Poseidon Final Assignment for the HOTS Simulation Contents Letter from GM2 Industry Environment3 Intended Strategy Selection4 Intended Pro-forma income statement from year 1 to year35 Realized Strategies and Deviations7 Realized P&L Statement from year 1 to year 310 SWOT Analysis10 Financial condition:12 Marketing strategies and effectiveness21 Physical property condition22 Impacts of decisions on human beings23 Cost Control24 Strategic Recommendation25 Pro-forma income statement of year 4 to year 626 Conclusion29 Reference29 Letter from GM

It is with my great honored to represent the Poseidon Hotel, and to introduce how the business of the hotel run over the past 3 year to all of you. It is a fact that through the past 3 year, the Poseidon Hotel was kept growing up steadily. No matter the good time or bad time, the hotel has shown the attention to every detail in order to protect the business. Reflecting of the understanding for the need to continuously evaluate and as a result, continuously re-evaluate is the manner for communicating to every one of our shareholders.

This is, I believe, makes The Poseidon Hotel Group to be one of those best hotels within the town, even we are competing with other hotels. Through the progress of the past 3 years, the Poseidon Hotel has changed from a simple BBP style hotel to a more leisure style hotel, at the same time to expand the type of business and the classification of services. The hotel started from the basic – provide only Rooms and limited Food & Beverage, then progressively promoted the service through the installation of Car park, Lobby Bar, In-room Internet Access, Conference Room etc.

The Hotel was trying their best to enhance guest satisfactions, and attract both travelers and businessman to come and stay. That’s the reason why I would say, the steadily development of the Hotel, is a reward of the job they did for the past 3 years, and a positive signal that the Hotel can develop to a World-Class Hotel in the near future. The Poseidon Hotel is a hotel that recognizes the need for competitive advantage and is not afraid for it.

I believe that this kind of attitude has been implant to all employees, and will be performed to all guests who have chosen the Poseidon Hotel. The reports below are the simulation to the work we did over the past 3 years, and I would say this is the foundation stone for the Hotel to be success in the future. I hope that you can take this chance to be with us on the journey to review what we have done, and go on into the future, and being a part of us to witness the successful business of the Poseidon Hotel.

Poseidon Poseidon General Manager Poseidon Hotel Industry Environment Beginning Through the report of the US hospitality industry, it showed that the conditions have improved and budgets for business travel and conferences have increased, so it was estimated that the business service and the conference service would be very popular in the becoming years. The resort has become a popular location for conference, both in and out of season.

The report also indicated the visitors stay in hotel during weekends normally not over 3 night, 11. 3% visitors were stay in hotel once in last year, 1. 7% visitors stayed in hotel three times in last year. For the weekdays the amount of the leisure visitors are more lower the weekends, normally is 0. 8-4. 6%, but for the business visits is 3. 7% In addition, in the beginning of year 1, 7 hotels including Poseidon were not well-maintained, not refurbished and not replaced. Most of them were old hotels without proper acilities. Now After three-year operation, it has been noticed that nowadays the guest focuses on qualities of services and facilities, they want to stay in a full service and more functional hotel, for example, they want the hotel can also include the entertainment function like spa, hair salon, fitness center, leisure club, yoga club, and shopping mall etc. Nowadays, a lot of hotels have already included those ‘necessary’ facilities. The basic functions like the business service, conference room are also popular.

Furthermore, people are more willing to spend money to do their business and social events, so the conference and meeting facilities still have a big potential market. According to the Source of U. S. Bureau of Labor Statistics, it showed that staffs are one of the important property of hotel because they are provide the service to the guests and some of them even represent the image of hotels because they are the first person who are contact with the guest.

And now hotel industry more focuses on the ‘quality’ of the staff, company willing to spend more to training the staffs and give more resources to encourage the staff develop because they think that if the staff have improve or learn something new is also helping the company. What has happened to change the environment? 1. Inflation: The global inflation is very high nowadays and it keeps increasing every year, so that it really affects the hospitality very much, all the expenditure, staff wages and expenses are all increased, the room rates and the product prices are needed to be increased to cover the costs. . Increase in no of competitors: More competitors appeared in the hospitality industry. Some of the international brand name hotel established, they had add the casinos, shopping mall or more and more entertainment facilities, they focus providing an innovative service to all the guests, so right now the guests stay in hotel not just like sleep or stay in one night, they are focusing on any extra they can gain. A lot of hotels nowadays try to increase number of facilities in order to attract guests.

