Project Report: Management of Hospitality Finance for Himalayan Pub

This project report provides a comprehensive financial feasibility analysis for the Himalayan Pub, a proposed restaurant located in Breakwater Parade, Mandurah, WA. The report begins with an introduction to the project and the importance of feasibility studies. It then delves into the general market characteristics, site evaluation, supply and demand analysis, and financial analysis, including profit and loss statements, balance sheets, and ratio analysis. The study highlights the restaurant's potential in the Australian market, considering the current economic conditions and the demand for affordable dining options. The report examines the restaurant's strategic location, target market, and pricing strategy, emphasizing the use of penetration pricing to increase market share. The financial analysis includes projections for sales, net income, and profit margins, demonstrating the restaurant's potential for profitability. Overall, the report concludes that the Himalayan Pub has a strong financial outlook and is well-positioned to succeed in the market.

Running Head: Management of hospitality finance
1
Project Report: Management of hospitality finance

Management of hospitality finance 2
Contents
Introduction.......................................................................................................................3
Discussion of feasibility studies.......................................................................................3
Importance, strength and weakness of feasibility studied of finance...........................3
General market characteristics..........................................................................................4
Site evaluation..................................................................................................................5
Supply and demand analysis.............................................................................................6
Financial analysis..............................................................................................................6
Conclusion........................................................................................................................7
References.........................................................................................................................9
Appendix.........................................................................................................................11

Management of hospitality finance 3
Introduction:
This report has been prepared to analyze the feasibility of finance of a company. In
this report, the feasibility of a new business has been analyzed in concern of finance. The
business is related to the hospitality industry. In which a restaurant would be started. The
main theme of the business would be offer a hygienic meal to the customers. This restaurant
would be started at the city of Breakwater Parade, Mandurah WA 6210. This business has
been chose after analyzing the market. Through the market, it has been analyzed that even in
the recession period; people don’t stop to go to the normal range restaurants they only start
ignoring the fancy restaurants (Mcleish, 2010). The restaurant has been set up in the middle
of the city and the range of the restaurants is affordable by the company. The name of the
restaurant would be “Himalayan Pub”.
Discussion of feasibility studies:
Feasibility studies are required to be done by every business which is entering either
into the new market or launching the new products into the market to analyze the market
condition of the company (Lacalle, 2017). So that the best outcome could be getting from the
market and the company would be able to achieve the goals and objectives from the market.
Importance, strength and weakness of feasibility studied of finance:
Financial feasibility is a study which depict about the financial performance of a new
business into the market. Through this study, it has been found that the financial feasibility of
a company relates to the total cost of the business, projected profitability and the cash flows,
debt equity relation, existing investment through the venture capitalist, acute slowing or
reduction of the sales (Kaufmann, 2012).
Financial feasibility study is essential for a business to analyze. For the business plan
of “Himalayan Pub” the financial feasibility would help the company to analyze the various
factors such as the related cost, projected profitability and the cash flows, debt equity
relation, existing investment through the venture capitalist, acute slowing or reduction of the
sales (Gaughan, 2010). The financial feasibility mainly focuses over the competitor’s
financial performance, market condition and various other financial figures of the industry as
well as the economy.
Mainly the financial feasibility offers the strength to the company to start the business
and earn high revenue from the market though, there are various lose points of the financial

Management of hospitality finance 4
feasibility are also there which makes it tough for the researcher or analyst to find the exact
value of the financial terms from the market. Further, it has been found that the collected data
is not reliable all the time. Mostly these data are collected by the analyst on the basis of the
assumptions and various unrealistic market figures so the outcome of these financial
feasibility do not provide a reliable result and it makes difficult for the business to survive
into the market (Elmuti & Kathawala, 2000).
Feasibilities are totally depends over the market if various fluctuations are there into
the market than it becomes difficult for the analyst to analyze the market and economical;
condition for the business. If restaurant industry is taken into consider than there are huge
competition in the market, thus the financial performance of a company depends over the
various factors. In which the financial feasibility and other feasibility could not help the new
business to identify the better result of the market and the business.
Himalayan Pub’s feasibility analysis has been done to identify the future performance
of the company and the profitability and stability of the company. The financial feasibility
and various other feasibilities of the company depict that the company would perform well in
the market and make high profit from the market. This would take place due to the location
and the strategy of the company and the pricing strategy of the comapny would help the
company to grab more market (Du and Girma, 2009).
It has been found through the feasibility analysis that the restaurant would start up at
the area where the restaurants are few in the place and target market range would be higher.
Company would use the penetration pricing strategy to enhance the profit and grab more
market share. Through the financial feasibility over the new start up which is “Himalayan
Pub”, it has been evaluated that it would be easy for the company to grab the market share
and make loyal customer. Through the feasibility, it has been found that it would take some
time to the company to analyze the market and enhance the sales of the company.
General market characteristics:
The start up is related to the restaurant industry. This would be open at the Breakwater
Parade, Mandurah WA 6210. The current market condition of Australia depict that the
market position and the economy position of the company is becoming better after the global
financial crisis. The condition of the restaurant industry of the Australia is quite better right
now and various franchises have been opened in the Australian market right now to grab
more market share.

