[PPT] - Profitability Analysis OVERVIEW OF INCOME STATEMENTS YoY% % to PowerPoint Presentation

SLIDE 1

Profitability Analysis

Case Study

SLIDE 2

OVERVIEW OF INCOME STATEMENTS

We were not provided financial statements for FY18 and FY17. We have attempted to work out the financials as above based on Tally data.
EBITDA from operations has declined by 4.3% in FY18 over FY17 while it had decreased by 27% in FY17 over FY16 and increased by 69% in FY16 over FY15.
The main reason for the decline in EBITDA has been the rise in expenses by 22.6% in FY18. This has lead to decrease in EBITDA.
Purchases/Consumption should ideally move in relation to the movement in sales, as this being a direct cost. However, in FY18 it has increased more than the increase

in sales.

Employee Benefit expenses were not verified by the management. The employee cost for FY17 has been estimated based on the previous years numbers. It is

assumed to have increased by 10% in comparison to FY16.

Other Expenses have increased by 4.9% in FY18 over FY17 but the percentage to revenue of other expenses has declined in FY18.
Operational EBITDA has declined by 4.3% in FY18 over FY17, comprising 20.7% of the Total Revenue in FY18 as compared to 25% in FY17, 32.9% in FY16 and 29.2%

in FY15.

It is also pertinent to note that the industry standard for EBITDA is 35% for four star hotel in Goa. In our case its working out to 20.7% which is quite low.
We need to mention that the preparedness of the accounts team was found lacking. Ideally the financials of FY18 and FY17 together with all the supporting should

have been easily available.

FY 18 FY 17 FY 16 FY 18 FY 17 FY 16 FY 15 Revenue From Operations 4,71,83,737 4,07,22,448 4,24,41,493 2,81,59,022 15.9%

4.1%

50.7% 100.0% 100.0% 100.0% 100.0% Expenses Purchases/Consumption 1,04,61,915 73,53,767 72,41,471 29,14,578 42.3% 1.6% 148.5% 22.2% 18.1% 17.1% 10.4% Employee Benefit Expenses 1,40,06,449 1,08,17,280 98,33,891 71,91,651 29.5% 10.0% 36.7% 29.7% 26.6% 23.2% 25.5% Other Expenses 1,29,66,519 1,23,62,840 1,14,16,713 98,35,409 4.9% 8.3% 16.1% 27.5% 30.4% 26.9% 34.9% Total Expenses 3,74,34,884 3,05,33,887 2,84,92,075 1,99,41,639 22.6% 7.2% 42.9% 79.3% 75.0% 67.1% 70.8% EBITDA from Operations 97,48,853 1,01,88,560 1,39,49,418 82,17,384

4.3% -27.0%

69.8% 20.7% 25.0% 32.9% 29.2% YoY% % to Total Revenue Particulars FY 18 FY 17 FY 16 FY 15

SLIDE 3

INCOME

Room revenue comprised of major portion of total revenue at 74% in FY18. Revenue from rooms

have increased by 7% in FY18 inline with 10% increase in the room nights sold in FY18. Comparatively, room sales reduced by 2% in.

The F&B revenue has increased by 57% in FY18 as compared to a decrease of 6% in FY17 comprising
f 18% to the total revenue in FY17 as compared to 24% in FY18. This is due to the new restaurant

which has been introduced in the recent FY. However, ideally F&B revenue to total sales should be a minimum of 30%.

Laundry income has decreased by 11% in FY18 as compared to 24% increase in FY17 over FY16 and

45% increase in FY 16 over FY15. As per the management the laundry service is outsourced and commission is charged for the services provided.

Other Operating Income includes any extra charges paid by the customers, car hire charges and other
perating miscellaneous income. It has increased by 23% in FY 18 comprising of 1% of total revenue.

Segment Wise Revenue Particulars FY 18 FY17 FY16 FY15 FY18 FY17 FY16 FY15 FY18 FY17 FY16 Room Sales 34,962,915 32,793,494 33,615,804 19,343,055 74% 81% 79% 69% 7%

2%

74% Food and Beverage 11,500,144 7,303,432 7,790,741 8,099,061 24% 18% 18% 29% 57%

6%
4%

Laundry Income 121,911 137,308 110,794 76,419 0% 0% 0% 0%

11%

24% 45% Other Operating Income 598,768 488,214 924,153 640,488 1% 1% 2% 2% 23%

47%

44% Total 47,183,737 40,722,448 42,441,493 28,159,022 100% 100% 100% 100% 16%

4%

51% % of Total Revenue YoY%

SLIDE 4

EXPENSES -1/6

Purchases have increased by 42% in FY18, but the increase is not in alignment with the increase in revenue (16% overall increase in

Revenue).

Purchases for Restaurant has increased by 48% the reason could be introduction of new restaurant in FY18. However, as a percentage to

sales of Restaurant this is very high. Ideally this ratio is expected to be approx. 40%. However, we found this to be 75% and needs to be looked at.