Besides, most of them would like to imitate others and adapt the most effective strategies of other successful hotels. Intended Strategy Selection 1. To increase public awareness by advertising. Advertisement is a good tool to tempt the target market’s attention and awareness of our hotel. We plan to spend quite a lot of money in advertising to make our hotel become famous, to increase market awareness index and market share. 2. To change the advertising strategies according to the environment changes.

Different kinds of events are held in our local places from January to December. Different kinds of events attract different kinds of tourists, so we would like to change the promotion items according to the different events. For example: Conference facilities would be a main promotion during October because of Political Conference. High-demanded products will be the main focus on advertising as well. 3. To improve the quality of the facilities by refurbishing the hotel rooms to level 1and other facilities to level 3 in the beginning of the year.

Some of hotel facilities are out-dated and not well-maintained. 225 guest rooms, front desk, restaurant and bar have not been refurbished recently. Therefore, we decide to refurbish all the facilities to enhance the guest’s satisfaction, to attract more guests to stay in our hotel and to create a new environment to retain our guests. 4. To enhance the quality of staff services by providing enough training programs, and rearranging the staff of different departments.

Manpower is a very important element to a hotel. Training programs can make staff easier to get used to the working environment and to develop their skills. Well-trained and motivated staff can retain and impress guests. Also, enough training and a good relocation of manpower can increase productivity and efficiency of our hotel operations. 5. To reduce staff turnover rate by offering reasonable compensation system and training programs.

Appropriated compensation system such as salary increase, incentive payments, insurance and other benefits or rewards are provided can help to keep and attract more talented and capable staff to accomplish our hotel’s goals and objectives. 6. To build conference room to increase the competitive competency in the middle of 2nd year. Due to the resort has become a popular location for conferences, conference room will be built in the 2nd year if we have enough cash on hand. This action can attract more businessmen and increase our competitiveness in the hotel industry. . To adjust hotel room rates into the same level as industry average. The room rate is in the same level as the industry average in the beginning. Later on, the room rate will be increased a little according to the service standard, facility level, and demands as well. Intended Pro-forma income statement from year 1 to year3 In the first year, all the hotel facilities including guest rooms, restaurant, front desk and bar will be refurbished to create a new hotel environment to our guests. Advertising expense will be increased to increase the market awareness.

Besides, in the second quarter of first year, hotel shop will be built in order to increase our hotel’s competiveness, so room revenue, food and beverage sales and other sales in the first year will be increased by 93%, 115% and 124%. In the second, conference room will be built as well, it can bring even more business in rooms and food and beverage, thus, room revenue, food and beverage sales will be increased by 24% and 41% from year 2 to year 3. In addition, talented and competent staff will be hired in order to assist different aspects of our hotel operations, and to enhance our guest satisfactions and experiences.

More training programs will be held by increasing training spending and appropriated compensation system such as adjusting the pay level of all the staff will also be implemented, it could increase our hotel operation’s efficiency, productivity and service quality. Therefore, payroll expenses and related expenses of room, food and beverage will be increased by 105% and112. 8%. Moreover, more facilities such as hotel shop will be built, more staff will be employed to do the operations, and central admin payroll expense will be increased by 67. %in the first year, Last but not least, as pro-forma income statement showed, income after business tax in the first year is $43,770 which will be increased significantly when we compare it to year 0 which is a negative number. There are more than 50% increases in net income from year 1 to year 2 and year 2 to year 3 as well. Realized Strategies and Deviations 1. To build additional guest facilities in order to fulfill guests’ demands. In the first few months, no extra facilities have been established because money on hand was not enough. There are many people driving in the U. S. , the distance between places is quite long.

Therefore, extra parking lot was decided to be built in April of year in order to attract more local people and some individual travellers as well as to increase the capacity of our parking lot. Besides, hotel shop was built in June of year 1 as it could attract more business to Poseidon, to diversify the range of products apart from rooms and restaurant. In room facilities such as internet access, quick check in/ checkout and business service have been installed to enhance guest satisfactions. Poseidon can be differentiated from others by offering those additional experiences (facilities). 2. To increase public awareness by advertising.

