final board of directors report

SPH R-425

Final Board of

Directors Report Taylor Asmann, Taylor Brockmiller, Lirong Dai,

Megan Humes, Kelsey Huse, & Liujing Wang

Hotel California

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TABLE OF CONTENTS Introduction ................................................................................................................................................................. 2

Company Overview ................................................................................................................................................... 2

Mission & Vision ...................................................................................................................................................... 3

Industry Overview ..................................................................................................................................................... 4

Property Overview .................................................................................................................................................... 5

Human Resources Philosophy ................................................................................................................................... 7

Strategic Plan ............................................................................................................................................................... 8

Strategy Overview & Positioning .............................................................................................................................. 8

SWOT Analysis ........................................................................................................................................................ 9

Balanced Scorecard ................................................................................................................................................. 11

5 Measurement Criteria ............................................................................................................................................ 18

Total Revenue ......................................................................................................................................................... 19

Total Food Revenue ................................................................................................................................................ 20

Staffing Competence ............................................................................................................................................... 21

Guest Service Satisfaction ....................................................................................................................................... 22

Occupancy Rate ....................................................................................................................................................... 23

Evaluation of Overall Financial Picture .................................................................................................................. 24

Revenue and Expenses ............................................................................................................................................ 24

Cash Flow ................................................................................................................................................................ 26

Inventory ................................................................................................................................................................. 27

Future Projections ................................................................................................................................................... 28

Recommendations for Improvement ....................................................................................................................... 29

Future Goals & Objectives ....................................................................................................................................... 31

Conclusion .................................................................................................................................................................. 32

References .................................................................................................................................................................. 33

Appendix .................................................................................................................................................................... 34

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INTRODUCTION

With the San Francisco hotel market booming, The Hotel California is in a great position to bring in a share of visitors and produce revenue. The Hotel California uses a more for less marketing strategy that enables it to give its guests a high end experience for an affordable price.

COMPANY OVERVIEW Hotel California is located in the heart of San Francisco. The hotel aims to provide high quality services and facilities for a discounted price. The hotel’s financial standing has been decreasing for the past few years and the company has not had the funds to refurbish or improve their facilities. The atmosphere that the Hotel California strives to create is a high-end, clean and welcoming environment in order to boost the business we lost in recent years. In addition, a friendly and competent staff is our biggest advantage. In order to increase our revenue, we selectively focused our target market on leisure travelers and concentrated our energy on quality of food and beverage service. Based on all these factors, we achieved our “more for less” marketing strategy.

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MISSION & VISION

Mission Statement

• Hotel California’s mission is to exceed the expectations of guests

and provide exceptional accommodations for business and

leisure travelers.

Vision Statement

•Hotel California’s vision is to be our guests’ optimal multi-purpose destination choice for high quality service.

How?

•Hold our employees to the highest standard to adhere to the individual’s preferences•Provide a prestigious state-of-the-art facility•Deliver high quality meals at our restaurant•Offer spacious business areas, as well as event and meeting-specific

amenities

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INDUSTRY OVERVIEW

Located in San Francisco, California, the Hotel California is in a prime location for both business and leisure travelers. With 16.9 million visitors in 2013, San Francisco is a heavily visited area that supports a steady hotel industry. There are currently over 33,642 hotel rooms housed in 215 hotels within the county/city of San Francisco (San Francisco Travel).

The average daily rate of hotels in the San Francisco area has risen 88% in the past year, ranking number one for priciest hotel area in the United States at an average of $397 a night, according to a Bloomberg article (Brandt). These high rates are in part because of the vast amount of activities and opportunities that San Francisco offers.

While a mass amount of hotels exist in this area, The Hotel California will be able to compete for a decent share of the San Francisco market with our significantly lower prices and unique services and amenities.

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PROPERTY OVERVIEW

The Hotel California is located in the golden state of California, in the heart of San Francisco. Our prime location allows guests easy access to the city and all of the opportunities that it provides, without ever commuting too far from their hotel.

We have positioned ourselves as a “more for less” four-star hotel, giving our guests a high-end experience without the high cost. We currently have 250 rooms and have recently done renovations on all of our rooms (leisure and premium) to provide guests with a more comfortable and upscale experience. The Hotel California also houses several additional facilities such as a retail shop, travel and tour desk, valet parking, a lobby kiosk, a lobby bar and an executive lounge. These facilities also allow guests a fast and convenient check in and out, hassle free parking, and comfortable leisure areas.

