Discuss about the Decision Making for Crystal Hotel Pty Ltd.
Some restaurants offer food services to the patrons with a combination of selling accommodation or presenting a diverse entertainment to the customers. The key driver for demand is demographic, the customer’s tastes and income of an individual (Nissim & Penman, 2001). The profitability of individual businesses varies as their customer target are not the same, but the competition for the customers is there. The famous and established companies have the advantage in marketing, brand name, access to finance and purchasing while the small companies will have to offer superior services and food.
In the revenue section of the Crystal Hotel Pty Ltd, it shows that the hotel has intensified and centralized its investment in the accommodation, food and beverages and services among other sources of revenue. In the revenue sources listed for the company, the rooms or the accommodation services seems to dominate their area of specialization as it gives the organization about 62% of the total revenue being collected from the invested.
From the returns that the organization has managed to collect in terms of percentages, there is a likelihood that the hotel has invested much on the infrastructure which results to their customers being attracted to the buildings and the accommodation facilities. Due to this reason may be the organization have ended up overlooking on the potential lying within food and beverages as well as the functions.
It is an indication that if the organization can start giving an equal attention to the other sources of revenue, there can be an increment in the amount collected from the business venture. This can be achieved through advertisement and involving the customers to ensure that they give their feedback to ensure that they own the facility.
The cost of sale is a crucial component in the running of the organization as it dictates the number of revenues that can be collected as profit. From the analysis provided, it is evident that Crystal Hotel Pty Ltd pumps more resources to the rooms or the accommodation followed by followed by food and beverages and the least is channeled to other activities.
Focusing on the amount spent to keep Crystal Hotel Pty Ltd running and making profit, food and beverages and rooms are getting almost the same share of resources but the amount realized as revenue differs. This is an indication of investing in rooms is more profitable than investing in food and beverages.
Personnel cost is the amount of resources channeled to the human resource department to ensure that there is enough and productive to keep the organization moving (Bridge, et al., 2013). The largest share of the personnel costs is direct to rooms and catering with the least being allocated to property management and maintenance as well as sales and marketing.
It should be not that the personnel costs is a crucial aspect of running the organization as it serves as a motivating factor in the course of running the organization. Also, it is in the personnel costs where the sales and marketing docket lies which is tasked with the responsibility of convincing the customers and creating awareness among the general public.
The unallocated operating costs are the amount of resources that are anticipated to be used by a particular department though they are kept as pending until when the need arises. Administrative and general operating costs are given the largest share in the context of the organization followed by sales and marketing. Among the least allocated amount is information systems. In Crystal Hotel Pty Ltd, technology and automation of operations and processes are not given the necessary concentration. The management should allocate more resources towards implementation of information systems to ensure that recurrent expenditures are eliminated.
From the analysis, the total cost consideration is of great importance as it determines the number of profits realized per unit sales of products and services of Crystal Hotel Pty Ltd. The total cost as the analysis carried out shows that there is a margin left in between the total cost and the profit realized. This is an indication that the organization is on the positive side of the operation.
The organization should regularly study the market trend to ensure that the services and products released to the market meet the market demand at a particular given time (Boškov, 2016). This will ensure that the cost of operation remains within the reach of the organization.
The profitability ratios for Crystal Hotel Pty Ltd shows how the profits of the organizations are distributed in terms of the amount that is spent and what can be reused to generate more income. Gross Profit, in this case, is much high but after expense deductions are made, only 11% remains to be used by the organization (Boškov Veronika, 2016). This implies that there is a large portion of the resources meant towards running the organization. Also, the return on assets is quite minimum meaning funds regeneration has not been fully achieved since the value of Crystal Hotel Pty Ltd can be measured by the return on assets for sustainability purposes. The management should be keen on ensuring that return on assets is increased as well as increasing the percentage of net profit margin.
Efficiency ratio is used for the purposes of comparing the organization’s net sales to the total average assets. In the context of Crystal Hotel Pty Ltd, inventory turnover seem to occupy around 8 units of the industry (Watson, et al., 2015). The 8% of the inventory turnover is equivalent to the return on assets. The efficiency ratio should reflect the ability of Crystal Hotel Pty Ltd of putting the long-term resources to use.
The main purpose of the liquid ratio is to ensure that the capability of Crystal Hotel Pt Ltd to settle the various current debts using the available current assets without outsourcing. Crystal Hotel Pty Ltd has a positive current ratio and a quick ratio which is also positive. Therefore, current debts to remain as minimum as possible but whereas the organization should invest current assets.
Solvency ratios are the leverage ratios which are essential in ensuring that the organization has a long life or sustainable as it can handle long-term liabilities. From the ratios
The three listed below restaurants are known for their different customer friendly services and products which make the organizations stand a better position in the hospitality industry. Crystal Hotel Pty Ltd can use this organizations for benchmarking purposes.
The hotel stand in a good position to spend less on your transportation and less time if you decide to rely on a motel which is just within your location. However, those who are near your place can fail to reach your expectations forcing you to depend on those which are placed at a far distant. With such choices, consider a place which is connected by an access road.
One can easily identify whether the inn intending to rely on can offer quality services based on the reputation it has. This includes the public rating that it has achieved and the kind of recommendations given by its former clients. Therefore, look for as many platforms as possible which you can use to access comments given about the kind of service that it can offer.
Acknowledge the measures taken to make the boardinghouse a family-friendly place. A suitable inn is supposed to include different aspects to ensure that every member of a family feels comfortable. There should be enough facilities to cater for children needs in terms of their nutritional requirement and play activities. The play items should be safe enough for the children to avoid any accidents or infections.
Conclusion
When considering the liquidity ratios of Crystal Hotel Pty Ltd, it is clear that the company is in a position to settle all the current debts using the available resources but the challenge is that it may be left without enough resources to run the organization. Crystal Hotel Pty Ltd being a retail business should always ensure that the significance of efficiency ratio is utilized. For the organization to continue making profits and avoid instances where they might disappoint the customers, the amount spent on food should be reduced and increase the amount spent on rooms to an equilibrium level. What should be given priority is the role played by the information systems in the 21st century running of any organization. Sales and marketing should be given priority as this will translate to income. When the number of customers increases, an extra income will be generated by the organization.
Reference
Abrams, R., 2003. Successful business plan: Secrets and strategies. 4th. ed., California: The planning shop.
Altman, E. I. (1968). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. The journal of finance, 23(4), 589-609.
Anon, 2012. The business plan-5. In Strategic Business Development for Information Centres and Libraries. pp. 75–88.
Boškov Veronika, 2016. Business plan as a source of information for making business decisions. Škola Biznisa, 2016(2), pp.38–46.
Bridge, S. et al., 2013. Beyond the business plan; 10 principles for new venture explorers / Simon Bridge, Cecilia Hegarty, Basingstoke: Palgrave Macmillan.
Ceausescu Ionut, 2015. THE IMPORTANCE OF THE FEASIBILITY STUDY FOR THE BUSINESS PLAN. Analele Universit??ii Constantin Brâncu?i din Târgu Jiu: Seria Economy, 1, pp.515–519.
Nissim, D., & Penman, S. H. (2001). Ratio analysis and equity valuation: From research to practice. Review of accounting studies, 6(1), 109-154.
Watson, Kayleigh, McGowan, Pauric & Smith, Paul, 2015. Leveraging Effectual Means through Business Plan Competition Participation. Industry and Higher Education, 29(6), pp.481–492
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