Advertising is used to persuade an audience to take actions with respect to products, ideas or service. Therefore, around 15% of total room revenue was put into sales and marketing department in order to do advertising in year 1. In year 2 and year 3, the expense was increased by 3% and 3. 1% respectively to increase more public awareness. 3. To change the advertising strategies according to the environment changes. This strategy remained the same as mentioned in the previous section. 4. To adjust hotel room rates based on industry average. The room rate was $101. 27 on average in year 1. In year 2 and year 3, it was $100. and $105. 52 severally. The room rates were decreased a little bit in year 2 in order to attract more business, but it turned out this method was not working. Therefore, we decided to increase the room rates by providing more extra facilities to the guests and enhancing the guest satisfaction to cover the inflation cost. 5. To pay back the loan every single month Monthly loan repayment was made. The amount of the repayment was determined according to net income. Higher the net income was, higher the repayment was. Nevertheless, the repayment would be stopped in Januarys and Februarys due to negative net income occurred.

After continual repayment, Bank charges and Interest was decreased by 55% from year 2 to year 3. 6. To improve the quality of hotel facilities by doing refurbishments Hotel facilities were refurbished from time to time. At first, we decided to set the refurbishment level of the facilities as level 3, but due to the problem of the cost of our hotel, we determined to set the refurbishment level as level 1. However, there was a wrong decision existed in our decision-making because we want saving money. Therefore, we did not keep refurbish the facilities, refurbishment was done when the conditions of them dropped down from “Excellent” to “Good”. . To enhance guest satisfaction by upgrading guest comfort facilities to level 3/4. From the start of the period, the guest comfort facilities were set at level 3. This strategy was used until the middle of year 3. At the time, we changed it to level 4 as the needs of compete in the market with others. As the market competition was tight at year 3, the status of our hotel was needed to be improved as keeping the contention with others and enhancing guest’s satisfaction. 8. To improve the quality of staff services by providing training programs consistently. To the training program, an average training expense was $65. 7 in the first year. However, wrong decision-making happened in the second year, training cost was reduced at February because we wanted to lower the cost of the hotel as the costs of that period were quite high and after making the cut cost decision the sales of rooms could not reach what we expected. Therefore, we increase the training expenses in September and the average training expense in the second year was $71. 62. At the third year, we had the experience of the previous year, so we kept increasing the training expense from the start to the end of third year.

Finally we got the average number of the training expense of the third year which is $83. 79. By increasing training spending, it reflected the turnover rate and sales revenue were increased. 9. To reduce staff turnover rate by offering reasonable compensation system and rearranging the staff of different departments. The number of staff was remained if possible. However, during the peak season and the low season, we added and deducted maximum 2 staffs in each department according to the environment of the market and the market needs.

Also, their salaries were upgraded to level 4 to retain staff. 10. To build conference room to increase the competitive competency in the beginning of 2nd year. In order to increase our hotel’s selling point and to make more profit, conference room has been built in our hotel. Competitive ability would be increased by doing so. In fact, we wanted to build the conference at the first year, but due to insufficient cash on hand, our plan was delayed. Therefore, we made a decision of building the conference room at the beginning of the second year and it officially operated at the middle of year 2.

Realized P&L Statement from year 1 to year 3 SWOT Analysis According to the previous 3 years, internal and external factors are analyzed regarding the hotel location, facilities, staff, financial condition, marketing strategies and outside effects etc , in order to show the strengths, weaknesses, opportunities and threats of Poseidon Hotel. Strength Amount all seven groups and hotels, we kept our business in a stable and consistent increase because we equipped and maintained the equipment and all the facilities in a nice way.

On the other hand, in order to provide better services and unique experience for our customers during their stay in our hotel, we have been maintaining good conditions on refurbishment of rooms and excellent conditions on refurbishment of bars, restaurant, front desk and conference rooms until the end of the third year, it is because we understand that providing a good rooms and facilities with good condition is the basic needs and requirements to fulfill guests satisfaction. With our planning and forecast, in the beginning of first year, we built up our first asset which was the conference room.