Management of hospitality finance 5
Through the market analysis, it has been analyzed that market of the Australia and the
industry of restaurant is of open nature in which the entry and the exits stage is quite easy and
thus it would be easy for the restaurant to enter into the market and exist from the market
would also be easy for the company (Dotson & Hyatt, 2005). through the market trend, it has
been analyzed that normal range restaurants would last for the long time into the Australian
market due to the government regulations and the different trend in the society. According to
the study over the industry data, it has been found that the place where the restaurant would
be start up is a better place to target all the citizens easily.
Further, it has been analyzed that the current economy condition of the Australian
market is of free nature. Free market economy is the economy in which individuals are
allowed to have all the resource at theory own. The government has also not implemented
various complex regulations over the industry. Government do not force the company to
become more significant although it is expected by the company that company would not
affect the environment and the CSR policies of the company must also be good. The
government has allowed the companies to open the private owned business as well in which
interference of the government would be lesser.
Site evaluation:
Site evaluation is a study in which the location and the site of the startup are analyzed
on the basis of the market analysis and the feasibility of the company. Through the analysis, it
has been found that the best place for opening the start up is the Breakwater Parade,
Mandurah WA 6210. According to the analysis over the market, it has been found that the
Mandurrah is the hub of the youngster where the start up is planned (Dopfer, 2012). Through
this analysis, it has also been evaluated that it would be easy for the company to target the
youngsters’ people for the fast food and the meal. Further, it has also been evaluated that
further suppliers are available nearby the restaurant so it would be easy for the company to
buy the materials whenever required. Through this, the warehouse charges of the company
could also be saved.
In addition, it has been found that few competitors are there in the market but they all
are following the traditional technique of the cooking and thus the taste of all the restaurants
are almost similar. “Himalayan Pub” would offer them the food which would be cooked
through using the modern technology and thus the taste of the food would be different and
way better than other restaurant and through it, it would be easier for the company to grab

Management of hospitality finance 6
more market (Dean & Yunus, 2001). The site evaluation of the company finally conclude that
it is a better choice of the company to set up the restaurant at this place as this would help
them to recognize and analyze more market share and the opportunities level would also be
higher there that would helped the company to achieve the goals and the objectives.
Supply and demand analysis:
Supply and demand is a main factor for every company to analyze; supply and
demand of a company mainly depends over the market position, customer’s behavior and the
capacity of the company (Cravens & Piercy, 2006). Through the analysis, it has been found
that it is easier for everyone to analyze the market and grab the opportunity from the market.
Supply and demand helps the company to make various decisions through the
professionalism and in a better manner. Through the study, it has been found that the supply
and demand make an impact over the performance of the company.
The supply and demand analysis has been done over the company to analyze the
performance of the company and the capacity and customer’s behavior and various other
factors of the company. Through this analysis, it has been found that the performance and
position of the company has become better and thus now the supply is done by the company
according to the demand (Dallas, 2011). Through the feasibility analysis over the demand and
supply of the company which has been analyzed and at initial stage, the demand of the meals
and fast food range of the company was lesser due to various factors but after a period of
time, demand of the products and services has been enhanced due to various promotional
techniques and advertising of the company.
Further, it has also been found that the current demand as well as supply has been
enhanced by the company due to various new strategies and policies. The demand of the
company’s product would be higher day by day. The performance of the company would be
better in near future. Thus through this study it has been found that the company would earn
high profits from the market in the future the demand of the company’s products would be
higher (Elmuti & Kathawala, 2001).
Financial analysis:
Lastly, a study has been done over the financial analysis of the company to
analyze the stability and the performance of the company. Through the feasibility analysis, it
has been found that the performance of the company would be better in near future. Thus