Along with our updated facilities, our hotel offers guests multiple services to enhance their experience. The majority of these services were focused within each room so that while guests are relaxing in their room, they have all of the amenities that they need. Some of these services include: telephone, guest room internet, guest room entertainment, room service, a minibar of food and beverage and a turndown service. To make the experience more enjoyable and convenient for our guests, we also offer, express check in/check out, a concierge, and guest laundry and dry cleaning services.

Though we are not positioned as a high-end hotel, we offer many of the same facilities and services as a high end hotel would. Because we offer several of the same amenities, but at a lower price, we appeal largely to business travelers, but are also an ideal hotel for leisure travelers.

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Facilities Facility Available Revenue Operating Cost

Retail Shops May $3,000 / month lease N/A Travel & Tour Desk February $2,000 / month lease N/A

Valet Parking May $400 / month lease N/A Lobby Kiosk February Per Price $1,500 / month Lobby Bar February Per Price $2,000 / month

Executive Lounge June N/A $1,000 / month Figure 1

Figure 2

Services Facility Revenue Operating Cost

Parking $3,800 / month + $2,100 / month

$300 / month

Telephone $1 per occ. Room $200 / month & 20% of revenue

Guest Laundry & Dry Cleaning

$3 per occ. Room $2,000 /month & 20% of revenue

Guestroom Internet $4 per occ. Room $300 / month Guest Room Entertainment $8 per occ. Room $200 / month and 40% of

revenue Room Service Food &

Beverage $2,000 / month lease N/A

Mini Bar Food & Beverage $400 / month lease N/A Concierge N/A $1,500 / month

Express Check In/Out N/A $2,000 / month Turndown Service N/A $1,000 / month

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HUMAN RESOURCES PHILOSOPHY Hotel California’s Human Resource philosophy consists of four different segments. Based off of these segments the four main goals that the hotel wish to accomplish are high competency levels, quality and comprehensive training, well-paid and satisfied employees, and state-of-the-art facilities and atmosphere.

High competency levels and quality employee training work closely with one another. To achieve above-par competency levels, quality and extensive training will be needed. At the beginning of January, we spending 3% of each employee’s salary to train. We had this strategy until April because we were starting to notice that our costs were extremely high, especially in comparison to the hotels. For the month of April, we lowered the training expense by only training essential employees. With this selective training, we lowered the cost from 3% to 2%. We noticed that this did not have much effect on competency levels and we saved money in our total expenses.

In May, we completely rid training for a month, to see if this would help our overall expenses, which it did, but there was a huge decrease in competency levels. Therefore in the next month, we installed training back into our budgeting, decreasing the overall training from 3% to 1%. Competency levels were still struggling after this installation. For the remaining months, we implemented a 2% training system. This improved our staffing to 100% in all departments (as shown in figure 3).

As for compensation, we had to decrease our employee’s salaries overtime to help with our high expenses. Once we modified these salaries to average between the guidelines given, we found this helped our turnover rate, employee satisfaction, and overall expense. Lastly, we improved our facilities to help improve guest and employee satisfaction. Facilities investments are discussed previously in Figures 1 & 2. A good first impression stems from good and clean facilities and satisfied guests lead to satisfied employees.

Figure 3

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STRATEGIC PLAN

STRATEGY OVERVIEW AND POSITIONING

Since our hotel is located in San Francisco, the other four hotels are found in the same surrounding area. The other four hotels are all high-end hotels, matching our hotel. The graph above shows that the positioning of our hotel is value-priced. Also, we intend to use more for less marketing strategy to boost our hotel’s business. In the graph, 0 is the lowest, and 6 is the highest rating. Therefore, we can safely conclude that Hotel California is the lowest priced and second highest service quality among all other hotels in the San Francisco area.

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SWOT ANALYSIS

Strengths ● Qualified Market ● Staffing Lobby bar ● Restaurant ● Focus on training ● Marketing/advertising ● Beverage market share

Weaknesses ● Room and front desk

satisfaction ratings were low ● Some rooms out of service ● Utilization of facilities due to

refurbishments ● Focusing on loans for short

term

Opportunities ● RFP ● Capitalizing on non-residents

for food and beverage ● Quality of life ● Location

Threats ● Same market as all of the

other hotels ● Inconsistent flow of guests,

due to more peak weekends

Strengths:

Our main strength would be the competency of our staff. The Hotel California made training our staff a high priority. As stated in our mission statement, our goal is to provide exceptional accommodations and exceed guest expectations. As a group we felt that making sure our staff was properly trained would help us accomplish that.