Because we are the first few hotel built up the conference facilities, Poseidon had a very big advantage while comparing with others. As a result, we were built up a firm foundation for our future success. Furthermore, building conference room also has another advantage for Poseidon is to provide extra facilities for the guests, for example, the venue for wedding or instant meeting rooms, etc. Thru the statement of cash flow, there are always positive numbers appeared. The financial statement showed us we are walking on the stably and liable rail and also the right track. Opportunity

Different kinds of popular festivals and well established tourist events are often held in the city which brings great business opportunities for our hotel. According to different kinds of festivals and events, we used different marketing strategies to meet the needs of the markets on those periods in order to maximize our revenue, such as focus on promoting the leisure and families during the December. There are good road, rail and bus links to major cities, as well as airport nearby, it provide an accessible and convenient transportations to our hotel. It makes our hotel in a good location and easy to reach. Weakness

We had serious staff turnover problems in several weeks and received not good comments from the team members and customers such like “You never see the same member of staff twice (in week 36 and 48)” Although we encounter this staff problem, we found out that and solve it in the fastest way, the management team made decisions in increasing the number of staff so that the heavy workload could be reduced, so that the turnover rate could be reduced. When we took over the management of this hotel at the beginning, we found out that the hotel facilities was not enough for the guest so we decided to build up more conference and other facilities.

It may cause a large amount of money and also need to take a high risk, but in the coming week the numbers proved that we made a correct decision. Threat We had to pay more salaries to the staff since the policy of minimum wage was issued which resulted in increasing the cost of labor. There are seven competitor hotels opened surrounding. We were doing the best in the first year. However, the competitors being well equipped with more facilities, their competitive strengths were enhanced a lot. It was also a threat to us. Financial condition:

According to the balance sheets of 3 years, the total asset, total current liabilities and the owners’ equity of the hotel were increasing year to year. However, the long term debt was decreasing year to year due to strategy implementation. The figures of those items are shown down below: | Year 1| Year2| Year3| Total asset| $10,146,444| $11,675,944| $12,624,215| Total liabilities| $1,409,367| $1,693,488| $1,713,563| Total owner’s equity| $8,540,277| $9,840,468| $10,871,744| *Long term debt| $196,800| $141,988| $38,908| Ratios Analysis: | Year 1| Year2| Year3| Debt Ratio| 15. 83%| 15. 72%| 13. 88%|

Quick Ratio| 6. 32| 6. 36| 7. 2| Important Notes: Debt ratio: The lower the ratio, the smaller risk will be associated with Poseidon’s operation. In addition, low debt to assets ratio indicates high borrowing capacity of a firm, which will increase the hotel’s financial flexibility. It showed that Poseidon has put efforts to reduce the amount of debt. Quick ratio: it measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. This ratio indicated Poseidon has ability to pay back liabilities. It had a significant increase (13. %) from year 2 to year 3 when comparing it to the increase (0. 6%) from year 1 to year 2. Total Revenue and Net Income Overall For total revenue, our revenue was raising up from year 1 to year 3. It’s because after we spend a lot money in the hotel rooms and facilities, we have reach more and more customers and guests require, they like to go to our hotel and use the unique and good quality service at the that time. And more they come, more they enjoyed, more reputation that we gained. We can also build up the loyalty and some others business opportunity with them to receive more revenue.

For net income, due to inflation, the increase in cost of sales, and other hotels started imitating each other in order to become the most successful, net income was increased from year 1 to year 3. Besides, Poseidon has built many facilities to fulfill the market demands, a great amount of maintenance fees occurred. It caused a decrease in our net income. It also conveyed that Poseidon did not perform as well as previous, the profitability was decreasing. A better cost control should be conducted and new strategies have to be implemented.

To the following 3 years, new mentioned strategies such as building a leisure club and extending restaurant will be adopted. Therefore, it is forecasted that our total revenue will be increased step by step and net income will take a turn for better instead of being worse. Rooms Department Total Revenue and Net income In the past 3 years, room department total revenue was increased by 18. 87% from year 1 to year 3. It indicated that Poseidon could attract more customers successfully. However, the increase between year 2 and year 3 was only 7. 2%.

It conveyed that there were some minor problems existed such as there was lack of difference between others. Room department contributed the largest amount of revenue to the hotel, net income should be increased according to room revenue, but the fact was not like this. Net income was decreased from year 1 to year 2 due to improper cost control, but later on, the problem has been investigated, a better cost control was conducted. Therefore, it was increased by 5. 58%. In the following 3 years, we expected to attract more business consistently and to increase net income by conducting better cost control and applying new strategies.

