Hospitality Property Management: Regency International Case Study

This report provides a comprehensive analysis of the Regency International case study, focusing on the options available to James Canavan, owner of the Regency Group, for developing his land into a hotel. The report evaluates the financial and feasibility aspects of various investment options, including franchise arrangements, lease financing, and loan arrangements. It examines the Australian market, the current valuation of the land, and the offer from Argon Developments. The analysis delves into the feasibility of the hotel venture, considering its location away from the Central Business District and the potential for nightclubs and food marts to increase profitability. The report identifies key players, including James Canavan, Ivy Coutts, Alex Deale, and Sophie Lonsdale, and discusses the risks, opportunities, and tax constraints associated with the project. The recommendation is to accept the offer from Argon Development. The report concludes that the hotel venture is feasible with optimal resource utilization and highlights the potential benefits of the venture.

Running head : HOSPITALITY PROPERTY MANAGEMENT AND DEVELOPMENT
STRATEGIES
HOSPITALITY PROPERTY MANAGEMENT AND DEVELOPMENT STRATEGIES
Name of the Student
Name of the University
Author Note

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Introduction
The aim of the project is to provide a report on the basis of the research that is with
regards to the best available option to James Canavan, who is the owner of Regency Groups.
As the value of the area he has the property in, is increasing with time, he wants to make that
land a hotel. As it is known that every arrangement involves investment, which can be done
through financing (Yoo and Lee 2016). There are various financing options that are available
to James Canavan. The report aims towards the analysis of the options that are available to
James and making a financial and feasibility study of the viability of the options. It further
aims towards the issues of risks that are involved in choosing a certain option, and the
measures to control risk, and the opportunities that are present (Goh, Nguyen and Law 2017).
Evaluation of the Deal and scenarios
The case study revolves around a person, James Canavan who owns a land, and has a
dream of transforming the land into a hotel. Therefore he is looking for [potential investors,
who would have a stake in his new venture. The value of the land is increasing day by day,
due to which he is getting potential investors. However it is known that everything comes
with a cost. Therefore he is getting many investors, some of which are cheap but have risk
matter involved. On the other hand, there are various other investors who involve huge cost,
but the risk matter involved is lesser in comparison to the other investors. There are investors
who are interested into a franchise arrangement (Patiar 2016). There are some investors who
are interested in the lease financing. There are some investors who are involved in the loans
arrangements. Now it is on the hands of the James to decide, which option he would choose
(Brien, Thomas and Brown 2017).
The Australian Market has been deeply affected by the recent supply growth in the
hotel performance that has been going on since a few years. According to the reports of
Deloitte the Revenue per Available Room is forecast to grow by 3.1 percent over the up
coming three years and the average rates of the room are expected to increase at an average
of 2.5 percent over the same period (Divisekera and Nguyen 2018).
Financial Analysis
The cost of the land at which James Canavan had bought, according to the case study
is $350,000. James Canavan is receiving a rent of $25,000 per month for warehousing a
portion of his property and the land that is associated to it. The land that he had bought is of
4000 square meter. The present valuation of the land that is inclusive of everything is $1200

2HOSPITALITY PROPERTY MANAGEMENT AND DEVELOPMENT STRATEGIES
per square meter. Therefore including everything, the valuation of the land is $4,800,000.
There is an option that has been provided to James Canavan, by a Company Argon
Developments. Argon Developments made an offer to purchase the land from James Canavan
at $5 million. The Regency Group in any way is making a profit of $200,000 in the project.
Feasibility Analysis
According to the case study, James Canavan engaged an Asset Management
Company and Hotel Development Specialist Sophie Lonsdale in order to conduct a market
study on the area in order to determine the feasibility of developing a hotel in the land of
James Canavan. As per the analysis of Sophie Lonsdale the demand for hotels is growing at a
faster rate. The hotel would be situated a bit away from the area of the Central Business
District. The hotel if is away from the suburbs, will prove to be utmost use, because there can
be nightclubs that can be opened inside the hotel, which would prove to be a stress buster for
the officers who would be using it for the purpose of relaxation (Breakey, N.M., Robinson,
R.N. and Brenner, M.L., 2015). A food mart inside it will also increase the profitability of the
venture, as a food in the suburbs is always available, but a food court somewhere away from
the Central Business District area would prove to be helpful (Patiar, A. and Mia, L., 2015).
The only threat to this venture would be that it is situated away from a Central Business
District area. However it is absolutely a profitable venture when it comes to future interests
(Nimri, R., Patiar, A. and Kensbock, S., 2017).
Relevant Owners
The relevant Chairman of the Regency Group is James Canavan. The other owners
are mentioned as under.
The owner of Empire Finance is Ivy Coutts. The owner of Cest Apartment hotels is
Oliver Thumb. Sophie Lonsdale the owner of Jacaranda Hospitality Consulting, is an Asset
Management Company and Hotel Development Specialist.
Key players
The key player in the field has to be James Canavan. Apart from James, the other key
players in the field are mentioned as follows.

