Real Life Case Study Individual Report for Hotel Globe Trotter

This report is based on setting up a small hotel in London, UK named Globe Trotter. It includes a SWOT analysis, environmental analysis, competitive analysis, financial forecast, and key success factors in the hospitality industry.

REAL LIFE CASE STUDY
INDIVIDUAL REPORT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
USP of the business.....................................................................................................................3
PESTLE analysis of hospitality industry.....................................................................................3
Competitive analysis using Porter's 5 Forces Model...................................................................4
SWOT analysis of Hotel Globe Trotter.......................................................................................5
Key success factors in Hospitality Industry.................................................................................5
Forecasted Income Statement for the year 2024 to 2026............................................................6
Balance Sheet for the year ending 2024 to 2026.........................................................................6
Cash Flow Statement...................................................................................................................7
Ratios...........................................................................................................................................8
Interpretation................................................................................................................................8
Finance.........................................................................................................................................9
Sources of finance........................................................................................................................9
Personal Reflection....................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
A start up is a brand new company that has been set up by one or more business owners
in order to develop products and services that are unbeatable and unique. The main objective
behind developing a start up is to collaborate the efforts of the individuals working within an
organization and innovate something meaningful. The present report is based on setting up a
small hotel in the London, United Kingdom. The current report includes a SWOT analysis,
environmental analysis, and key success factors in the hospitality industry. It also covers a
financial forecast of the start up including an income statement, balance sheet, and cash flow
statement and the ratios with respect to the start up.
MAIN BODY
USP of the business
The start up will be named as Globe Trotter. The Unique Selling proposition of the start
up will to focus on providing the customers with exclusive and premium class services to
customers which helps the hotel in influencing the customers, enhancing the brand image of the
hotel and increasing the satisfaction of the consumers (McKeever, 2018). The main objective of
the hotel will be to provide the customers with a homely yet an exclusive environment merged
with extraordinary services.
PESTLE analysis of hospitality industry
PESTLE analysis is a framework that is used by several organizations in order to
determine the macro environmental factors that affects the functioning of a business
organization. The PESTLE analysis with respect to the Globe Trotter is as follows:
Political factors
The government policies within United Kingdom with respect to the hospitality sector is
getting liberal gradually. On the past two years, due to the outbreak of COVID 19, the hospitality
and tourism sector were badly affected due to the imposition of lock down across the globe
(Fichter, and Tiemann, 2020). But now, the risk of COVID19 has reduced and the government of
United Kingdom is focusing on increasing the tourists within the country by following liberal
policies. This will be a positive factor which will help the Hotel Globe Trotter in increasing its
revenue.
Economic factors

It has been identified that tourism and hospitality are one of the major contributors in the
development of a country. The rise in the income level of the travellers across the world has
given rise to the hospitality industry.
Social factors
The increase in the use of social media also influences the peers of the travellers within
the country and helps in increasing the number of travellers across the globe.
Technological factors
The Hotel Globe Trotter will provide its customers with advanced features within the
hotel such as Wi-Fi, booking through apps and online portals, lifts, intercoms and all kinds of
facilities.
Legal factors
It has been determined that the Government of Europe is providing tax deductions to the
hospitality industry within UK (Chen, and Gong, 2019). This is a positive indicator for the Hotel
Globe Trotter for the purpose of initiating the business.
Environmental factors
In today's world, the customers are well versed with the negative and harmful impacts of
the operations of an organization. Therefore, it is essential for the Hotel Globe Trotter to keep in
mind the environment of the nation and take steps for the same.
Competitive analysis using Porter's 5 Forces Model
The competitive analysis with respect to the Hotel Globe Trotter is as follows:
Threat of new entrants
It has been examined that the hotel Globe Trotter might face difficulties in entering the
hospitality industry in terms of the location. As there are several hotels that already exists within
the London which might be considered as tough competitors for the hotel.
Bargaining power of buyers
The Hotel Globe Trotter will aim to provide the customers with premium services at
affordable prices. Therefore, the bargaining power of the buyers will be low (Ross, and et.al
2019).
Threat to substitutes
The threat to substitute under the hospitality industry will be low as setting up a hotel
requires extensive capital to be invested.

Bargaining power of the suppliers
The Hotel Globe Trotter will aim to acquire the raw materials from suppliers belonging to
various regions in order to acquire them at least cost possible (Hasanaj, and Kuqi, 2019).
Therefore, the bargaining power of the suppliers will be low.
Threat of competition
The threat to competition is high within the hospitality industry. Since, the London is an
attractive destination for tourists, the Hotel Globe Trotter will face tough competition from its
peers.
SWOT analysis of Hotel Globe Trotter
Strengths
 Prime location in London.
 Premium class exclusive services at
affordable prices.
 Covered with nature.
Weaknesses
 Small rooms.
 Less parking space.
 Less popular.
Opportunities
 Promotion through online channels of
distribution and social media
marketing.
Threats
 High competition.
 Innovation.
Key success factors in Hospitality Industry
There are several factors which contributes to the success of the hospitality industry
include:
 Since, the Hotel Globe Trotter will be based in London, it will attract a range of
customers as London is an attractive spot for tourists (Sezer, Gudelek, and Ozbayoglu,
2020).
 The liberalized policies of Tourism in the United Kingdom will also add to the success of
this industry.
 Enhanced services provided to the customers also increase the number of customers
towards the brand and increase the profitability of the industry.