Net income is forecasted to be increased by 15. 96% from year 4 to year 6. F;B Department Total Revenue and Net income F;B department is the second largest revenue generator. It contributed around 50% of total revenue of Poseidon from year 1 to year 3. The graph showed a big increase from year 1 to year 2 as conference room was built in year 2. In year 3, no new strategies were applied. Therefore, F;B sales did not increase as much as previous. Everything remained the same in year 3. In the following 3 years, F;B department revenue will be increased continually as the same as room department revenue.

It was a significant increased by 10% from year 2 to year 3 since restaurant is planned to be extended in year 3. It is believed that restaurant extension and building a leisure club will make our hotel more popular. Other Department Total Revenue and Net Income Total revenue generated by the other shop was not as big as room department and F;B department, sometimes it would be a loss, but its existence helped to attract more guests and increase the hotel competent competitive. In following years, we decided to put more focuses on the other shop and try to increase its revenue and net income.

Overall ROE and ROS In the past 3 years, we had inputted a lot effort to maintain our business and built up lots of facilities, for example we had built a conference room in Year 2. Above the graph shown that ROE and ROS were decreased. Return on equity (ROE) measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. Return on Sales (ROS) measure is helpful to management, providing insight into how much profit is being produced per dollar of sales.

Both of indicators showed that we did not perform as good as year 1 during year 2 and year 3 due to the increase in cost of sales and lack of difference between other hotels. In the following 3 years, we estimated to perform much better since new strategies are adopted as mentioned previous. ROE and ROS will be increased steadily. Occupancy rate and ADR As the graph showed, occupancy rate was increased a lot from year 1 to year 2 because the completed conference facilities. The occupancy rate was only increased by 3. 6% from year 2 to year 3 since many competitors had built conference room as well. Our business market was shared.

Besides, ADR was increased quite a lot from year 1 to year 2 since cost of sales was higher than previous. In order to balance our revenue and cost of sales, rising up room rate is a must. In the following years, we believe occupancy rate and ADR will be increased consistently. We do not think the increase in ADR would like to affect our occupancy rate a lot. ADR and REVPAR For the past 3 years it shows that our ADR and REVPAR had increased steadily, and the main reason was the effect of the global inflation. Since we couldn’t do anything to control the inflation, what we could do was to adjust the Daily Rate in order to control our business.

For the predicted next 3 year, we believe that this situation would keep go on and that’s why we would keep the adjustment accordingly. It is assumed that more business opportunities will occur. It could bring us more revenue, so REVPAR would be increased. Occupancy rate and Refurbishment Spending The above 2 graph showed that the Occupancy % and Refurbishment Spending % of the past 3 years and the predicted next 3 years. For the past 3 years we did spend a 4% to 5% of total revenue to refurbish our hotel in order to maintain a good environment to attract people to visit.

For the coming 3 years, since we are going to open the leisure club in our hotel, we predicted that a leisure club could bring more business to Poseidon in order to have a higher occupancy rate and a more or less similar percentage of refurbishment will be taken in order to maintain the quality of our facilities and services. Marketing strategies and effectiveness Marketing is to achieve organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. Thru market research, the information regarding seasonal demand and advertising effectiveness are obtained.

The advertising campaign was changed which was based on these two pieces of information. When there is high demand on a particular item, the campaign would be focused on this particular item in order to draw more public awareness (as shown in the below table) since there are several choices existed in the market. For example, conference business and meal / liquor would be our main advertisements during from week 2 to week 12 since it’s one of the peak periods for conference business. From week 28 to week 34, wedding and social events would be the focus ones. | Year 1| Year 2| Year 3|

Public Awareness Index| 42. 45| 50. 5| 51. 17| Moreover, there must be one weekday or weekend room to be included into advertising campaign no matter it was high demand or not as hotel is a building structure that basically providing lodging service to public. Room revenue is one of the significant sources of revenue. Once high demands were forecasted, the price of those critical items would be increased accordingly. Normally, the adjustment would be increased by $2 to $5 to receive more revenue. Moreover, the prices would be adjusted according to cost of sales and industry average. Types| Range in year 3|

Weekday Corporate| $120-$122| Weekday Leisure| $118-$123| Weekend Corporate| $120-$122| Weekend Leisure| $119-$124| Conference| $165-$170| Tours| $66-$75| Events| $66-$75| In year 1, other kind of advertising strategy has been tried. It was to promote the future popular rather than the current one, but it showed that the result was not as good as the previous one. Thus, the original strategy was still applied. In year 2, inflation occurred, so the spending on advertising campaign was increased as well. Money is allocated to each category of advertising medium based on the example provided by HOTS.