Another strength that the Hotel California has would be our large beverage market share. The large portion of our revenue came from our restaurant and beverage sales. This is because we don’t limit these amenities to just guests. We saw the opportunity we could have by offering our restaurant and lobby bar to the public, and decided to capitalize on it.

Our last main strength would be our marketing and advertising. We spent a large amount of our money on this section. We delegated our money in various categories for our marketing to ensure that we would hit a large demographic. While our bread and butter were leisure travelers, we still made sure that businessmen and women were also knowledgeable about our hotel and what it has to offer.

Overall these three components, competency of staff, beverage market share, and marketing and advertising, worked together and brought us to the success we are having today.

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Weaknesses:

The main weakness Hotel California had to endure was our low satisfaction ratings. These low ratings were because a lot of our rooms and certain amenities were not accessible at certain times due to refurbishments. This was a huge challenge for us because we wanted to improve our facility, but when we did our guests were not happy.

Another weakness we had was our front desk ratings. We struggled with this the entire simulation because we were constantly understaffing or overstaffing our front desk. We would put the recommended number of employees at our front desk, but it always ended up being too many or not enough employees. We never were able to find the perfect amount.

Opportunities:

The biggest opportunity we had were the RFP’s. RFP’s are huge in the hotel business because they guarantee the winning hotel a certain number or rooms and sometimes food and beverage. Hotel California was able to win one of the RFP’s and that impacted our hotel significantly for that month. Winning more RFP’s would help ensure our hotel would make a profit from month to month.

Another opportunity we had was our location. We were located in a high traffic area that is accustomed to tourism. This gives us a leg up because our area is already used to a large number of tourists and travelers may be more inclined to stay at our hotel because it is new.

Our last opportunity would be capitalizing on non-resident food and beverage sales. While stated in our strengths section, we are already capitalizing on this, but there is always room for improvement.

Threats:

The main threat Hotel California has is that we are priced very similar to all the hotels in our area. This poses a threat because we do not stand out in regards to price, so potential customers might overlook us and decide to go to a different hotel that they have stayed at before or even a chain hotel. Not only are our prices very similar to the other hotels, but our amenities are fairly similar as well.

The other threat that poses the second most concern, is the inconsistent flow of guests. The inconsistency is due to peak weekends that people would travel, leaving us with a low occupancy rate during the weekdays as well as weekends that do not attract visitors. Both of these threats need to be taken into consideration, and we need to have a plan of action to help combat them.

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BALANCED SCORECARD

January:

For the first week, as a group we decided that we wanted our target goals to be challenging yet still conceivable. As you can tell from the table above we were on par with our market section as well as our associate engagement section. However, we were struggling in our financial and guest satisfaction section. We were significantly lower than our target goals in every category except for guest service. As a group we concluded that this was because it was our first month as a new property and we had a large amount going under renovations. We made note of this and made adjustments.

Actual Target DifferenceMARKET

Room Market Share 11.89% 15% -3%REVPar $99 $110.00 -$11.00

TRevPar $142 $150.00 -$8.00 92.68FINANCIAL

GOP 17.74% 30% -12%Net Profit ($5,469) $200,000.00 -$205,469.00

ROE -0.02% 1% -1.02%Management Fees $35,672 $100,000.00 -$64,328.00 10.07

GUEST SATISFACTIONRoom Refurbishment 56% 100% -44%

Public Space Refurbishment 59% 100% -41%Facilities 0% 100% -100%Services 38% 100% -62%

Guest Service 100% 100% 0% 50.60ASSOCIATE ENGAGEMENT

Staffing Level 182.13% 100% 82%Competence 100.00% 100% 0%

Pay 100% 100% 0% 127.38

BSC Score 70.18223715

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February:

Unfortunately our balance scorecard score was lower than our first month. We were able to keep our market and associate engagement sections either right where we wanted them to be or a bit above, which we plan on adjusting. Our financial and guest satisfaction section is where we are struggling the most. While we were able to slightly increase all of the categories within the guest satisfaction section, we would still like to see a larger improvement. As for our financial section, we improved, but are still suffering in our net profit and management fees.