Purchases for Housekeeping has gone up by 92% in the FY18, as per management remarks linen, bedsheets, pillow covers were purchased in

FY18 and no such purchases were made in FY17.

Purchases/Consumption Particulars FY 18 FY17 FY16 FY15 FY18 FY17 FY16 FY15 FY18 FY17 FY16 Purchase for Restaurant 86,78,782 58,81,337 56,23,273 2,25,238 18% 14% 13% 1% 48% 5% 2397% Purchase for House Keeping 13,21,446 6,88,549 12,65,764 7,98,710 3% 2% 3% 3% 92%

46%

58% Purchase for Maintenance 2,86,731 2,95,257 2,01,046

1%

1% 0% 0%

3%

47% 0% Purchase Account- Others

- 15,98,540

0% 0% 0% 6% 0% 0%

100%

Purchase for Mini Bar 1,34,955 2,29,150 1,36,319 2,92,090 0% 1% 0% 1%

41%

68%

53%

Purchase for Utensils (Kitchen) 40,001 2,59,474 15,069

0%

1% 0% 0%

85%

1622% 0% Total 1,04,61,915 73,53,767 72,41,471 29,14,578 22% 18% 17% 10% 42% 2% 148% % of Total Revenue YoY%

SLIDE 5

EXPENSES – 2/6

The other expenses broadly comprise of housekeeping expenses, marketing expenses and administrative & other expenses.
Laundry Expense comprise of hotel laundry and the guest laundry expenses. Laundry expenses have decreased by 21% in FY18 as compared to

increase by 69% in FY17. It is noted that the laundry service provider is changed frequently due to service issues faced by the management. Although, the same is not inline with growth in room sales. Accordingly, it is advisable to review the terms of laundry service provider.

Overall the housekeeping expenses have decreased by 16% in FY18 mainly on account of laundry expenses in FY18 comprising major portion of

Housekeeping expenses.

On comparison with industry norms, Housekeeping expense is generally 3%-4% of Total Revenue.

Other Expenses Particulars FY 18 FY 17 FY 16 FY 15 FY 18 FY 17 FY 16 FY 15 FY 18 FY 17 FY 16 Housekeeping 6,94,440 8,24,477 5,66,900 5,02,578 1% 2% 1% 2%

16%

45% 13% Marketing 30,82,130 26,02,491 21,71,487 7,72,560 7% 6% 5% 3% 18% 20% 181% Administrative and Other Expenses 91,89,949 89,35,872 86,78,326 85,60,271 19% 22% 20% 30% 3% 3% 1% 1,29,66,519 1,23,62,840 1,14,16,713 98,35,409 27.48% 30.36% 26.90% 34.93% 4.88% 8.29% 16.08% Housekeeping Particulars FY 18 FY17 FY16 FY15 FY18 FY17 FY16 FY15 FY18 FY17 FY16 Housekeeping & Maintenance 42,417 140 78,154 13,650 0.09% 0.00% 0.18% 0.05% 30197.86%

99.82%

472.56% Laundry Expense 6,52,023 8,24,337 4,88,746 4,88,928 1.38% 2.02% 1.15% 1.74%

20.90%

68.66%

0.04%

Total 6,94,440 8,24,477 5,66,900 5,02,578 1.47% 2.02% 1.34% 1.78%

15.77%

45.44% 12.80% % of Total Revenue YoY% YoY % % of Total Revenue

SLIDE 6

EXPENSES – 3/6

Marketing Particulars FY 18 FY17 FY16 FY15 FY18 FY17 FY16 FY15 FY18 FY17 FY16 Entertainment & Sight seeing 7,16,600 1,55,900 92,000 1,84,780 1.5% 0.4% 0.2% 0.7% 359.7% 69.5%

50.2%

Travelling and conveyence Travelling and conveyence- General 4,10,648 9,16,036 46,222 38,710 0.9% 2.2% 0.1% 0.1%

55.2%

1881.8% 19.4% Transportation of Guest (Car on Hire) 1,60,038 15,350 1,21,960

0.3%

0.0% 0.3% 0.0% 942.6%

87.4%

0.0% Transportation 54,568 1,77,946 1,75,585 32,800 0.1% 0.4% 0.4% 0.1%

69.3%

1.3% 435.3% Total 13,41,854 12,65,232 4,35,767 2,56,290 2.8% 3.1% 1.0% 0.9% 6.1% 190.3% 70.0% Advertisement & Sales Promotion Sales Promotion Expenses

2,01,591

2,00,000 0.0% 0.0% 0.5% 0.7% 0.0%

100.0%

0.8% Advertisement & Publicity - Marketing 3,36,784 5,92,699 1,66,766

0.7%

1.5% 0.4% 0.0%

43.2%

255.4% 0.0% Advertisement & Publicity - Others 1,22,578 65,123 1,81,227 2,11,584 0.3% 0.2% 0.4% 0.8% 88.2%