Management of hospitality finance 7
through this study it has been found that the company would earn high profits from the
market in the future the demand of the company’s products would be higher (FIRER et al.,
2012).
Financial feasibility of the company has been analyzed through conducting the profit
and loss account, balance sheet, cash flow analysis, ratio analysis and the break even analysis.
Through the profit and loss account of the company, it has been analyzed that the total sale of
the company would vary in every month sue to the timing which will take by the company to
grab the opportunities and more market. The sales of the company would be 5500 units, 6750
units and 8513 units of the meal in Jan, Feb and March of 2018. Further it has been analyzed
that the net income of the company would be 5370, 6570 and $ 8298 in the receptive months.
The net profit of the company would be $ 1670, $ 3705 and $ 6645 in Jan, Feb and March of
2018 (Blundell & Dias, 2009).
The ratios study depict that the gross margin of the company would be 64.61% in Jan,
62.32% in Feb and 62.71% in March. Further, the net margin of the company depict that the
performance of the company would be better in March with the 35.45% of total net profit.
In addition, the feasibility has been analyzed through analyzing the Balance sheet of
the company (Fournier & Lee, 2009). It has been analyzed through this study that how well
the company would perform in near future from the first day of the trade. Through this
analysis, it has been found that the current assets of the company are $ 4425, $ 11475 and $
370000 whereas the total assets of the comapny are $ 4975, $ 12475 and $ 38750 in Jan, Feb
and March. The total liabilities of the company depict that the debt position of the company is
bit lower. Company would take the bank loan to manage the finance. The shareholder equity
of the firm is 2845, $ 5950 and $ 31970.
Lastly the study of cash flow and the break even analysis depict that the performance
and position of the company has became better in the market due to various change into the
operations of the company in three months. The sales of the company would be enhanced as
well the expenditure of the company would also be raised according t o the performance of
the company. the study of break even analysis depict that company is required to sell at least
$ 20,225.8 worth of the meals to reach over the breakeven point. At this point, the revenue
and the expenses of the company would be at the point where the loss and profit of the
company would be nil (Fulin, 2011).

Management of hospitality finance 8
Through this analysis, it has been found that the financial feasibility of the restaurant
depict about the better future and good performance of the restaurant. On the basis of the
financial feasibility, it is recommended to the company to start this business.
Conclusion:
To conclude, various analysis and research has been one to evaluate the performance
and future prediction about the “Himalayan Pub”. Through the feasibility analysis, it has been
found that the restaurant would start up at the area where the restaurants are few in the place
and target market range would be higher. Company would use the penetration pricing
strategy to enhance the profit and grab more market share. Through the financial feasibility
over the new start up which is “Himalayan Pub”, it has been evaluated that it would be easy
for the company to grab the market share and make loyal customer.
The site evaluation of the company finally conclude that it is a better choice of the
company to set up the restaurant at this place as this would help them to recognize and
analyze more market share and the opportunities level would also be higher there that would
helped the company to achieve the goals and the objectives. Through the study of the demand
and supply, it has been found that the company would earn high profits from the market in
the future the demand of the company’s products would be higher.
Through the analysis, it has been found that the financial feasibility of the restaurant
depict about the better future and good performance of the restaurant. On the basis of the
financial feasibility, it is recommended to the company to start this business.

Management of hospitality finance 9
References:
Blundell, R. and Dias, M.C., (2009). Alternative approaches to evaluation in empirical
microeconomics. Journal of Human Resources, 44(3), pp.565-640.
Cravens, D.W. and Piercy, N., (2006). Strategic marketing (Vol. 7). New York: McGraw-
Hill.
Dallas, H,. (2011). “Strategic Management; competitiveness and globalization”. Strategic
management, Asia-Pacific 4th ed, pp 434-440.
Dean, E. & Yunus, K. (2001). ”An overview of strategic alliances”. Management Decision,
Vol. 39 Iss 3 pp. (205 – (218.
Dopfer, K. ed., (2012). Evolutionary economics: program and scope (Vol. 74). Springer
Science & Business Media.
Dotson, M.J. and Hyatt, E.M., (2005). Major influence factors in children's consumer
socialization. Journal of Consumer Marketing, 22(1), pp.35-42.
Du, J. and Girma, S., (2009). Source of finance, growth and firm size: evidence from China
(No. (2009.03). Research paper/UNU-WIDER.
Elmuti, D. & Kathawala, Y. (2001). “An overview of strategic alliances”. Management
Decision, vol. 39, no. 3, pp. (205217.
Elmuti, D. & Kathawala, Y. (2001). “An overview of strategic alliances”. Management
Decision, vol. 39, no. 3, pp. (205-(217.
FIRER, C. et al. (2012). Fundamentals of Corporate Finance. 5th
Edition.Berkshire.McGraw-Hill Companies, Inc.
Fournier, S. and Lee, L., (2009). Getting brand communities right. Harvard business review,
87(4), pp.105-111.
Fulin, S. (2011). Preface by SHANG Fulin. Corporate Governance of Listed Companies in
China, 9-10.