For instance, $6750 have been allocated to Business Press to attract businessmen, $10,750 have been spent on Sunday News Paper to allure leisure travelers. This information provided us a good example for allocating our money. Physical property condition Until the end of the third years, the conditions of our hotels facilities were in excellent level. We do not keep on doing refurbishment on the facilities every month. The strategy for the refurbishment that we adopted was when the status of the facilities changed from “Excellent” to “Good”, Level 1 refurbish method would be chosen.

As the refurbishment process needed a certain amount of money, if keeping doing refurbishments of the facilities every month, this action will cause a large amount of cost. Another reason we refused to do it every month because the facilities would not be changed to a lower condition in a short time. Therefore, it is not worth to refurbish the facilities month by month. After experienced 3 years operation time, it indicated that the status of the facilities would change from “Excellent” to “Good” within around 6-8months. After this eriod, level 1 refurbishment is needed to be done. Thus, the best strategy to keep all the facilities in a good condition is to keep refurbishing the facilities every 6months. Then the facilities can remain at the “Excellent” status. To rooms refurbishment, to keep refurbishing 15-20 rooms each month is the best strategy and we have on the track of this strategy. Impacts of decisions on human beings Human Resources is a great part of the HOTS system. Except the staffing hiring and their payroll, training is also an important section in the hotel operation.

To the staff allocation, it will affect the quality of departments and directly affect guests’ satisfactions. Decisions were made according to different periods and market needs to allocate the numbers of staff in each department. And the range between the increase or decrease number of staff is ±2. To the payroll of the staff, except the department heads are level 3 payments, the others were set as level 2. And this strategy was used from the first year to the third year. However, in week 135, all level 2 payments were changed in to level 3 in order to increase the staff satisfaction and reduce staff turnover.

Training will affect the staff’s qualities in terms of the input of the training cost. Overall the three years operation time, training cost kept increasing each year. As we wanted to provide the best service to the guest by increasing the staff’s qualities Better qualities of staff and service will lead to have positive feedbacks from hotel guests. Therefore, with more positive feedbacks come greater market image and awareness. Cost Control Cost control is used to support decision making to have minimum cost and to improve profitability without reducing the quality of service.

First of all, training cost was one of the important elements for the success of Poseidon. Through training, staff can learn the skills which help them to perform their job better, to increase guest satisfaction and to enhance hotel’s image. Training is a feature of good management. Therefore, training cost should not be cut. However, a wrong decision was made as mentioned. $3 of training cost per staff has been deducted in year 2 because there an increase in the cost of most of the items purchased to run the hotel. After deducting this cost, it did not take a turn for the better. Staff atisfaction and turnover rate were increased, so several months later, we decided to increase the training spending per person, and this action showed a better result. Second, advertising cost was a major expenditure in Poseidon. A large amount of resources are put into Sales and Marketing for the advertising purpose. In low seasons, a cost control was conducted strictly. A cheaper advertising media was preferred rather than posting advertisement in Sunday Newspaper. For example, posters for liquor and meal advertisements were selected as promotion medium in January and February.

During peak season, more money was allocated in order to increase Poseidon’s public awareness. The most effective and efficient medium with higher costs would be chosen, such as Direct Mail for tour and conference, Sunday Newspaper for leisure weekend room. Third, more and more bank interest would be charged if the loan did not repay. Hence, repayment would be made every month apart from January and February (low seasons). Last but not least, in the first month of year 1, a negative net income was occurred. Poseidon was almost broken and running out of cash since cost control was not conducted.

A great amount of money was put into every single department such as refurbishing the rooms to level 2, hiring too many staff, paying too much unnecessary payroll. This issue indicated cost control is a must in every single hotel. Strategic Recommendation New strategies are recommended as below: 1. To build leisure club in week 13 of year 4. Through market research on health and fitness, it indicated that the U. S. health and fitness club industry is thriving. Membership is expected to reach 41. 1 million members. Industry revenue will exceed $17. 4billion.