3HOSPITALITY PROPERTY MANAGEMENT AND DEVELOPMENT STRATEGIES
Ivy Coutts, who is the Financial Broker from the Empire Finance of the Regency
Group from the past 15 years. Her job is to shop around to all the financiers to seek out the
deals that are in the interest of the Regency Group. She has to analyze the terms and
condition of lending that are favorable enough. Alex Deale VP of the acquisitions is also
considered to be one of the key players in the industry. He had the vision to develop the land
into two luxury apartment blocks with the shared facilities that includes pool, gym, car
parking facilities, tennis courts, café and two retail stores.
Sophie Lonsdale the owner of Jacaranda Hospitality Consulting, is an Asset
Management Company and Hotel Development Specialist, who is responsible for conducting
a market study on the area in order to determine the feasibility of developing a hotel in the
land of James Canavan.
Arrangement of the scenario
The arrangement of the scenario that is mentioned in the case study is a finance
arrangement and not a lease arrangement. Had it been a lease arrangement there could be
Issues of Risk, control, structure and opportunity
The possible risk that the venture would get involved in is the fact that it would be
situated away from a Central Business District. The local conditions are also present that may
affect the venture. There might be the financial constraints that would aid to the risk of the
venture.
As it is known that a hotel provides the people a place to reside in when people are up for
vacations. The customers’ needs are also taken into account while providing the people with
a place to reside in (Nieves and Quintana 2018).
The hotels are known to be major contributors to the local economy. In a market there
might be various other areas that generate revenue in the tourism sector, however tourism
sector is the one that generates the maximum revenue. This could prove to be an opportunity
to the company in the enhancement of the profitability. The hotel venture does face tax
constraints. There are various rooms in a hotel are subject to quite a large amount of tax
(Nieves, J. and Segarra-Ciprés 2015).
However keeping all other things constant, the hotels have always been a set of tourist
attraction. They go through peak seasons which generate them the highest revenue (Howells,
J. and Lowe, M., 2018). The hotel venture is that only venture that does not have to incur

4HOSPITALITY PROPERTY MANAGEMENT AND DEVELOPMENT STRATEGIES
much cost in comparison to the other ventures. Therefore the venture that James Canavan has
dreamt of is an absolute feasible approach inn terms of the enhancement of the revenue (Fraj,
E., Matute, J. and Melero, I., 2015).
Recommendation
As per the above analysis it is recommended that James Canavan should opt for the
alternative that has been offered by the company Argon Development that made an offer that
made an offer to purchase the land for 5 million dollars. The recommendation that is provided
to the venture is that the company should use the resources to its optimu .
Conclusion
From the above report it can be concluded that the hotel venture that is the dream of
James Canavan can prove to be one of the feasible projects, if there can be optimum
utilization of the resources that are being put to use. The hotel if is away from the suburbs,
will prove to be utmost use, because there can be nightclubs that can be opened inside the
hotel, which would prove to be a stress buster for the officers who would be using it for the
purpose of relaxation. A food mart inside it will also increase the profitability of the venture,
as a food in the suburbs is always available, but a food court somewhere away from the
Central Business District area would prove to be helpful. The recommendation that is
provided to the venture is that the company should use the resources to its optimum.

5HOSPITALITY PROPERTY MANAGEMENT AND DEVELOPMENT STRATEGIES
References
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delivery of hotel/hospitality management undergraduate degree programmes within Australia.
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Brien, A., Thomas, N.J. and Brown, E.A., 2017. How hotel employee job-identity impacts the
hotel industry: The uncomfortable truth. Journal of Hospitality and Tourism Management, 31,
pp.235-243.
Divisekera, S. and Nguyen, V.K., 2018. Determinants of innovation in tourism evidence from
Australia. Tourism Management, 67, pp.157-167.
Fraj, E., Matute, J. and Melero, I., 2015. Environmental strategies and organizational
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Goh, E., Nguyen, S. and Law, R., 2017. Marketing private hotel management schools
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Howells, J. and Lowe, M., 2018. Innovation, market segmentation and entrepreneurship in
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6HOSPITALITY PROPERTY MANAGEMENT AND DEVELOPMENT STRATEGIES
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