Management of hospitality finance 10
Gaughan, PA. (2010). Mergers, Acquisitions, and Corporate Restructurings. John Wiley &
Sons.
Kaufmann, H, (2012). Customer-Centric Marketing Strategies: Tools for Building
Organizational Performance: Tools for Building Organizational Performance. United
States: IGI Global
Lacalle, D., (2017), Credit‐rating agencies. Life in the Financial Markets: How they really
work and why they matter to you, pp.95-98.
Mcleish, B, (2010). Successful Marketing Strategies for Nonprofit Organizations: Winning in
the Age of the Elusive Donor. New York: John Wiley & Sons.

Management of hospitality finance 11
Appendix:
Profit and Loss Statement
Month Jan 18 Feb 18 Mar 18
Income
Sales
Sale of goods/services
$
5,000.00
$
6,250.00
$
7,812.50
Sundry Income (e.g. Commission
earned, frachise fees etc.) $ - $ -
Etc.
$
500.00
$
500.00
$
700.00
Total Sales
$
5,500.00
$
6,750.00
$
8,512.50
Less Discounts/Commissions
Sales Discounts given
$
80.00
$
100.00
$
125.00
Sales Commissions paid
$
50.00
$
80.00
$
90.00
Total Discounts/ Commissions
$
130.00
$
180.00
$
215.00
Total Net Income
$
5,370.00
$
6,570.00
$
8,297.50
Cost of Sales
Opening Stock $ -
$
100.00
$
125.00
Stock Purchased
$
2,000.00
$
2,500.00
$
3,125.00
$
2,000.00
$
2,600.00
$
3,250.00
Less Closing Stock
$
100.00
$
125.00
$
156.25
Total Cost of Sales
$
1,900.00
$
2,475.00
$
3,093.75
Gross Profit
$
3,470.00
$
4,095.00
$
5,203.75
Expenses
General & Administrative
Bank charges
$
50.00
$
50.00
$
50.00
Credit card commission
$
10.00
$
30.00
$
30.00
Consultant fees
$
35.00
$
35.00
$
35.00
Office Supplies
$
100.00
$
100.00
$
100.00
Business insurance
$
100.00
$
100.00
$
100.00
Etc. $ - $ - $ -

Management of hospitality finance 12
Total General & Administrative
$
295.00
$
315.00
$
315.00
Marketing & Promotional
Advertising
$
100.00
$
100.00
$
100.00
Promotion - General
$
50.00
$
50.00
$
50.00
Promotion - Other $ -
$
50.00
$
55.00
Etc. $ -
$
10.00
$
11.00
Total Marketing & Promotional
$
150.00
$
210.00
$
216.00
Operating Expenses
Newspapers & magazines
$
25.00
$
25.00
$
26.00
Parking/Taxis/Tolls
$
100.00
$
105.00
$
110.25
Laundry/dry cleaning
$
80.00
$
100.00
$
125.00
Cleaning & cleaning products
$
60.00
$
75.00
$
93.75
Sundry supplies
$
40.00
$
50.00
$
62.50
Equipment hire
$
250.00
$
250.00
$
250.00
Etc. $ - $ - $ -
Total Operating Expenses
$
555.00
$
605.00
$
667.50
Motor Vehicle Expenses
Fuel
$
50.00
$
50.00
$
50.00
Vehicle service costs
$
15.00
$
15.00
$
15.00
Tyres & other replacement costs
$
20.00
$
20.00
$
20.00
Insurance
$
10.00
$
10.00
$
10.00
Registrations $ - $ - $ -
Total Motor Vehicle Expenses
$
95.00
$
95.00
$
95.00
Website Expenses
Domain name registration
$
20.00
$
20.00
$
20.00
Hosting expenses
$
25.00
$
25.00
$
25.00
etc $ - $ - $ -
Total Website Expenses
$
45.00
$
45.00
$
45.00
Employment Expenses
Permanent $ - $ - $ -
Salaries/Wages
$
100.00
$
125.00
$
156.25
PAYE
$
10.00
$
12.50
$
15.63
Superannuation
$
20.00
$
25.00
$
31.25