This report showed that the trend in physical activity and health is running strongly toward a nation that is increasingly becoming more physically active on a regular basis. People expect to have a full service health spa at resorts and have made their preferences known. Moreover, this report indicated many business travelers change hotels for the vacation portion for their trips and require amenities such as babysitting services, children-stay-free programs and children’s activities. Business guests regard the availability of leisure facilities as a bonus, and will also use them if time is available in their busy schedule.

Building a leisure club can be treated as a marketing tool to transform Poseidon from a business hotel into a business and leisure hotel. 2. To keep refurbishing hotel facilities one by one every 6 months. For details, please refer to “physical property condition”. Month| Jan| Feb| Mar| Apr| May| Jun| Jul| Aug| Sep| Oct| Nov| Dec| Restaurant| ? | | | | | | ? | | | | | | Front Desk| | ? | | | | | | ? | | | | | Bar| | | ? | | | | | | ? | | | | Conference| | | | ? | | | | | | ? | | | *15-20 rooms are refurbished every single month. 3. To extend restaurant to response to the eating out trends in week 22 of year 5.

According to a nationwide survey conducted by the National Restaurant Association, 91% of men and 85% of women are more likely to use restaurant services. Besides, a market research on eating out trends showed that full service restaurants represent 52% of all restaurant sales in the U. S. Growth in this segment is driven in large part by consumer’s desire for fun and enjoyment. Hotel foodservice continues to reinvent itself. After years of cost-cutting, hotel foodservice operators are showing healthy signs, from their room service and restaurant revenues to grander banquets and conventions.

These researches showed a great support in our decision making on extending out restaurant. Previous Strategies are recommended as below. 4. To retain public awareness by selecting the most effective and efficient advertising medium. 5. To maintain staff service quality by offering an appropriate compensation system and training program. 6. To conduct cost control consistently. 7. To adjust room rates regarding external and internal environment changes. Pro-forma income statement of year 4 to year 6 In year 4, leisure club is decided to be built in order to create a new marketing hotel image to our guests.

As many additional facilities are established, it is possible that those facilities can bring more business to our hotel. Therefore, room sales, food & beverage sales and other sales are estimated to be increased by 7. 5%, 2% and 2. 5% respectively from year 3 to year 4. In year 5, restaurant is planned to be extended to fulfill the needs of the market, food & beverage sales is expected to be increased by 6% from year 4 to year 5 and 10% from year 5 to year 6. Revenue from other shops will be increased since more guests are forecasted to be served. Total sales will be increased by 4. 78% from year 3 to year 4, 5. % from year 4 to year 5 and 11% from year 5 to year 6. In addition, cost of sales will be increased by 4. 25% from year 3 to year 4, 4. 46% from year 4 to year 5 and 11. 39% from year 5 to year 6 due to inflation and the increase in sales volume. Besides, advertising expenses percentage is more or less remained steadily in the following years since the same marketing strategies are used. Nevertheless, refurbishment cost and payrolls are expected to be increased a little bit as more facilities are built, more maintenance is needed, more staff are employed. Hence, total other direct costs and payroll and related expenses are increased by 4. % to 8%, 4. 9% to 11. 28% from year 4 to year 6 severally. Last but not least, as pro-forma income statement showed, income after business tax in year 6 is increased by 19. 7% when comparing it to year 5. It is a significant increase to our hotel. It indicates that Poseidon is forecasted to do its job more and more successful in the foreseeable future. Conclusion In the early time, we have already set up a long-term goal for our hotel, to become a leisure hotel in the future, it is very important for us to solve the staff turnover problem and we are going to build a leisure club for our hotel.

We made efficient short term strategies in order to solve them. As the time passed, we realized there were many unpredictable incidents coming up, so our management-team was flexible to respond to the upcoming challenges. After this practice, we noticed that we need to be ready to work in the hotel industry, there are many challenge we have to face on it, so we think this is a good chance for us to have such as system to run a hotel operation.

It makes us deeply understand how it works in the hotel industries we noticed that we need to be ready to work in the hotel industry, which is very busy and exciting. Reference http://en. wikipedia. org/wiki/Advertising http://en. wikipedia. org/wiki/Marketing#Marketing_research http://www. doleta. gov/BRG/Indprof/Hospitality_profile. cfm http://www. htrends. com/trends-detail-sid-55047-t-Employer_Medical_Costs_Expected_to_Increase_by_____Percent_i n_______According_to_PwC. html http://www. investopedia. com/terms/r/returnonequity. asp