Hotel & Hospitality Management: Recent Market Conditions, Capital Cost Determination, Sustainability Recommendations, and Implementation Planning

This article discusses the changing market demographics of the Canadian restaurant industry, the determination of the appropriate capital cost of the project, sustainability recommendations, and implementation planning for Hotel & Hospitality Management. It also includes a projected sales plan for the Toronto facility. The subject is Hotel & Hospitality Management, and the course code, course name, and college/university are not mentioned.

Running head: HOTEL & HOSPITALITY MANAGEMENT
HOTEL & HOSPITALITY MANAGEMENT
Student’s Name
University Name
Author’s Name

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Table of Contents
1. Recent market conditions.......................................................................................................3
2. Determination of the appropriate capital cost of the project..................................................4
3. Sustainability Recommendations...........................................................................................5
3.1 The Toronto Facility.........................................................................................................5
3.2 The Vancouver Facility....................................................................................................5
4. Implementation Planning.......................................................................................................5
Reference List............................................................................................................................7
Appendix 1: Projected Sales plan for the Toronto facility.........................................................8

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1. Recent market conditions
The market demographics of the Canadian restaurant are changing rampantly. Eating
out have been an accepted trend in the country. The change in the diet plans and the
fascinations for vegan food which have plant based ingredients are being particularly
favoured by the Canadian people. The mix of restaurant menus offering food of various
ethnicities have been in vogue among the Canadians. As an outcome, the spending on eating
out the Canadian working Class have increased by 30% (Erdem & Jiang, 2016). The
Canadian community have become more professional and their lifestyle have become faster
paced and as an outcome, the food vending services like Door Dash, Uber Eats and Skip the
Dish. Of all these companies operating in the business domain, the market acquisition rate of
Uber Eats is the greatest. They have been the frontline food delivering company in the
regions like Calgary, Toronto, and Montreal, Quebec and so on. The online food industry
worth Canadian Dollar $ 13.5 million is going to provide more sumptuous opportunities to
the new market entrepreneurs by offering them a large target market and greater customer
base.
However Macro analysis of the Restaurant industry of the Canadian restaurant sector
suggest that poignant issues like short of culinary labours and service labourers have stormed
the market. Another major issue is that the lack of rainfall have resulted in curtailed
productivity in of the vegetables. The variety of vegetables in the Canadian cities mainly
comes form the southern US states. The shortage of supply have led to the rise of prices by 4
to 6%. According to the opinion of van der Rest et al. (2018), the prices of the vegan dishes
can rise about 5 to 10% as an impact of this market outcomes. Lastly the restaurant business
have accepted about a 25% increased customer base since 2016 (Deery & Jago, 2015) . That
is why the current labour force in the restaurant business is falling short to manage the 10
million extra regular basis customers that have been incorporated in the sector. Undoubtedly,

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this would increase the annual revenue generation. The lack of resources might affect the
sustainability of this Market growth seriously.
2. Determination of the appropriate capital cost of the project
The facility at Toronto seems to have recently started gaining in new customers and
this site being located in the downtown area, the average customer visits would be
automatically high. Typical Canadian cuisines would be highly popular here, which includes
the likes of Salmon, Tourteire, and bannock and so on. Since SH Ltd have various signature
dishes. The average projected per seat revenue collection of $50 Canadian Dollars can be
easily accumulated from here. However, the average capacity of serviceability is the area of
concern here. Evidently, looking at the location of the location and the connectivity of the
facility, there are high chances that the customer visits would be high and the capacity would
be full. Hence the company’s annual forecast budget of $475000 might have to be increased
in order to suffice the additional customers’ demands. Hence, it can be suggested that extra
revenue accumulation of 7% can also go into the operational costs (Xie, Zhang & Zhang,
2014). However, there are high chances of revenue accumulation. This should be projected
as a long term plan by the company and even if the initial profit generation do not reach the
expected outcomes, sustained business operations in this area can generate more than
expected profit percentage.
Another, important facility is the Vancouver kitchen expansion plan. The operational
costs of the Vancouver facility would be 38% of the estimated whole set up cost of the
Toronto site. This site would work on 24 hours roster basis and would always be available for
a take away (Molina-Azorin et al. 2018). In context of this site, it would be favourable if the
company set up a strategic partnership with the app based food delivery companies like Uber
Eats. Uber Eats have an extensive customer base in that locality and that is why the SH ltd