64.1%
14.3%

Total 4,59,362 6,57,822 5,49,584 4,11,584 1.0% 1.6% 1.3% 1.5%

30.2%

19.7% 33.5% Commission to Travel Agent & Others Commission to Travel Agent & Others 12,80,914 6,79,437 11,86,136 15,900 3% 2% 3% 0% 89%

43%

7360% Commission on Credit Cards

88,786

0% 0% 0% 0% 0% 0%

100%

Total 12,80,914 6,79,437 11,86,136 1,04,686 2.71% 1.67% 2.79% 0.37% 88.53%

42.72%

1033.04% Total 30,82,130 26,02,491 21,71,487 7,72,560 6.5% 6.4% 5.1% 2.7% 18.4% 19.8% 181.1% % of Total Revenue YoY%

SLIDE 7

EXPENSES – 4/6

Per the management remarks, entertainment & sight seeing expenses includes cable charges and the amount paid to the live artist

performing in the restaurants. It has increased substantially in FY18 as compared to an increase of 69% in FY17 over FY16 comprising 2% of the total revenue in FY18 as compared to .4% in FY17 and .2% in FY16. The reason for increase in FY18 is that the artist are paid for performing in Moets restaurant in FY18, earlier there was no such events organized by the hotel.

Conveyance expenses have drastically decreased by 44% in FY18.
Advertisement & Publicity- Marketing expenses include the expenses paid by the hotel for participating in various events
rganized by the hospitality industry in different cities, to which the General Manager attends in order to advertise its hotel. The

expense has gone down by 43% in the FY18.

Advertisement & Publicity- Other includes the amount paid to Mr. Mohit for running the restaurant Moets. The Moets restaurant

was operational only in FY18 and prior to which no amount was paid to Mr. Mohit, hence the expense has increased in FY18 compared to FY17.

Commission expense includes the amount paid to travel agents for booking the rooms and is directly linked to revenue but in FY18

revenue has increased by 15.9% on the contrary Commission is increased by 89% in FY18 over FY17. Management should control this cost as it is 2.7% of the total revenue.

Overall the marketing expenses have been increased by 18.4% in FY18 as compared to 19.8% increase in FY17 over FY16

comprising 6.5% of the total revenue in FY18 as compared to 6.4% in FY17, 5.1% in FY16 and 2.7% in FY15.

As per the normal industry standards four and three star hotel, marketing expense comprise of 3% of the Total Revenue. Currently,

Hotel is incurring 6.5% of Total Revenue which is almost double the standard rate.

SLIDE 8

EXPENSES – 5/6

Administrative and Other Expenses Particulars FY 18 FY17 FY16 FY15 FY18 FY17 FY16 FY15 FY18 FY17 FY16 Power and Fuel 42,75,030 39,16,813 39,07,444 20,09,348 9.1% 9.6% 9.2% 7.1% 9.1% 0.2% 94.5% Repairs and Maintenance 11,49,333 7,25,334 8,01,854 9,40,493 2.4% 1.8% 1.9% 3.3% 58.5%

9.5%
14.7%

Director Purchase/ Courier 10,92,810 11,67,113 7,07,163

2.3%

2.9% 1.7% 0.0%

6.4%

65.0% 0.0% Security Charges 7,99,986 4,66,800 4,32,000 4,90,820 1.7% 1.1% 1.0% 1.7% 71.4% 8.1%

12.0%

Water Charges 4,13,401 4,46,318 4,54,735 3,12,965 0.9% 1.1% 1.1% 1.1%

7.4%
1.9%

45.3% Professional and consultancy fees 3,10,420 1,94,894 54,810 90,320 0.7% 0.5% 0.1% 0.3% 59.3% 255.6%

39.3%

Insurance 2,05,157 2,44,629 78,732

0.4%

0.6% 0.2% 0.0%

16.1%

210.7% 0.0% Telephone & Communication 1,87,946 3,98,027 4,74,382 4,41,475 0.4% 1.0% 1.1% 1.6%

52.8%
16.1%

7.5% Printing & Stationery 1,33,123 1,22,200 71,749 1,87,663 0.3% 0.3% 0.2% 0.7% 8.9% 70.3%

61.8%

Rates & Taxes 1,30,260 5,95,223 5,77,513 25,15,390 0.3% 1.5% 1.4% 8.9%

78.1%

3.1%

77.0%

Refund of Booking amount 1,12,989 1,03,191

0.2%

0.3% 0.0% 0.0% 9.5% 0.0% 0.0% Miscellaneous Expenses 88,001 64,928 19,801 25,530 0.2% 0.2% 0.0% 0.1% 35.5% 227.9%