TRevPar $153 $150.00 $3.00 95.76FINANCIAL

GOP 22.31% 33% -11%Net Profit $27,386 $250,000.00 -$222,614.00

ROE 0.11% 1% -0.89%Management Fees $38,194 $150,000.00 -$111,806.00 16.40



Guest Service 82% 100% -18% 60.20ASSOCIATE ENGAGEMENT

Staffing Level 123.49% 100% 23%Competence 82.61% 100% -17%

Pay 100% 100% 0% 102.03

BSC Score 68.59799334

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March:

This was our highest balance scorecard score yet. We saw significant improvements in our market section and our associate engagement section. We had a slight decrease in our financial section and that was due to our net profit category. We are nowhere close to our target goal and that is due to us spending too much money on our food, salaries, and our rooms/amenities being out of service due to refurbishments. Our associate engagement score was a little too high in our staffing level and we decided that we needed to cut back on some employees.




GOP 18.86% 33% -14%Net Profit $20,466 $250,000.00 -$229,534.00






Pay 100% 100% 0% 109.76

BSC Score 72.15177317

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April:

We were pleased to see our balance scorecard increase a substantial amount. Continuing on with the trend we have seen month to month, our market and associate engagement sections have consistently grown and flourished. This is due to how much time we spend on our staff’s training and also our total RevPar (revenue per room). Even though our guest satisfaction section is still not as high as we would like it to be, it is steadily improving. This means that our guests are enjoying the various refurbishments we have been making. As for our financial section, it went up from last months, and that is due to us delegating out money in a more economical fashion.


Room Market Share 12.41% 15% -3%REVPar $112 $110.00 $2.00


GOP 23.87% 33% -9%Net Profit $70,926 $250,000.00 -$179,074.00






Pay 100% 100% 0% 104.67

BSC Score 76.19514312

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May:

We were extremely pleased to see our balance scorecard score jump a full ten points. Our financial section increased from a 29 last month to 84 this month. The reason for such a huge increase is because we won the RFP for this month. The RFP brought us a lot of business that we desperately needed. We were able to fill more rooms this month and also make a large amount of revenue on our food and beverage. Our guest satisfaction score went up as well because all of the refurbishments that we have been doing are finally finishing up, so our guests are able to take advantage of.




GOP 41.80% 33% 9%Net Profit $267,706 $250,000.00 $17,706.00

ROE 1.05% 1% 0.05%Management Fees $69,077 $150,000.00 -$80,923.00 84.20




Staffing Level 82.69% 100% -17%Competence 72.11% 100% -28%

Pay 88.47% 100% -12% 81.09

BSC Score 86.1209659

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June:

We were not surprised to see that our balance scorecard score decreased because we did not win the RFP again. With that being said, the only section that was affected by this was on financials. Once again this was not surprising to us because we did not have the guaranteed amount of guests, like we did last month. Overall we were pleased that all of our scores are either maintaining or increasing.




GOP 36.16% 33% 3%Net Profit $180,276 $250,000.00 -$69,724.00





Staffing Level 89.85% 100% -10%Competence 87.52% 100% -12%

Pay 88.82% 100% -11% 88.73

BSC Score 81.21080929

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July:

Finally, our last month we were ecstatic to see our highest balance scorecard score yet. All of our sections were finally either where we wanted them to be or very close to is. There still is some work to be done in regards to guest satisfaction, and we planned to do more room refurbishments because that was a main area we were lacking in as well as adding more facilities. We were pleased to see that our financial section was right where we wanted it to be. After this month we are planning on adjusting our target goals so that we can continue challenging ourselves and making continuing offering a great hotel.