Forecasted Income Statement for the year 2024 to 2026
Particulars 2023-24 2024-25 2025-26
Revenue
Rooms 89000 95000 93000
Food 50000 42000 52000
Beverages 25000 56000 53000
Other 5000 10000 10000
Total Revenue 169000 203000 208000
Cost of sales 23200 27550 26680
Gross Profit 145800 175450 181320
Expenses
Salaries, wages, and benefits 26400 31350 30360
Direct operating expenses 4800 5700 5520
Marketing 3200 3800 3680
Repair and maintaintence 4800 5700 5520
Administrative expense 4000 4750 4600
Total operating expense 43200 51300 49680
Profit before Interest and Tax 102600 124150 131640
Occupancy expense 4000 4750 4600
Property taxes 2400 2850 2760
Insurance 80 950 920
Depreciation 4000 4750 4600
Interest 2400 2850 2760
Total Non operating expense 12880 16150 15640
Total income/ loss before taxes 89720 108000 116000
Tax 8972 10800 11600
Profit after tax 80748 97200 104400
Balance Sheet for the year ending 2024 to 2026
Particulars 2023-24 2024-25 2025-26
EQUITY AND LIABILITY
SHAREHOLDER'S FUND
Eq. share capital 130748 147200 154400
TOTAL SHARE CAPITAL 130748 147200 154400
Reserves and Surplus 5000 10000 12000
TOTAL RESERVES AND SURPLUS 5000 10000 12000
TOTAL SHAREHOLDER'S FUND 135748 157200 166400
NON CURRENT LIABILITIES
Long Term Borrowings 500 450 300
Other long term liabilities 650 580 500

TOTAL NON CURRENT LIABILITIES 1150 1030 800
CURRENT LIABILITIES
Short term borrowings 300 500 800
Trade payables 500 1000 1500
Other Current liabilities 700 1200 1200
TOTAL CURRENT LIABILITIES 1500 2700 3500
TOTAL CAPITAL AND LIABILITIES 138398 160930 170700
ASSETS
NON CURRENT ASSETS
Tangible assets 115748 139200 147400
Intangible assets 0 0 0
Others 5355 2611 3410
FIXED ASSETS 121103 141811 150810
Non current investments 2000 2500 2200
Long term loans and advances 1500 1000 1200
Others 1500 1500 1800
CURRENT ASSETS
Current Investment 1295 1219 6790
Inventories 2000 2200 1900
Trade receivables 2000 2500 3000
Cash and cash Equalvalent 3000 3200 3000
short term loans 3000 3500 1800
Others 1000 1500 1200
TOTAL CURRENT ASSETS 17295 19119 19890
TOTAL ASSETS 138398 160930 170700
Cash Flow Statement
Particulars 2024 2025 2026
Cash received from customers 169000 203000 208000
Salary paid 26400 31350 30360
Net cash from operating activities 142600 171650 177640
Cash Flow from Investing activities
Sale of Investments 0 0 0
Purchase of land 0 0 0
Purchase of investment 0 400 5271
Net cash from investing activity 0 -400 -5271

Cash flow from financing activities 0 0 0
Net Cash flow 142600 171650 177640
Ratios
Hotel Globe Trotters
2024 2025 2026
Revenue from sales 169000 203000 208000
Gross profit 145800 175450 181320
Gross profit margin 86% 86.40% 87%
Current assets 17295 19119 19890
Current liabilities 1500 2700 3500
Current ratio 1153 708 568
Operating Profit 102600 124150 131640
Revenue from sales 169000 203000 208000
Operating profit margin 61% 61% 63.29%
Interpretation
Gross profit ratio
Gross profit margin ratio can be defined as the amount of profits generated by an
organization using its actual products and services which means revenue generated from the
actual sale of products and services of the company. The calculation of this ratio is very essential
for an organization planning to introduce its own business within the market. Here, the gross
profit of the Hotel Globe Trotters is quiet good for the first year i.e., 86% followed by 86 % in
2025 and is predicted to be 87% in the year 2026 (Easton, and et.al 2018). The predicted gross
profit of the Hotel Globe Trotters is quite good. This means that the company will be well
managed and will be able to generate revenue from sales by providing its services to the
customers. If the ratio gets compared to the gross profit ratio of its competitors, then Hotel Globe
Trotters will surely beat other hotels in terms of gross profit generated by them. The gross profit
ratio also helps the company in determining the market position of the brand within the market as
compared to its competitors.
Current ratio