22.4%

Rent 78,119 1,48,201 54,370 2,12,542 0.2% 0.4% 0.1% 0.8%

47.3%

172.6%

74.4%

Pest Control 74,000 92,000 62,740 81,810 0.2% 0.2% 0.1% 0.3%

19.6%

46.6%

23.3%

Computer Expense 55,488 28,387 15,705 52,617 0.1% 0.1% 0.0% 0.2% 95.5% 80.7%

70.2%

Office Expenses 42,251 95,057 71,018

0.1%

0.2% 0.2% 0.0%

55.6%

33.8% 0.0% License Fees 26,000 8,625 1,11,665

0.1%

0.0% 0.3% 0.0% 201.4%

92.3%

0.0% Membership & Subscription 12,500

25,000

20,000 0.0% 0.0% 0.1% 0.1% 0.0%

100.0%

25.0% Bank charges 3,134 230 27,787 44,477 0.0% 0.0% 0.1% 0.2% 1262.8%

99.2%
37.5%

Painting Work

1,70,100

3,97,320 0.0% 0.0% 0.4% 1.4% 0.0%

100.0%
57.2%

Consumable Expense

8,169

2,78,449 0.0% 0.0% 0.0% 1.0% 0.0%

100.0%
97.1%

Director Expense

4,93,000

3,32,133 0.0% 0.0% 1.2% 1.2% 0.0%

100.0%

48.4% Auditor

60,000
0.0%

0.1% 0.0% 0.0%

100.0%

0.0% 0.0% Conference Party Expense

41,525

0.0% 0.0% 0.0% 0.1% 0.0% 0.0%

100.0%

Compensation

4,772

58,591 35,000 0.0% 0.0% 0.1% 0.1%

100.0%
91.9%

67.4% Refreshment

2,420
50,395

0.0% 0.0% 0.0% 0.2%

100.0%

0.0%

100.0%

Bad Debts

38,710
0.0%

0.1% 0.0% 0.0%

100.0%

0.0% 0.0% Brokerage

12,000
0.0%

0.0% 0.0% 0.0%

100.0%

0.0% 0.0% Total 91,89,949 89,35,872 86,78,326 85,60,271 19.5% 21.9% 20.4% 30.4% 2.8% 3.0% 1.4% YoY% % of Total Revenue

SLIDE 9

EXPENSES – 6/6

Other Administrative cost have overall increased by 2.8% in FY18 over FY17.
Increase in following important cost is observed in FY18:
Power and Fuel Expense 9.1%, Printing and Stationery 8.9% Security Charges 71.4% Professional and Consultancy Fees 59.3% and Repairs &

Maintenance 58.5%.

The following points should be considered:

Power and fuel cost has increased due to increase in occupancy rate by 10% in FY18. Also, as per industry norms the power and fuel cost should be in range of 4%-5% of Total Revenue which is currently 9%. Management is suggested to connect the room air conditioner to room key so that is saves the power cost. Also controls should be laid down to ensure switching off electricity wherein its not utilized. Power meters can be installed at different places to track excess consumption. Professional and Consultancy Fees has been increased in FY18 in comparison to FY17, to which the management explained that they hired the service of a bar consultant in FY 18 for the first time. Repairs and Maintenance have significantly increased primarily due to-

Increase in repairs to plant & machinery expense by 55% in FY18 over FY17.
Repairs on Furniture has been made in the FY18, earlier no amount has been spend on furniture thereby increasing it 100% in FY18.

As per the normal industry standards of four star hotel, administrative expense comprise of 10.3% of the Total Revenue. Currently, Hotel is incurring 19.5% of Total Revenue. Management should take steps to curtail the expenses.

SLIDE 10

ANALYSIS SNAPSHOT

Revenue from operations is showing a positive trend over the period

covered from FY15 to FY18, except for FY 17. The reason for increase in revenue is increase in number of room nights over period.

Although, the revenue is showing the increasing trend but the EBITDA is

not moving in the same direction. EBITDA is decreasing which shows that the occupied nights is increasing but the ARR being charged by the hotel is not high. The Revenue Per available room night (RevPAR) i.e. the total number of room nights available in a year has increased over period covered except for FY 17.

SLIDE 11

OCCUPANCY

Hotel is currently operating at an occupancy of 83% as compared to 76%, 84% and 46% in FY17, FY16 and FY15 respectively.
Occupied Room Nights has increased by 10% in FY18 which has correspondingly lead to an increase in Room Revenue by 7% in FY18.
Occupancy for Deluxe and Sea View rooms in Q1 of FY18 has been reduced by 4% and 11.35% respectively in comparison to FY17.
It has been noted that, occupancy in FY17 for both Deluxe and Sea View has been reduced substantially in all the quarters except for Q1.

Occupied Room Nights- FY18 Occupied Room Nights- FY17 Occupied Room Nights- FY16 Occupied Room Nights- FY15 Quarter 1 1,841 1,910 1,776 263 Quarter 2 1,846 1,565 1,837 895 Quarter 3 2,040 1,867 2,067 1,502 Quarter 4 2,040 1,806 2,142 1,625 Deluxe Rooms Occupied Room Nights- FY18 Occupied Room Nights- FY17 Occupied Room Nights- FY16 Occupied Room Nights- FY15 Quarter 1 625 705 639 104 Quarter 2 635 593 696 286 Quarter 3 777 712 762 590 Quarter 4 819 525 830 601 Sea View Rooms

SLIDE 12

ROOM REVENUE

Room Revenue has increased by 7% in FY18 due to

increase in occupied room nights by 10%, but the Average Room Rent(ARR) has been decreased by 3%.