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company can easily acquire market in the Vancouver area. However, Uber Eats generally
agrees in business operations at 10% revenue over the operational value of food business.
This is one area of conflict for the company. However, the clientele that Uber Eats would
bring in, given that both the market partners (SH ltd and Uber Eats) are market entrepreneurs.
3. Sustainability Recommendations
3.1 The Toronto Facility
The basic facility at Toronto is the best possibility of business expansion for the
company. However, the company needs to engage serious and professional business
management for this facility so that the cost and resource management are very good. Besides
that, the operational budget of $1,500,000 would not be sufficient for the expansion because
of high labour wages. Currently the lack of labourers in the restaurant business is prevailing
due to the poor wages that workers get. Naturally, Pereira-Moliner et al. (2014), opines that
many move out and those who survive do not show any engagement towards the
organisational objectives. The company should employ less labours at high wages make
shifting work hours for them so that they are always able to meet customers’ demands (refer
to appendix 1).
WACC = EQUITY + PREFERRE
D
+ DEBT
CAPM = 2% + [1.60
x (12% -
2%)]
+ = (12% x
$60) / $65
+ = 7% x (1 -
35%)
17.00% 15.08% 5.20%

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Gordon
Model
= $0.86 /
$16.00 +
10%
18%
Average 18.00%
WACC = 17.00% +
15.08% +
18% / 3
WACC = 28.96% ------> 29.00%
Discount Rate / WACC -------> 30.00%
Year 0 1 2 3 4
Investment @ time 0 -
$500,000
Sales $1,440,0
00
$1,491,8
40
$1,545,5
46
$1,601,1
86
Variable Costs -
$504,000
-
$522,144
-
$540,941
-
$560,415
Additional Variable Costs -$72,000 -$74,592 -$77,277 -$80,059
Fixed Costs -
$325,000
-
$324,999
-
$324,998
-
$324,997

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Tax -
$188,650
-
$199,537
-
$210,815
-
$222,500
Net Cash Flows -
$500,000
$350,350 $370,568 $391,514 $413,214
x Present Value Factor 1.000 0.769 0.592 0.455 0.350
Present Value of Cash Flows -
$500,000
$269,500 $219,271 $178,204 $144,678
Present Value $311,653
3.2 The Vancouver Facility
In case of the Vancouver facility, the quality of the delivery service have to be strong
and the restaurant also have to be mindful of the food quality that they serve. This is because
there is no chance of direct interface with the customers except the few coming at takeaway
counters. Hence the customer interaction and customer retentiondepends on the quality of
food they serve. That is why it is essential that they appoint adept and professional staff for
the culinary department. With further rise in the brand fame, the company have to deliver
faster deliveries. That is why more staff appointment would be required.
4. Implementation Planning
In order to create a competitive edge, the restaurant, at first, should develop a
customer attraction strategy and for tat they have to offer heavy discounts for the initial days
after opening. Other than that they can offer the customers, complimentary drinks
The next stage would be mapping of the primary competitors. The SH Ltd is a popular
restaurant chain. Hence their brand loyalty is permanent. Their main focus should be on the
variety and quality of the food served in other restaurants of the area.

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Now-a-days, the young population and mainly the young families are showing a trend
of dining out or ordering food from the online applications. That is why the company should
make business promotions through advertisements featuring some youth icon who is much in
praise among the customers. Considering the financial feasibility of these three countries it is
gathered that Toronto is the best location for the business in comparison to Victoria and
Vancouver.

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Reference List
Deery M, Jago L. Revisiting talent management, work-life balance and retention strategies.
International Journal of Contemporary Hospitality Management. 2015 Apr 13;27(3):453-72.
Erdem M, Jiang L. An overview of hotel revenue management research and emerging key
patterns in the third millennium. Journal of Hospitality and Tourism Technology. 2016 Aug
1;7(3):300-12.
Molina-Azorin JF, Font X, López-Gamero MD, Pereira-Moliner J, Pertusa-Ortega EM, Tarí
JJ. 32. Conducting mixed methods in tourism and hospitality management: applications in
competitive strategy, management systems, and sustainability practices. Handbook of
Research Methods for Tourism and Hospitality Management. 2018 Jul 27:384.
Molina-Azorín JF, Tarí JJ, Pereira-Moliner J, López-Gamero MD, Pertusa-Ortega EM. The
effects of quality and environmental management on competitive advantage: A mixed
methods study in the hotel industry. Tourism Management. 2015 Oct 1;50:41-54.
Pereira-Moliner J, Font X, Tarí JJ, Molina-Azorin JF, Lopez-Gamero MD, Pertusa-Ortega
EM. The Holy Grail: Environmental management, competitive advantage and business
performance in the Spanish hotel industry. International Journal of Contemporary Hospitality
Management. 2015 Jul 13;27(5):714-38.
van der Rest JP, Wang XL, Schwartz Z, Jooste M, Koupriouchina L. Book review-Hotel
revenue management: from theory to practice.
Xie KL, Zhang Z, Zhang Z. The business value of online consumer reviews and management
response to hotel performance. International Journal of Hospitality Management. 2014 Oct
1;43:1-2.

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Appendix 1: Projected Sales plan for the Toronto facility