GOP 39.11% 33% 6%Net Profit $247,418 $250,000.00 -$2,582.00




Guest Service 100% 100% 0% 72.00ASSOCIATE ENGAGEMENT

Staffing Level 88.13% 100% -12%Competence 100.00% 100% 0%

Pay 88.82% 100% -11% 92.32

BSC Score 89.89083593

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5 MEASUREMENT CRITERIA

In addition to the balance scorecard, other measurements can be used to gauge and measure the success of the Hotel California. These indicators helped us check the progress of the hotel and influenced operations decisions for the following months. The management team chose a variety of factors that would accurately reflect our hotel, and our mission & vision, in order to continue to operation to our core values. The following five indicators were used as measurement criteria, which is analyzed further below:

1. Total Revenue 2. Total Food Revenue 3. Staffing Competence 4. Guest Service Satisfaction 5. Occupancy Rate

When using this method of analysis, Hotel California reach a couple of major takeaways about the hotel and the overall process of using key performance indicators. While the indicators are one strategic method of representation, they do not provide the sole evaluation of the hotel’s success. It rather provides one piece of the whole puzzle, since there are also intangible and qualitative factors to consider. Also, making changing to improve one measurement can cause a trade-off, as another factor might be negatively indicator. This trade-off involves analysis to find the best balance. Overall, it was concluded that numerous factors impact the complex model of a hotel and the industry.

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TOTAL REVENUE

Source: market data and financials

The first indicator the team felt was one good representation of success was total revenue. A hotel cannot run without a steady inflow of revenue. The graph shows the total revenue by month, as well as our ranking in the market for those respective months. For revenue specifically, it is critical to consistently find ways to continually increase the revenue through time, which the graph shows this steady increase. One way Hotel California was able to increase our revenue is finding additional revenue streams. As May was one of the highest revenue months, this can be attributed to receiving additional business through the secure of an RFP. Having an increase in revenue allowed the hotel to invest in additional services in the hotel, such as dry cleaning, guest room entertainment, and parking, which all brought in additional revenue. Overall, Hotel California consistently stayed on par with our competitors in the industry.

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TOTAL FOOD & BEVERAGE REVENUE


In addition to looking at the overall revenue through the months of operations, the management team felt like further analysis should be conducted on the food revenue. Hotel California wanted to capitalize on the opportunity to provide good food & beverage services to not only the hotel guests, but be a destination of choice from non-hotel guests. Like total revenue, the total food revenue had a steadily increases each month, showing signs of improvement throughout each month. The hotel’s strategy and position for our food & beverage sector was maintaining average prices for food, and continually improving our margins. This led to one of the prized possessions of the hotel. As we received additional capital to invest, the hotel had the opportunity to grow our food business by adding a bar lounge. This allowed Hotel California to find ways to continue to grow to offset our expenses, and execute the model by providing excellent accommodations to both the business and leisure travelers.

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STAFFING COMPETENCE


The management team believes that the employees should be held to the highest standard, and their competence is directly relatable to the hotel’s performance. Like the balance, the goal is to reach the 100% staffing competence, but learned through the past months how training can affect this value. While this is not the strongest area in the market, the hotel is moving in the right direction. Staffing Competence also directly follows Hotel California’s vision implementation.

The decrease in May can be attributed to the trade-off the management team faced. The expenses were rather high, as we had been training our employees at 3% of their wages. In May, it was decided to take out training to reduce fixed costs and work on improving the net profit. Hotel California adjusted by gradually adding a couple percentage of salaries into training. In the future, the management team hopes finding this balance will allow our competence to grow into the 90% range.

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GUEST SERVICE SATISFACTION


Another indicator that our hotel used to measure success was guest service satisfaction. This was an obvious choice, as this indicator directly relates to Hotel California’s mission and vision and this would be a great benchmark the effectiveness of the hotel’s operations. Like the balance scorecard, this is another measurement that has an optimal 100% goal. There are many factors can be contributed to guest service satisfaction, such as the state of the facilities, the quality of the staff, and the accommodations provided, which provided the opportunity to make many decisions to improve this measurement.

Like staffing competence, the same changes that were aimed to increase overall profit in May sufficed the guest satisfaction measurement. In order to turn things around, the management team decided to invest in guest feedback to hear about their suggestions, which directly helped effective strategic decisions in the future. Also the improvements to the hotel took a couple months to put into service, which allows the future months to take advantage of these amenities.

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OCCUPANCY RATE


The last indicator that would provide Hotel California of a good financial representation of its operations was occupancy rate. While there are many services the hotel offers, the main purpose of the hotel is to provide a lodging experiences for the hotel residence, which occupancy shows how many rooms are bringing in revenue. Like the other indicators, the increase and revenue is a result in the increase of the occupancy rate throughout the months. This measurement also helped the management adjust the budget for the following month, such as determining covers and room rates. While some volatility exists with this gradual increase trend, some of the bumps are most likely due to market trends. From an internal perspective, the months of March and April had lower occupancy rates because of the room renovations that took place. Looking forward, Hotel California is currently working on moving above average through our promotion and attracting larger groups of people, such as through RFPs.