Current ratio can be described as a liquidity ratio used by several organizations for the
purpose of determining their potential to pay their current liabilities i.e., liabilities which are
arising in a time span of less than 12 months and needs to be paid within the time frame. The
ideal ratio for the company needs to in between the range of 1.5 to 3. The current ratio of a
company is used for stating the liquidity position of the company. On the basis of the above
calculations, it has been determined that the current ratio of the Hotel Globe Trotters will be
around 1153 times in the year 2024, 708 times in the year 2025 and 568 times in the year 2026
(Martin, Keown, and Titman, 2020). This is not a good sign for the company. This means that
the company is not utilising its current assets appropriately. This means that the company might
have manipulated the financial statements in order to keep the current ratio high. Therefore, in
order to maintain the ideal current ratio and minimise the same, it is essential for the Hotel Globe
Trotters to utilise their liquidity in an effective manner.
Operating ratios
The operating margin ratio is a useful ratio for the Hotel Globe Trotters as it helps an
organization in determining the profits generated from the main operations of the company. It
helps the organization in determining the financial performance of the hotel. From the above
calculations, it has been determined that the operating margin of the Hotel Globe Trotters is quiet
good for the initial years of setting up of the business (Monahan, 2018). The predicted ratio of
the Hotel Globe Trotters in the year 2024 and 2025 is 61%, and in the year 2026 it will be 63%.
Finance
The amount of finance that will be needed by the Hotel Globe Trotters for the purpose of
setting up its business will be 2,67,000 Pounds.
Sources of finance
The hotel Globe Trotters will make use for several sources of finance in order to raise
funds for the purpose of initiating the business. The sources are mentioned below:
 The Hotel Globe Trotters will take bank loans for the purpose of initiating the business.
This will help the company in reducing its tax and also it is one of the most trusted forms
of acquiring money.
 The Hotel Globe Trotters will also raise money using crowdfunding. This will involve a
certain amount of money that will belong to different types of small investors within the

market. This will help the Hotel Globe Trotters in easily raising money without having to
ask for help from individual people.
 Also, another source of finance that will be used by the Hotel Globe Trotters will include
venture capitalists (Inkon, 2019). The Hotel Globe Trotters will share the idea of the start
up with different sorts of venture capitalists and influence them into providing them the
required capital for the purpose of setting a business.
Personal Reflection
This project was a great learning experience for me. It was time-consuming at first but
then I started to like the process as it was helping me to develop new skills within myself. This
project has helped me in developing my finance skills, interpretation skills and also contributed
to the development of my analytical skills. In order to prepare the financial statements, first I
carried out research in order to determine how it is prepared and then prepared the same for my
business plan. This helped me in developing research and analytical skills in myself. Also. This
project was quiet helpful in bringing creativity in my thinking as the process required to start up
a business and determine what are the key factors that needs to be considered before setting up a
business within the market.
CONCLUSION
The present report is based on a start up plan which involves introducing a new hotel
into the market of London. The present report includes a PESTLE analysis in order to determine
the macro environmental factors which might affect the growth and development of the Hotel
within the industry. It also includes forecasted financial statements for the Hotel Globe Trotters
for the year 2024, 2025 and 2026. The financial statement includes profit and loss statement ,
balance sheet and the cash flow statements for the next three years in order to determine the
profitability and the success of the Hotel Globe Trotters.

REFERENCES
Books and journals
McKeever, M.P., 2018. How to write a business plan. Nolo.
Fichter, K. and Tiemann, I., 2020. Impacts of promoting sustainable entrepreneurship in generic
business plan competitions. Journal of Cleaner Production, 267, p.122076.
Inkon, K., 2019. A cross-sectional study on the relationship between business plan, entrepreneur
type, development stage and profitability of US SMEs. Academy of Entrepreneurship
Journal, 25(1), pp.1-21.
Monahan, S.J., 2018. Financial statement analysis and earnings forecasting. Foundations and
Trends® in Accounting, 12(2), pp.105-215.
Easton, P.D., and et.al 2018. Financial statement analysis & valuation. Boston, MA: Cambridge
Business Publishers.
Martin, J.D., Keown, A.J. and Titman, S., 2020. Financial management: principles and
applications. Prentice Hall.
Sezer, O.B., Gudelek, M.U. and Ozbayoglu, A.M., 2020. Financial time series forecasting with
deep learning: A systematic literature review: 2005–2019. Applied soft computing, 90,
p.106181.
Hasanaj, P. and Kuqi, B., 2019. Analysis of financial statements. Humanities and Social Science
Research, 2(2), pp.p17-p17.
Chen, A. and Gong, J.J., 2019. Accounting comparability, financial reporting quality, and the
pricing of accruals. Advances in accounting, 45, p.100415.
Ross, S.A and et.al 2019. Corporate finance (pp. 880-86). McGraw-Hill Education.
Fridson, M.S. and Alvarez, F., 2022. Financial statement analysis: a practitioner's guide. John
Wiley & Sons.
Habib, A., and et.al 2018. Political connections, financial reporting and auditing: Survey of the
empirical literature. Journal of International Accounting, Auditing and Taxation, 31,
pp.37-51.
George, R., 2021. The Tourism and Hospitality Marketing Environment. In Marketing Tourism
and Hospitality (pp. 183-219). Palgrave Macmillan, Cham.
BURKE, K., ROBINSON, P. and Choi, M., 2020. Developing meta-strategies for hospitality
experiences. Managing Hospitality Experiences, p.141.
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