Ideally the ARR in Q3 in comparable hotels of Goa

is approx. 30% higher as compared to the average

f Q1 and Q2. In this case it was a mere 19%.
Similarly Q4 is generally 20% higher, however in
ur case there was no difference. Hence, it can be

concluded that we are not taking any advantage of the season period.

Period Occupied Nights Room Revenue ARR % to Revenue Occupied Nights Room Revenue ARR % to Revenue Occupied Nights Room Revenue ARR % to Revenue Occupied Nights Room Revenue ARR % to Revenue Quarter 1 2,466 7,765,784 3,149 22% 2,615 7,954,685 3,042 24% 2,415 6,668,941 2,761 20% 367 1,325,288 3,611 7% Quarter 2 2,481 7,819,494 3,152 22% 2,158 6,476,801 3,001 20% 2,533 6,691,958 2,642 20% 1,181 3,128,655 2,649 16% Quarter 3 2,817 10,472,461 3,718 30% 2,579 10,253,449 3,976 31% 2,829 10,200,069 3,606 30% 2,092 7,734,830 3,697 40% Quarter 4 2,859 8,919,333 3,120 26% 2,331 8,129,132 3,487 25% 2,972 10,086,232 3,394 30% 2,226 7,234,713 3,250 37% Total 10,623 34,977,072 3,293 100% 9,683 32,814,067 3,389 100% 10,749 33,647,200 3,130 100% 5,866 19,423,487 3,311 100% % Change in Room Nights/Revenue/ARR Quarter 1

6%
2%

4% 8% 19% 10% 558% 403%

24%

Quarter 2 15% 21% 5%

15%
3%

14% 114% 114% 0% Quarter 3 9% 2%

6%
9%

1% 10% 35% 32%

2%

Quarter 4 23% 10%

11%
22%
19%

3% 34% 39% 4% Total 10% 7%

3%
10%
2%

8% 83% 73%

5%

Source: Management Information and MARC Analysis FY 17 FY 18 FY 16 FY 15

SLIDE 13

ROOM TYPE REVENUE

The ratio of deluxe to sea view Room is 71% and 29% respectively.
Revenue generated by deluxe room has increased by 17% in FY18 as

compared to 0% and 76% in FY17 and FY16 respectively. ARR for deluxe room has increased by 7% in FY18.

Revenue from sea view room has decreased by 20% in FY18 due to decrease

in ARR by 29% in FY18. Although the room night sold has been increased by 13% in FY18.

It is surprising to note that the ARR for sea view rooms is lower then deluxe
rooms. Ideally the sea view rooms should have been positioned to be sold

at a premium. However, it was noticed that the sea view rooms are being sold at a discount.

Room Type Revenue Rooms Sold ARR % to Revenue Revenue Rooms Sold ARR % to Revenue Revenue Rooms Sold ARR % to Revenue Revenue Rooms Sold ARR % to Revenue Deluxe 2,74,34,684 7,767 3,532 78% 2,35,46,594 7,148 3,294 72% 2,36,63,495 7,822 3,025 70% 1,34,55,453 4,285 3,140 69% Sea View 75,04,560 2,856 2,628 21% 94,13,864 2,535 3,714 29% 99,00,595 2,927 3,383 29% 58,65,070 1,581 3,710 30% Unkonown 37,829 (1,46,390) 83,110 1,02,964 Total 3,49,77,072 10,623 3,293 100% 3,28,14,067 9,683 3,389 100% 3,36,47,200 10,749 3,130 100% 1,94,23,487 5,866 3,311 100% % Change in Revenue/Room Sold/ARR Deluxe 17% 9% 7% 0%

9%

9% 76% 83%

4%

Sea View

20%

13%

29%
5%
13%

10% 69% 85%

9%

Total 7% 10%

3%
2%
10%

8% 73% 83%

5%

Source: Management Information and MARC Analysis FY18 FY17 FY16 FY15

SLIDE 14

ROOM REVENUE ANALYSIS

The annual occupancy of the hotel stood at 83% in FY18 compared to 76%, 84% and 46% in FY17,FY16 and FY15 respectively.
The occupancy has increased by 10% in FY18 as compared FY17, but the ARR has been reduced by 3% correspondingly which is not in favour of the
hotel. In FY17 the occupancy was reduced by 10% but then the ARR was increased by 8%. According to the Industry standards hotels in Goa, the average
ccupancy should be 72%.