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EVALUATION OF OVERALL FINANCIAL PICTURE

The overall financial picture is extremely hopeful. Hotel California launched in January and ended with a negative net profit at the end of the month. However, their net profit peaked in May at $267,706 and leveled out in June and July with ending net profits of $214,466 & $177,154, respectively. This means that Hotel California has been able to adjust their cost of production while efficiently training and maintaining high competencies at the same time.

REVENUES & EXPENSES

The Hotel California has never experienced much turmoil with gaining revenue through room rates and food and beverage. Occupancy rates have been considered a strength for our company and room rates/F&B rates have been adjusted to the clientele throughout the past 8 months. However, with our high revenues have come high expenses. The expenses were reason for a few negative net profits throughout the past few months, but with time and adjustments, the expenses have decreased significantly.


The Hotel California originally positioned itself as a high brand hotel. We set our prices at the higher end of the market, with higher quality expenses to compensate. With time, we offered lower rates for RFPs, which we were awarded one in February, and offered lower rates for market segments that were not as in high demand. We found this helped sell our rooms and increased our revenues and occupancy rate. This helped our revenues because although some of our market specific rooms were discounted, rooms were sold that would have otherwise been lost profits.

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Our hotel expenses seemed to be coming from a variety of different things. First off, our food and beverage were priced extremely high in comparison to all of our competitors, but they also had a high quality percentage. This meant that we were barely breaking even off our cost of productions for the food and beverage. We also were overestimating our food and beverage guest covers, which resulted in loss of sales. We had high expenses from our staffing segment as well. Beginning in January, we followed the training guide for staffing but we found that we had an extremely high staffing rate compared to everyone one else. We also were paying our employees a higher than average salary, with a 3% training cost. We quickly decreased our staffing, compensation, and training. Another high expense that we found was in marketing and advertising. We chose not to decrease this expense because it was bringing in additional revenue by increasing our brand awareness and ultimately increasing our occupancy rate.

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CASH FLOW

As seen in the chart to the right, our

total cash sales have increased significantly since January. We achieved this overall goal by setting affordable room rates for clientele, pricing food and beverage appropriately to the quality, and slowly adding additional income through rentals. The pie chart is a representation of our year-to-date total cash sales, thus January’s 6% is an indication that it was the worst month for our cash flow. Through adjustments and understanding of the project, our total cash sales increased 15%, which we consider to be successful.

When cash inflow outweighs the cash outflow, this puts a business in a safe financial position. By making more cash than its spending, even if some of the cash is considered to be credit or a loan, the business is able to pay bills, update facilities, and invest in whatever they feel necessary to improve their business. In May, Hotel California took out a loan of $100,000 so that we could invest in an executive lounge. This was a strategic financial decision that our team agreed upon because our business market shares were beginning to fall. Once we finished this installation in June, we saw that our business market share increase and our revenues increased as well.

Another indication of our success in our cash flow statement, is the obvious increase in our rental revenue. January, we invested in the Travel and Tour desk, which was guaranteed an additional income of $2000/month, but we would not reap the benefits until February. We began to recognize that our competitors were gaining a lot more additional income through their rental investment, therefore in April, we purchased retail shops and valet parking.



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INVENTORY

Based off the monthly balance sheets, our inventory has gradually increased with time. Beginning with $245,631 in inventory and ending with $530,182 in inventory, we believe that our company is growing and our inventory should too. High inventories mean that there are excess products that are not being utilized. This may be because the occupancy rates were not as high as anticipated but it may also be for preparation towards the future. Within a growing economy, hotels can often predict when their occupancy rates will rise. Accounting for a large amount of business means that the hotel must also account for higher expenses. Having a higher inventory will help combat those expenses and it can be seen as an investment towards the future.

Our inventory may include items like shampoos, toothpastes, towels, cleaning products, and other small items that help maintain guest satisfaction. Not having to purchase these items every month and having the ability to purchase items in bundles helps decrease expenses for Hotel California.


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FUTURE PROJECTIONS

If we would have made our future projections, 3-4 months prior we would not have a positive outlook for the Hotel California. However, since we quickly began to regain our financial standing, our future projections are extremely hopeful.

