The hotel industry of UK offers variety of facilities such as motor hotels, resort hotels and other various things which can make business life easy. This industry has been providing different types of beverage and food services, conference room, convention services, recreational services etc.
In this paper, I will be advising owner of hotel and restaurant business of Little Hallingbury Mill whether to carry on building on the success achieved to do date or to sell now and allow someone else to take things forward. The decision will depend on the current financial performance of the hotel and financial modelling on the defined assumption based on market trends.
Discussion
Overview of the Business
Little Hallingbury Mill business comprises a hotel with 20 bed rooms and two licensed restaurants providing 60 covers set in a pretty rural riverside location close to Stansted Airport, Bishop's Stortford and Harlow and just 40 minutes by road from the Olympic Park and by rail from the City of London. The hotel's restaurant has a 5 star rating for food hygiene and safety and is attracting a growing array of plaudits from customers.
Over the past few years the current owners of the hotel and restaurant have brought the business back to life and generated a trend of revenue and profit growth and customer loyalty that will be of significant benefit to new careful owners. There remains significant capacity available to increase restaurant and functions bookings and improve margins on bedroom sales. The hotel is very well located to benefit from a windfall opportunity from the Olympics in 2012 and managed carefully it is expected that this can be converted into further long term growth (Williamson A., 2004).
Company Current Performance
Currently, there has been a downfall in the demand for hotels for last few years. The reason for this is that due to the inflation and per capital income of the people. The recession which has impacted on unemployment and domestic travelling rate has decline the revenue of the company. Since destination hotels and motels rely heavily on domestic and foreign tourists, the decline in domestic and international travel hurt the industry's bottom line. Nevertheless, in 2010 and 2011, arrivals from abroad increased 8.7% and 5.7% respectively, while domestic travel rates improved by a respective 1.9% and 2.4%. In 2012, domestic travel is expected to grow 3.3%, and international arrivals are anticipated to rise 5.4%. The infusion of tourist dollars is expected to benefit hotels and motels and increase room rates, causing revenue to grow 4.0% in 2012. Over the five years to 2012, industry revenue is expected to increase marginally at an average annual rate of 0.2% to $126.6 billion (Milburn R., 2011).
Impact of Travel
The downfall in the economy, the unemployment rate and consumer spending ...