Occupancy and Average Room Rent Particulars Available Room Nights Occupied Room Nights Occupanc y (%) Room Revenue ARR % to Total Available Room Nights Occupied Room Nights Occupancy (%) Room Revenue ARR % to Total Off Season 6,405 4947 77% 15,585,278 3,150 45% 6,405 4773 75% 14,431,486 3,024 44% Season 6,370 5676 89% 19,391,794 3,416 55% 6,370 4910 77% 18,382,581 3,744 56% % Change in occupancy/ARR/Revenue Off Season 4% 8% 4%

4%

8% 12% Season 16% 5%

9%
15%
9%

7% Total 12,775 10,623 83% 34,977,073 3,293 100% 12,775 9,683 76% 32,814,067 3,389 100% Income as per accounts 34,977,073 32,814,067 Difference*

% Change in Total occupancy/ARR

10%

3%
10%

8% FY17 FY18

Available Room Nights Occupied Room Nights Occupancy (%) Room Revenue ARR % to Total Available Room Nights Occupied Room Nights Occupancy (%) Room Revenue ARR % to Total 6,405 4948 77% 13,360,899 2,700 40% 6,405 1548 24% 4,453,944 2,877 23% 6,370 5801 91% 20,286,301 3,497 60% 6,370 4318 68% 14,969,543 3,467 77% 220% 200%

6%

34% 36% 1% 12,775 10,749 84% 33,647,200 3,130 100% 12,775 5,866 46% 19,423,487 3,311 100% 33,647,200 19,423,487

83%
5%

FY16 FY15

SLIDE 15

ROOM REVENUE ANALYSIS

Off Season

The hotel has achieved 77% occupancy in FY18 during off

season compared to 75% in FY17, 77% in FY16 and 24% in FY15. On account of increase in number of room nights

ccupied during off season by 4% in FY18.
In terms of Average Room Rent(ARR), there is 4%

increase in FY18. The ARR has increased by 12% during

ff season in FY17.
The ARR of the hotel during off season FY18 stood at INR

3,150.

Season

The ARR of the hotel during season FY18 has been

reduced by 9% over FY17 from INR 3,744 in FY17 to INR 3,416 in FY18. The hotel occupancy is 89% during season

f FY18 over 77%,91% and 68% in FY17,FY16 and FY15

respectively.

Revenue in FY18 increased due to number of rooms
ccupied during season FY18 increased by 16% compared

to decrease by 15% in FY17.

SLIDE 16

RATIOS

Hotel has an occupancy of 83.15% (FY 18) which is higher than the average market occupancy of 77.50%. This can

be due to the hotel selling rooms at lower average room rent than those quoted.

The ARR of Hotel is INR 3,293 (FY 18) which is way lower than the average market ARR of INR 5,041. This is

because the management prefers to keep the rooms occupied in times of lower demand by selling the rooms at a lower price.

The Revenue Generation Index of Hotel is INR 2,738 which is very low compared to the average market Revenue

Generation Index of INR 3,828.

It is suggested to management not to reduce the ARR below certain point as this is leading to lower profits.

Note:- The Hotel Market rate and amount has been

btained from the market research conducted by
MARC. We compared the occupancy, ARR and

RevPar of Hotel with the other competitive hotels. * RevPar or Revenue per available room night, is a performance metric in the hotel industry which is calculated by dividing a hotel’s total guest room revenue by the room count and the number of days in the period being measured.

S.No. Ratio Formula FY 17 Result 1 Market Penetration Index Hotel Occupancy % 83.15% 1.07 Market Occupancy % 77.50% 2 Average Rate Index Your Hotel ARR 3,293 0.65 Hotel Market ARR 5,041 3 Revenue Generation Index Your Hotel RevPar 2,738 0.72 Hotel Market RevPar 3,828

SLIDE 17

EXECUTIVE SUMMARY

Sr. No. Description Reference

1 Observed that the information regarding the restaurant on various websites like Zomato and Trip Advisor is incorrectly displayed as ”CLOSED PERMANENTLY”, resulting to lower footfalls. 12 2 In order to popularize RESTAURANT, we recommend its transformation into a multi cuisine restaurant with a facility to screen live sports/events. The restaurant can also be based on a theme to improve its visual appeal. 13 3 Better utilisation of the idle space on first floor by introducing a Fitness Gym. 14 4 Per the industry standard norms, four and three star hotels in Goa earns 5% of the revenue from banquets and

conferences. Currently, Hotel’s revenue from banquets comprises 2% of its total revenue. Hence, suggestions are

made in order to increase the revenue. 15 5 Hotel can introduce new categories of rooms in addition to current Deluxe and Sea View rooms like Premiere Sea View, Premiere Deluxe, Varanda/Balcao Room by increasing price by INR 500 per new room category in

rder to increase the ARR.

