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Financial Analysis and Valuation of Radisson Blu Marina.pptx

Financial Analysis and Valuation of Radisson Blu Marina Hotel
Name – Sunil Dutt Singla Roll No – 215/2013 Course – PGDM (Finance)
  • Mentor – Mr. Ashok Kumar
  • Designation – Chief Accountant
  • Internship Period – 8 weeks
  • Location – New Delhi
Flow of Presentation
  • About Radisson Blu Marina Hotel
  • About Indian Hotel Industry
  • Objectives
  • Comparison with Industry
  • Ratio analysis
  • Comparison between budget and actual
  • Valuation of Radisson Blu
  • Financial Modeling in MS Excel
  • Suggestions
  • Limitations
  • Learning
  • References
About Radisson Blu Marina Hotel
  • Radisson Blu Marina Hotel was build in 1937
  • In march 2010 acquired by Radisson group
  • Radisson Blu Marina Hotel Connaught Place features 90 guest rooms
  • For great dining in Delhi, enjoy Indian cuisine at The Great Kabab Factory (TGKF), cocktails at Connaught, international dining at Fifty9 and also there is a SPA and Business Centre
Major Clients
Indian Hotel Industry
  • The Indian Hospitality Sector is witnessing one of its rare sustained growth trends. Hotel industry is inextricable linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian Hotel Industry. A major reason for the demand for hotel rooms is the underlying boom in the economy, particularly the growth in the information technology enabled services and information technology industries.
  • Classification of Hotels:  
1. Star Category Hotels: 5 Star Deluxe, 4 Star, 3 Star, 2 Star, 1 Star.

2. Heritage Category Hotels: Heritage Grand, Heritage Classic & Heritage Basic
Objectives
  • Position of Radisson blu Marina Hotel in Industry
  • Valuation of Radisson blu Marina Hotel
  • Creating of financial model in Excel
Comparison with Industry
  • Industry
  • Radisson Blu Marina Hotel
Source: HVS- FHRAI- Indian Hotel Industry survey report 2012-13
Revenue Mix
  • Industry
  • Radisson Blu Marina Hotel
Source: HVS- FHRAI- Indian Hotel Industry survey report 2012-13
Source: HVS- FHRAI- Indian Hotel Industry survey report 2012-13
Total revenue and net income
  • Industry
  • Radisson Blu Marina Hotel
Source: HVS- FHRAI- Indian Hotel Industry survey report 2012-13
Ratio Analysis
Comparison Between Actual and Budget
Valuation of Radisson Blu
  • Room rate multiplier:
The lodging industry has a well-known rule of thumb known as the average daily rate (ADR) rule, which states that a property is worth 1,000 times its average daily rate on a per-room basis. The rule is essentially a RevPAR multiplier, setting value per room at 3.5 to 4.5 times annual room revenues, depending on occupancy. More formally: 
Value = Average Daily Rate x Number of Rooms x 1,000
  • Coke – cane multiplier:
Another valuation rule-of-thumb used in the lodging industry is that each room of a hotel is worth 100,000 times the price of a Coke™ in the on-floor vending machine or in-room mini-bar. More formally:
Value = Coke™ price x Number of Rooms x 100,000
  • Discounted Cash Flow (DCF):
In DCF technique we discount the future cash flows with weighted average cost of capital (WACC). Future cash flow is calculated by expecting growth rate that can be achieved by firm. After 10th year we assume a constant rate so that we can find out terminal value at that point.
The assumptions which are taken in applying this technique are also his limitations. On the basis of following assumptions we calculate the value of hotel:
  • First year expected growth rate is 4.5% and for further years it is expected to decrease by .25%.
  • After 10th year the growth rate is constant at 2% and on that we calculate terminal value.
Financial Modeling in MS Excel
  • Excel is excellent tool if you know it properly. Excel is used differently by different organizations. In Radisson blu hotel BOSS and Opera are used for accounting and financial usage. Excel is also used by them in vast nature.
  • Financial modeling is technique in which we use excel functions in such a way our work is done with minimum interjection of entries. When we update some entries later than final output will change automatically.
Suggestions
  • Setting up budget
  • Upgrading software
  • Skill development
  • Required manpower
  • Trends in industry
Limitations
  • Data Availability
  • Partnership Firm
  • Industry Analysis
Learning
  • Applying Budgetary Control Process
  • Benefits of Daily reporting
  • Negotiations with Debtors
  • Advance Features of MS Excel
Thank You
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