The Luzern Townhouse Hotel Case Study
The Luzern Townhouse Hotel is a boutique hotel located in the proximity of the railway stationandtheatre in the Hirshchengraben area of Luzern.The hotel falls into the 3 to 4 star category with 60well appointed and stylish, twin studio type rooms. The property was converted from office buildings in 2006 and was acquired by its present owners 3 years ago.
The hotel is open throughout the year and currently offers two tariffs on a per room basis: Monday to Thursday nights for primarily a business market and Friday to Sunday nights for a tourist market. The mixed market approach shows the guest mix as tourists 58%; business customers 37% and conference 5%. The average length of stay is approximately 2.5 nights. The tariff and occupancy statistics are shown in Appendix 1.
The hotel does not operate the restaurant and bar facilities on the ground floor of the property. These are outsourced to an independent operator and the hotel has its own access to the restaurant facility for breakfast service and other meals. A service of light snacks and drinks is available for residents and is provided by the restaurant operators.
The hotel is currently managed by the owners. They also employ a permanent team to service the rooms who are employed on a full and part time basis. The owners have good relations with their staff and labour turnover is minimal.
Attached are:
Appendix 1. The hotel tariff, hotel occupancy and rooms revenue data.
Appendix 2. The hotel operating statements and final accounts for the past year.
Appendix 3. An abridged balance sheet and a statement showing details of the
acquisition of the new property.
Appendix 4. Accounting policies and budget considerations for the hotel.
The hotel owners have recently purchased a 15 year lease on another office building for SFr 2,500,000with the intention of converting it into a further 20 hotel studios, this property is adjacent to the hotel property. Both the hotel and the new acquisition are in a good state of decoration and repair and whilst the owners have limited financial resources at this stage, it is envisaged thata limited capital budget of SFr 1,500,000 will be available for refurbishment of the property. The SFr 4 million development is to be funded by a SFr 2 million investment from the owners and a bank loan of SFr 2 million at 6% interest.
The owners have employed you, a hotel school graduate, as assistant manager since their recent acquisition. They have developed the hotel over the past three years and are happy with their current life style but believe their expertise is limited, in particular when considering the poor rooms performance of the past year, the need to expand the business and the implications of the acquisition of the new property.
YOU ARE REQUIRED TO:
Prepare a report for the owners to advise them on the current and future financial situation of the hotel, the report should include the implications and possibilities through the acquisition of the new property and your proposals to improve room sales and profitability over the coming year
Your report should cover the following issues:
STAGE 1 (30% weighting)
An analysis and evaluation of the current financial and market position of The Luzern TownHouse Hotel.
Your evaluation should be in the form of a SWOT analysisand focus on:
(1) identifying any strengths and weaknesses the hotel has in its sales and market environment
(2) identifying any strengths and weaknesses from expected operating and financial bench marks for this type of hospitality operation and its location
(3) identifying any opportunities and threats by this new acquisition
(800 – 1000 words)
STAGE 2: (70% weighting)
1. An outline ofa new revenue management strategy to include a pricing structure and room packages for The Luzern TownHouse Hotel.
This outline should focus on:
(1) A review of current room rates
(2) Increasing accommodation revenue through developing existing markets
(3) Identifying new accommodation markets e.g. conference and leisure
(4) Other sources of possible revenue.
An outline of your proposals in 1500 – 2000 words is required
2. Present a budget proposal for the coming year 2015, the budget should be prepared by using and adapting the template used in the case study data file.
The proposal should include:
(1) New sales forecasts incorporating any changes in demand that may be influenced by your pricing strategies outlined in response to question 1 of this case study.
(2) An operating budgetfor 2015incorporating any new cost targets that you have recommended through your SWOT analysis in response to question 1 of this case study.
(3) A forecasted balance sheet of the business at 31 December 2015
3. Using the budget you have prepared above, analyse and evaluate the data by using standard hospitality and business ratios and identify any strengths and weaknesses. (800 – 1000 words)
PERFORMANCE CRITERIA CHECKLIST
1. Identification of sales strengths and weaknesses
2. Identification of cost and financial strengths and weaknesses
3. Identification of opportunities and threats to the new acquisition
4. Making appropriate recommendations for the whole operation
5. Identification of accommodation markets
6. Developing room pricing strategy
7. Developing a package pricing strategy
8. Preparation of appropriate sales forecasts
9. Preparation of appropriate operating budgets
10. Analysis and evaluation of the budget forecast
11. Use of computer technology
12. Presentation of the report
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