16 6 In order to save the electricity cost it is suggested to link room’s AC power to the room's key card. 17 7 Many of the Hotels competitors like Hotel Fidalgo, The Crown Goa, The Fern Residency, Sandalwood Hotel & Retreat and Treehouse Neptune provide Spa facilities in their hotel. In order to attract more clientele and compete in the market it is suggested to introduce a two bed Spa in the hotel. 17 8 On conducting Market Research, we found that many of the competitive hotels fully stock the Mini Bar on request, as it leads to stock maintenance and fund blockage. Mini bar can be introduced only on the higher categories of rooms as an added advantage with additional price being charged for it. 19

SLIDE 18

EXECUTIVE SUMMARY

Sr. No Description Reference

9 Occupancy of the hotel is higher than the market occupancy, however the Average Room Rent is very less in comparison to other competitive hotels. Hotel’s occupancy in FY16 was 84%, the highest in the recent years. Although there was a sudden fall to 76% in FY17 and then it again rose to 83%. 29 11 Average Room Rent (ARR) of Goa Hotel Industry in season verses off-season shows 30% increase. Hotel, ARR in season (Q3) has gone up by only 19% whereas in Q4 it is less than Q1 and Q2 ARR. It clearly shows that, hotel is not taking any advantage of the season. It is also noted that the occupancy in Q4 is higher than Q3 yet the ARR decreased by 16%. 32-33 12 ARR of Sea View room is lower than the Deluxe room in FY18, which means the sea view room are sold at a discount throughout the year. This could be one of the reason due to which the profits margin have not increased in FY18 irrespective of the fact that the occupancy has increased in FY18 but ARR for Sea View Room has gone down by approx. 29%. 31 13 Preparedness of the accounts team was found lacking, ideally the audited financial statements along with the supporting of FY17 and FY18 should have been easily provided to us. 35 14 Overview of the financial statements has been provided. Revenue has increased by 15.9% in FY18 compared to FY17 due to increase in room occupancy, introduction of new restaurant Restaurant And banquet. 35 15 Revenue is showing an increasing trend but the EBITDA is not moving in the same direction. EBITDA is decreasing which shows that the occupied nights is increasing but the ARR being charged by the hotel is not high as well as the costs are increasing more then proportionately. 43

SLIDE 19

S. No Description Reference

16 Occupancy of Hotel is higher than the average competitive hotels, but the ARR and RevPar is lower in comparison to the average of competitive hotels. (Hotel ARR is 3,293 whereas market is 5,041 and RevPar of Hotel is INR 2,738 whereas market is INR 3,828). 45 17 We have also compared the ratings based on hotel, restaurant and banquet of Hotel with other competitors based in the online reviews. For details refer the following slides. 22-26 18 On comparing the cost incurred, ARR, RevPar, Occupancy of Hotel with the standard industry norms we found out the following- It is suggested to the management to take appropriate measures to curtail the cost and increase the ARR of the occupied nights.

EXECUTIVE SUMMARY

SLIDE 20

OBSERVATION- RESTAURANT

It has been observed that on various website and mobile applications, the information regarding the status of the

restaurant is Incorrect as it says it has been “CLOSED”, which could be one of reasons resulting in lower footfalls.

SLIDE 21

SUGGESTIONS - RESTAURANT

Currently, Restaurant has majority of in-house customer and less of locals visiting the restaurant.
In order to attract the local crowd, management can introduce the following.
Transformation of Restaurant Into a multi cuisine restaurant.
Hold live screening of sports events like the ongoing World Cup, IPL, ISL etc. and offer packages of drinks and starter at

reduced cost.

Improve on the quality of food served.
Themed restaurant can be introduced as the upcoming young generation is more keen on new things.
Introduction of Bollywood Night, Live Rock Music, Karaoke Night on different days.
Happy Hours and Thirsty Thursday can be introduced in the restaurant to attract local customers.
Membership cards with loyalty point system can be introduced by the management to attract customers.
First Floor section of the restaurant is lying idle and can be used as a play area wherein Pool Table can be placed there for

attracting young crowd.

SLIDE 22

SUGGESTIONS – OPEN SPACE ON 1st FLOOR

The weightage of clientele in Hotel comprises of 50% Business Corporates, 49% Domestic Tourist and 1% Foreign Tourist.
A Fitness Gym with basic equipment's like- Treadmill, Cycle, Weights and Bench can be introduced. Since it is generally

noted that corporate delegates prefer maintaining their routine while at work to stay fit.

SLIDE 23

SUGGESTION – BANQUET HALL

Hotel has a fully equipped business centre and meeting/function venue

located at the 5th floor of the hotel with a beautiful sea view complementing to cater the needs of corporate clients.

Management has earned a revenue of INR 10 lacs (approx.) in the FY 18,

currently this is only being booked by corporates and is advertised as a Business Centre.

Hotel does not have a significant revenue from banquet hall. As per

Industry standard, a three star hotels in goa earns around 5% of its revenue from banquets and conferences. Hence efforts should be made to attract Group tourist/guest and small corporates to revive the revenue.

Management is suggested to advertise there banquet as a place which can

be booked for Kitty party, Birthday party, Family Get-together etc. This can help earn revenue to the hotel in addition to the current corporate tie ups.

Management is also suggested to introduce Kids Menu at a lower per plate

price in order to attract local people to celebrate there kids party.