As for our revenues and expenses we expect that we will eventually be able to lower our expenses to equal 20% of our revenues. According to our chart below, we had the lowest expenses in May with 37.71%. In July we increased slightly with 43.56% of revenues being expenses. This is almost a 10% decrease from our beginning percentage of 54.29 in January. Our future projections are that we will get our expense to revenue ratio down to 20% by the end of the financial year.

Cash flows will continue to increase but we will eventually need to pay off our loans. This means that if cash flow continues to rise, we will budget to gradually pay off our loans over 15-20 years, with interest. So our future projections for cash flow will only be a slight increase. July had a total of $818,751 and the highest we would want to increase our cash flow would be to around $100,000. We do not want to exceed our cash too much and have extreme debt by not paying off our current loans.

As for inventory, we project that our inventory will continue to grow as long as our occupancy rate grows and our facilities improve. As long as the hotel is moving a positive direction, the inventory will grow. There may be some months where inventory takes a hit because of major events where the hotel may be completely booked, but with time the inventory will grow again. As long as the inventory is being accounted for and added back into the budget to combat high expenses, there should not be an issue with the inventory.


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RECOMMENDATIONS FOR IMPROVEMENTS

Based on the performance of our hotel, the general management has been fair and stable ensuring efficiency and profitable. According to the indicators that the organization was rated on such as the total revenue, staffing competence, guest service satisfaction and occupancy rate, marketing, and advertising and room rate there is pressing need for some significant change and improvement. The company mission and vision have set the pace so high when it comes to customer satisfaction since the guest expectation is stated to be exceeded by the provision of exceptional accommodations for business and leisure travelers.

Through offering high state the art facility, ensuring high-quality meals, holding employees to highest standard to adhere and provide spacious business areas, as well us event and meeting unique amenities, customers remain to be the key and the center of our actions. We will put serious consideration on guest satisfaction and fair rates to continue giving a satisfactory service to our customers and attack more for our services.

The first improvement that we started with is the staffing department. In our hotel, we made an improvement in the months experiencing poor staffing competence by ensuring that we employ more temporary staff during periods of high occupancy rate to ensure efficiency in management for example we have add more temporary personnel during May to meet the demand satisfactory. We provided excellent facilities needed for the effectiveness of work to flow and a conducive environment to ensure free working environment and communication. Employees will be properly paid with allowance and overtime payment. Quality training was offered at the different time and need to build and improve employee’s skills and knowledge. High level of competency will be rewarded, and more benefits will increase to ensure motivation of workers. Whenever motivation is instilled in employees, the zeal and passion for delivering the best will be their priority and hence, in the long run, customer service satisfaction will be full filled.

In addition, we continuously increased the revenue stream through customer segmentation and ensuring each segment is satisfied specifically, we will still look at the competitor’s house rate and restaurant menu and decide on how to compete depending on our organizational missions and objectives. We considered furnish convenient facilities such as keeping bath and vanity area fixtures in real operation, offer ample and available parking to draw motorist in need for parking. Taking into consideration for the price, we are planning to reduce price on our menu and reduce the house rate to attract more customers and eventually penetrate the market.

To improve total revenue, we come up with some objectives. Firstly, we are focusing mostly on marketing and advertisement mostly on February, April, and June to create awareness and increase the number of sales and enlarge our market share. We also reduced our marketing and advertising strategy during the month of May to reduce the advertisement cost during that period since demand is high.

From the SWOT analysis, some of the weakness that were observed for example some room were out of service. In this case, we are strategizing on how each single room will enhance

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value to our total returns, this is through up to date renovation of the idling out of service room. In addition to the rooms are upgrading and offering overall cleanliness to our customers and making them know that Hotel California is the best place to be on earth when it comes to hotel services. Above all, this help us upgrade on our satisfaction rating since all solid improvement will be offered from the best staff and quality service offered. We also involved our customer through asking them on what they would like to be offered.

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FUTURE GOALS & OBJECTIVES

Future Goals:

Hotel California will continue to boost our revenue by providing our high service quality to business and leisure travelers.

Future Objectives:

Our future objectives will be made based on future goals. Also, our focus will still be concentrated on providing high service quality. Therefore, we will make our future objectives based on high service quality from four aspects.

