Hotel Simulation

Prior to the HOTS assessment, you will be required to write a strategic plan for your hotel. Key areas are described in more detail below. The few sections that are to be incorporated into your plan that are NOT included in your word count are the Cover Page, Table of Contents and References. An example of your plan format is as follows:

1. Executive Summary

Although this is the first section of your business plan, it should be the last thing that you write. The executive summary is aconcise description of the main points of your plan. Think of it as a ‘hook’ for busy readers and prepare it with a variety of stakeholders in mind, including investors, the bank manager, employees and the local community. For this assessment the ES should be around 350 words.

2. SWOT Analysis

A SWOT analysis is a strategic planning tool that allows you to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in your forthcoming business venture. Strengths and Weaknesses are internal to your organization, while Opportunities and Threats arise from the external environment. This analysis will help you to match external possibilities with internal capabilities and to mitigate those factors that might hold your business plans back.

3. Market Analysis

In this section you need to:

1. Briefly discuss the current market situation.
2. Describe how you feel the market is likely to evolve over the next 3 years in the HOTS environment.
3. Identify your target market segment or segments and give the reasons for your choice.
4. State clearly why these customers will buy your products and services.
5. Summarize your intended pricing strategies, including how your pricing may change over time.

4. Vision Statement

The vision statement is a description of your business, not as it is now, but how it will be in the future. In this section you should describe your business as it will be in 3 years’ time. Include different perspectives in your account. What will it look like to your customers, your employees, the bank manager, your investors and the local community? Rather than a list, your vision statement should be an account, easy to read and inspiring.

5. Objectives

Here you should concentrate on your business’s non-financial objectives. This needs some careful consideration as to what decisions you intend to make and when (HOTS decisions tabs). Your business’s objectives are, in broad terms, the results you aim to achieve. They must be SMART:

1. Specific – Keep it simple yet clearly define what you intend to do
2. Measurable – How can you measure your hotel performance in attaining objectives?
3. Achievable – Must be challenging & attainable. Do you have the skills, abilities and knowledge?
4. Result-focused – What will your final outcomes be?
5. Time-bound – Set timelines for each of your goals. How can you incorporate the 5 x W’s & 1 x H into your plan and the time constraints required for each? Who? What? Where? When? Why? How?

6. Financial Targets

Set targets for the following:

1. Revenue
2. Rooms’ occupancy %
3. Average Daily Rate
4. RevPAR
5. Gross Operating Profit
6. ROCE%

You are only just taking over this hotel and you have a limited trading history review. There is some financial information for the last operating year (Year 0). Use the trading history provided by the previous management team as a starting point, but you will need to update these targets frequently, at least at the end of each year.

ROCE % is calculated as follows:               

There are numerous ways to calculate RevPAR, here are a few:

    OR   

Should you have any questions, please be sure to ask them during the HOTS Training session, at the end of each lecture or arrange a meeting to discuss.

Presentation

The aim of this presentation is to summarize key areas of the operation of your hotel in the HOTS environment and should include:

1. Comparison of your plan versus actual strategies.
2. Summary evaluation of your hotels performance, especially deviations from your plan.
3. Review how the industry environment changed from start to finish.
4. Explain your hotel’s departmental results (decisions tabs).
5. Provide a set of recommendations for the next three (3) years (Years 4, 5 & 6).
6. The presentation should focus on the team’s mental models and major learning points (successes and failures).

Use graphs and diagrams to illustrate your performance (use graphs provided in HOTS or create your own in Excel), some examples of graphs that can you can use include, but are not limited to are:

• Graph A – Total Revenue & Net Income Overall
• Graph B – Rooms Department Total Revenue & Net Income
• Graph C – F&B Department Total Revenue & Net Income
• Graph D – Other Department Total Revenue & Net Income
• Graph E – Overall ROE & ROS
• Graph F – Occupancy Rate & ADR

A sample outline of your presentation could follow the following structure

1. Introduction of hotel and management team
2. Assessment of industry environment at the beginning of the simulation and how it evolved over the 3 years.
3. Intended and realised strategies and reasons for any deviations
4. Intended and Realized P&L Statements (highlight major differences and briefly explain why there is a difference)
5. Strengths and weaknesses of your hotel – SWOT analysis (based on your hotel at the end of the simulation)
6. What decisions you made/changed/should have done with regard to the relevant decisions tabs (rates, revenue management, F&B, staff, training, advertising, EMS, refurbishment, guest comfort, extra facilities and finance) to maximize or improve the hotels performance.
7. Physical property condition – include renovations made and current status
8. KEY: Strategic recommendations for the new incoming management team that are thoughtful, specific, detailed and clearly supported by information previously presented in the analysis. You need to do a pro-forma income statement for the following 3 years for this section. This section is of highest importance as it acts as a blueprint for in the incoming management team.
9. Overall conclusion