The above suggestion will help the management to attain good occupancy
f the banquet and revenue.

`

SLIDE 24

SUGGESTIONS – CATEGORIES OF ROOMS

Hotel has 5 rooms on each floor. Management currently has categorized its room into Sea View and Deluxe.
We observed that one room on each floor is bigger in size than rest of the rooms which can be sold at a slightly

higher price.

Hotels' first floor room has big size veranda attached to the room which can be recreated to something new and

can be sold off at a higher price than rest of the rooms. Management can have rope Restaurant in the big veranda and create partitions in order to have privacy. Management can create a nice sitting area in the veranda where customer can relax and ease out.

Conclusion - We suggest management to have five categories of room apart from two. The categories are-
Sea View
Deluxe
Premiere Sea View- Big in Size
Premiere Deluxe- Big in Size
Veranda/Balcao Room- First Floor Room with Big Balcony.

SLIDE 25

GENERAL SUGGESTIONS

Electronic Key

It has been generally observed that customers usually

reluctant to switch off the electricity switches. Linking room's AC power to the room's key card can save the electricity cost of the hotel.

Spa

Spa helps oneself to disengaged from work, family and

friends for few hours, it slows down and allows the body to re-generate. Thus keeping this in mind, management

f Hotel can introduce a Spa Facility in there hotel which

helps customer to relax, chill out and recharge.

SLIDE 26

GENERAL SUGGESTIONS

Sign Board

Install a large glow sign board with the hotels name, since

the current board is not visible.

Balcony

Installation of full/partial separations between the

balcony of rooms can be made for better privacy.

SLIDE 27

GENERAL SUGGESTIONS

COMMENTS – SWIMMING POOL

The current swimming pool at Hotel is small and not suitable for adults to swim.
On comparing the swimming pool of Hotel with the swimming pools of its competitors, we
bserved that Hotel’s pool is 5 to 6 times smaller in size and unattractive.
This may be one of the reasons why tourists and corporates might prefer other hotels in the

nearby vicinity with larger pools so that they can swim or relax comfortably.

Per discussion with management, we were informed that as per government regulations it is

not possible to obtain the permission to make modification to the existing structure of the

hotel. Thus the suggestion to have infinity pool or increase the existing size of the swimming

pool is not justified.

SLIDE 29

COMPETITOR - OVERVIEW

SLIDE 30

OCCUPANCY COMPARISON

Hotel has a good occupancy rate throughout the year, but there are competitors like Goa International Hotel, Sandalwood Resort &

Retreat & The Crown Goa that have an occupancy rate of 90%. However the occupancy is higher than the average market

ccupancy for FY 17.
The ARR of Hotel is very less in comparison to other competitor hotels, so It can be concluded that management can increase their

ARR as other hotels are selling higher and also meeting the target of higher occupancy.

SLIDE 31

Hotel has below average ratings in all the key areas as compared to the competition.
Customer feedback should be considered and accordingly improvements could be brought in.

RATINGS OVERVIEW – BOOKING.COM

SLIDE 32

TRIP ADVISOR RATING – RESTAURANTS

In the areas of Food & Value, Hotel is on par with the competition.
It however falls behind its nearest competitors in the area of service.
This can be mainly attributed to the long time taken to prepare the dish, less number of waiters.

SLIDE 33

Sr. no.

Name Location Capacity Amenities Veg Non-Veg 1 Varanda Do Mar Panaji 75 Liquor served, Air Conditioner, Wi-Fi / Internet, Bathroom, Heating 550 550 2 The Crown Goa Panaji 125 Liquor served, Air Conditioner, Wi-Fi / Internet, Stage, Projector, TV screens, Bathroom, Heating 500 750 4 Hotel Fidalgo Panaji 100 Liquor served, bar counter, PA system, Projector facility 675 850 5 Vivanta by Taj Panaji 100 Liquor served, Air Conditioner, Wi-Fi, Internet, Bathroom, Heating, Projector, PA System 1200 1300 6 Hotel Mandovi Panaji 120 Liquor served, Terrace, Air Conditioner, Wi-Fi / Internet, Stage, Projector, TV screens, Bathroom 450 525 7 Hotel Grande Delmon Panaji 120 Terrace, Air Conditioner, Wi-Fi / Internet, Stage, Projector, TV screens, Bathroom 450 550 8 The International Centre Dona Paula 125 Liquor served, Air Conditioner, Wi-Fi, Bathroom, PA system, Projector facility 325 400 Average Price of Competitors 600 729

550 500 675 1200 450 450 325 550 750 850 1300 525 550 400 200 400 600 800 1000 1200 1400 Varanda Do Mar The Crown Goa Hotel Fidalgo Vivanta by Taj Hotel Mandovi Hotel Grande Delmon The International Centre Veg Non-Veg

BANQUET COMPARISON

SLIDE 34

Delivering Excellence. Partnering Success. Goa | Pune | Mumbai