in 2015 to 1.94 in 2019 depicting a reduction in
capability to pay off its short-term liabilities with the most liquid current assets.

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Debt-Equity Ratio: It represents the relationship of the debt of the organization with the
owner’s capital. Here the Debt-Equity ratio of the hotel on 2015 was 8.63% and on 2019 was
25.77% which signifies that the debt have increased over the years however it’s below the
standard of 50% signifying a safer company where debt is less than the owner’s equity.
Debt Ratio: It is the relationship of the total assets with the debt (Zainudin and Hashim
2016). Here the debt ratio in 2015 was 8.20% and in 2019 was 20.49% signifying that more
assets over the years are purchased with debt capital however it is way below the standard of
30%.
Equity Multiplier: It demonstrates the relationship of the assets of the firm with the
shareholder’s equity. The Equity multiplier over the years have been 1.05 and 1.25
respectively. This shows majority of the assets are financed by the shareholders equity.

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Apart from the above ratio analysis, there are other factors as well that must be
considered while evaluating the management of the investment. The management of the
investment is so far moderate. The capital assets have increased by a margin of $889,494
which looks promising with substantial increase in current assets especially cash at bank and
inventory. However, it should be kept in mind that the Accounts Receivable have enhanced
by a considerable margin that shows that there is a considerable volume of service that has
been provided on credit. It has met and paid off its long-term liability over the years which
along with a considerable amount of Retained Earnings worth $3,191,735 as on December
2019 is a promising sign for the business. However, there has been a considerable rise in
Current liabilities over the years that has to be met which will involve massive outlay of cash.
However, there is enough Current Assets to pay off such current liabilities. So, on an average,
it can be said that the management of the investment has been moderate.
Solution to answer no. 3
The hotel is struggling with its weekday’s sale following the trend of the first quarter
of the previous year. There can be various strategies to uplift the sales during the weekdays.
There can be different types of advertising campaigns for raising the weekday sales.

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However, the surveys on advertising effectiveness suggests that Business Press, Direct Mail,
PR Agency, Search Engine Optimization, contracting a web designer and online advertising
could be the best possible campaigns. Therefore, keeping in mind the amount of effectiveness
and the cost associated with it, PR Agency could be the best possible campaign among the
different alternatives as it will provide the business with editorial coverage and at the same
time will provide the business with customer and staff survey results.

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References
Xu, W., Xiao, Z., Dang, X., Yang, D. and Yang, X., 2014. Financial ratio selection for
business failure prediction using soft set theory. Knowledge-Based Systems, 63, pp.59-67.
Zainudin, E.F. and Hashim, H.A., 2016. Detecting fraudulent financial reporting using
financial ratio. Journal of Financial Reporting and Accounting.