Hotel Market Analysis Executive Summary

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 write an executive summary for it describing what we are going to do in this paper. 

Then open the second attached file “Proposed Hotel” and read the whole paper then and write a proposal hotel recap. 

1.Executive Summary – from file (Project outline) – 500 words 

2.Proposed Hotel Recap – from file (proposed hotel) – 500 words


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Hotel Market Analysis – Exercise Part II Hotel Revenue & Expense Forecast Using Fixed & Variable Component Approach and Hotel Capitalization Analysis Using Income Capitalization Method Objective: This exercise is designed to provide students the knowledge of forecasting hotel revenue and expense using the fixed and variable component approach and then determine hotel capitalization based on the estimated future cash flows. Students learn to practice the cash flow forecast model and valuation model developed by, and analyze and determine financial performance data for the proposed hotel project based on STR HOST reports using HVS programs and your own research. This exercise develops student analytical skills in hotel financial valuations and understanding the driving factors for hotel values. 1. Determine hotel financial projection using HVS FIXVAR Program a. Based on Exercise 1 focusing on demand and supply analysis for the proposed hotel project you are developing, input the Base Year Room Input into FIXVAR program (base year, # of rooms, days open in the year, occupancy and average rate). b. Then determine and input revenues from other operations, such as f&b, telephone or rentals if any by using ratios/multiples to room revenue, food revenues, etc. Two sets of STR HOST reports for Washington DC are posted in the Data Source section as well as the Project section to provide comparable reference data for your proposed hotel financial operations. c. Then you need to determine the fixed and variable components of the revenues and expenses. Please note HVS FIXVAR program provides default fixed component. You can adjust the fixed component if you think it does not reflect the business operations of your proposed hotel. d. The next input will be the inflation estimates. Based on your understanding of the macro economy and the local tourism business, you can adjust the inflation factor (percentage increase or decrease) for each item and for the years in your forecast. e. The last input is occupancy and average daily rate you have determined in the demand and supply analysis. The output sheet will report the analysis and forecast for financial projections of your proposed hotel for the period of years you have determined, such as a ten-year projection. Note: You can consult the HVS Manual for analysis and data input. In addition. You can also follow the step-by-step demo on Hotel Revenue and Expense Analysis and Forecasting which will be discussed today (April 11). 2. Determine hotel value using income capitalization program (Hotel Mortgage-Equity Valuation Model) After completing the hotel financial projection exercise, this part seems to be relatively easier. The required inputs include valuation inputs for loan to value (LTV) based models and NOIs for the projected years. Based on your proposed capital structure, your LTV ratios will probably vary. However, the following were the suggestions as valuation inputs (current rates and ratios used in the industry) for your reference. Step 1. Estimate the appropriate terms under which your proposed hotel could be financed with mortgage debt capital. As in pursuing any business development, the capital structure is typically stacked by both debt financing and equity financing. The first step is to determine the debt financing for taking a mortgage from a bank: Interest Rate – 6.0% Mortgage Amortization – 25 years Payments per Year – Monthly (12) Loan-to-Value Ratio – 60% Debt Coverage Ratio – 1.75 (on Year 4 [2024] net income) Debt Yield – 15% (on Year 4 [2024] net income) Step 2. Determine appropriate equity yield rate and a terminal cap rate. Current equity rate – 15% Current cap rate – 8% Step 3. The overall value of the project is determined through a mortgage-equity method by first valuing the equity component and then adding the initial mortgage balancing to that value. Stabilized year – 4th year (2024) Inflation after stabilized year – 3% Selling expenses (realtor fee) at reversion – 3% Summary of Recommended Valuation Inputs for Loan to Value Based Model: NOI's 2021 Year 1 2021 Copy your NOIs here $ Equity Yield 15.0% Year 2 2022 $ Mortgage Interest Rate 6.00% Year 3 2023 $ Mortgage Amortization (years) 25 Year 4 2024 $ Mortgage payments per year 12 Year 5 2025 $ 60% Year 6 2026 $ Terminal Cap Rate 8.00% Year 7 2027 $ Selling Expenses at Reversion 3.0% Year 8 2028 $ DCR (on Year3 [2020] net income) 1.75 Year 9 2029 $ Debt Yield (on Year 3 net income) 15% Year 10 2030 $ First Projection year Loan to Value Ratio Inflation Rate after Stabilization 3.0% Year 11 2031 $ You need to consult HVS Manual to input the data. In addition, a sample demo for inputting the data for the Westin Hotel will be discussed in class on April 14 and then be posted later for your reference. The output should include the LTV model, Cash flows for IRR calculations, Proof of Value for Total Property Yield, the Proof of Value for Mortgage Yield and the Proof of Value for Equity Yield, After completing the analysis of financial project and capitalization, students are expected summarize the projected financial performances and determine the hotel valuation by interpreting the proof of value for total property yield, mortgage yield and equity yield.
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View attached explanation and answer. Let me know if you have any questions.
View attached explanation and answer. Let me know if you have any questions.

Running head: Proposal Recap

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Proposal Recap

Student’s Name
Institutional Affiliation
Date

Proposal Recap

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Proposal Recap

Georgetown is a major tourist destination with a rich historical federalist architecture
dating back to the 18th century. The town is also home to Georgetown University and a great
shopping destination with premium boutiques and high end retailers. Despite the large
population of tourists, Georgetown only has a few hotels such as the Four Seasons, and Ritz
Carlton Hotel. We thus propose to...

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