● Keep holding our employees to the highest standard to adhere to the individual’s preference. Our human resource philosophy is that we satisfy our employees’ needs in order to let employees deliver the best service to our guests with this satisfaction.

● Maintain delivering high quality meals at our restaurant. Our hotel believes that food is a key element when it comes to high quality service. We insist on using the healthiest and freshest food to provide guests’ high quality meals, even though the best food will cost us lots of money.

● Continue to provide a prestigious state-of-the-art facility. We decorate and refurbish our hotel every month during past several months. We attach importance to every detail of our hotel’s facility in order to provide the best high quality as long as we can.

● Carry on offering spacious business areas, as well as event and meeting-specific amenities. Our target market is mainly business and leisure travelers. Obviously, business travelers not only care about services with regard to employees, meals and facilities, but also consider about meeting environment such as meeting equipment and spaces. Therefore, we will gradually perfect our convention department to catering to business travelers’ needs.

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CONCLUSION

In its first seven months of operations, Hotel California has proven potential exists to continually improve in the future to become one of the hotel destinations of choice in the San Francisco area. Our “more for less” strategy helps position the hotel at a price point to attract both leisure and business travelers. There are four major reasons why investors should finance Hotel California:

1. Prime location 2. State-of-the-art facilities 3. Well-trained and enthusiastic staff 4. Determined and motivated management

Prime location In the heart of San Francisco, Hotel California is conveniently located close to many tourist destinations, attractions the city has to offer, as well as close to the business district. State-of-the-art facilities Since the hotel is our prized possession and main selling point, it is important to maintain and hold our facilities to the highest standard. Hotel California’s refurbishments over the past year can attribute to the facility’s current condition, and are outlined further in the Appendix. Well-trained and enthusiastic staff Our employees are a top priority for Hotel California, and this is reflected with our consistent training and good compensation, as we believe this plays a critical role in the high guest satisfaction. Determined and motivated management Our last pillar of excellence comes from the experience and attitudes of the management team. We are determined to find the optimal guest experience and ensure Hotel California can accomplish and influence a guest’s decision to return.

Looking forward, our hotel to plans to continue using guest feedback and further analysis to make specific improvements to the hotel. With additional capital, we could leverage our marketing stance in the San Francisco area as well as add new facility amenities, without dramatically increasing our room rates.

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REFERENCES

2014. Vinyl Philosophy. Web. 9 Dec. 2015. <http://vinylphilosophy.blogspot.com/2014/04/vinyl-feature-eagles-hotel-california.html>.

Brandt, Nadja. "San Francisco Hotels Are World's Priciest as Rates Surge." Bloomberg.com. Bloomberg, 30 June 2015. Web. 09 Dec. 2015. <http://www.bloomberg.com/news/articles/2015-06-30/san-francisco-hotels-are-world-s-priciest-as-rates-surge>.

Controlling cash flow for business growth, A CIMA case study. (2015). Retrieved December 9, 2015, from http://businesscasestudies.co.uk/cima/controlling-cash-flow-for-business-growth/the-importance-of-cash-flow.html#axzz3tpqr4dJg

Discount strategies. (2015, January 30). Retrieved December 9, 2015, from http://www.business.vic.gov.au/money-profit-and-accounting/pricing/Discount-strategies

N.d. Hotel Garden Inn. Web. 9 Dec. 2015. <http://hiltongardeninn3.hilton.com/en/hotels/california/hilton-garden-inn-fontana-SNACAGI/accommodations/index.html>.

"San Francisco Visitor Industry Statistics." San Francisco Travel. N.p., n.d. Web. 09 Dec. 2015. <http://www.sanfrancisco.travel/san-francisco-visitor-industry-statistics>.

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APPENDIX

Marketing and Advertising Financials:

Percentage of Sales

Jan. 7.51%

Feb. 7.78%

Mar. 7.12%

Apr. 6.81%

May 6.23%

Jun. 7.20%

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$78,000

$80,000

$82,000

$84,000

$86,000

$88,000

$90,000

$92,000

Marketing/Advertising Spending Revenue

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Room Rate Financials:

Refurbishments:

0 20 40 60 80 100 120 140 160 180

January

February

March

April

May

June

January February March April May JuneRevPar 99 96 106 112 117 110Net ADR 147 115 145 137 130 133ADR 169 132 166 160 152 154

Room Rates

final board of directors report

Documents