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The Lone Star Hotel is a 126-room economy-lodging hotel in Amarillo, Texas. Built in 1980, it is part of Lone Star Lodging, a privately-owned hotel chain headquartered in suburban Houston, Texas. Lone Star operates a network of 207 hotels in four states: Texas, New Mexico, Oklahoma and Arkansas. About half of the hotels are owned and operated by the company.

Each student needs to complete in their team the Lone Star Lodging case study and submit by the due date and time following the submission requirements outlined below.  

The structure and contents of your report must follow the Marking Rubric Criteria. That is, use the section headings:

1. Analyses and Discussion;

1.1. Quantitative analyses and discussion;

1.2. Qualitative analyses and discussion;

1.3. Conclusions; and

2. Recommendation

Quantitative Analysis

The main focus of the report is on “Lone Star Hotel” case study. The management of the company is preparing for a meeting next week. And in order to make the proper reports and the presentation of the meeting, the performance of the hotel, various related quantitative and qualitative factors of the business have been evaluated by the management in the report. Along with that, in order to get the market position of the business, the data and figures have been compared with the industry data. The case explains that the hotel consist 126 rooms. The average sales price, occupancy, revenue, expenses etc of the business has been discussed in the report along with the comparison with industrial data.

The quantitative and qualitative figures of the company have been measured in order to identify that whether the comapny is able to meet the goals and become competitive in the market. The quantitative analysis of the company is as follows:

Quantitative analysis:

The static budget of the company has been prepared firstly. The quantitative analysis has been performed in order to measure that whether the business would be able to occupy the budgeted rooms, if yes, than how much change have occurred into the business. On the basis of the study, it has been found that the total room revenue of the company has been at variance in negative manner and explains abut lower sales revenue of the company (Madura, 2011). More to it, the study has been performed on the total expenses and profitability position of the company. Through the calculations, it has been found that the total expenses and profit figures of the company depicts about the huge changes in the actual and budgeted figures. The calculations brief non favourable performance as the level of profitability from the static figures is quite different from the actual sales and profitability figures of the company. The static figures explain about bad position of the company and few changes must be done in order to improve the position.

Further, the study has been done on the flexible budget of the company. Flexible budget calculations have been done in order to measure that the changes occurred in the actual revenues, profits, occupancy against budgeted figures of the business (Porcelli & Delgado, 2009). On the basis of the study, it has been found that the total room revenue of the company has negative variance and explains about lower sales revenue of the company. More to it, the study has been performed on the total expenses and profitability position of the company. Through the calculations, it has been found that the total expenses and profit figures of the company depicts about the huge changes in the actual and budgeted figures. The calculations brief favourable performance as the level of profitability is higher than the budgeted figures of the company.

Flexible Budget Analysis

In addition, the study has been done on the sales volume variance and the sales volume analysis of the company. Sales volume variance calculations and the sales volume analysis have been done in order to identify the total changes in the sales level and its impact on the performance of the business (Higgins, 2012). On the basis of the study, it has been found that the total room occupied of the company was 25,435. However, the budgeted occupancy units of the company were 27,376. It explains that the budgeted units are quite higher than the actual occupied rooms of the business. It further explains that the sales volume variance of the business is 39041 units.  

Sales volume variance

Actual unit sold

25,435

Budgeted unit sales

27,376

Standard profit per unit

-20.11

Sales volume varinace

39041.16

(Koropp, Kellermanns, Grichnik & Stanley, 2014)

More to it, the study explains that the business is required to focus on the occupancy rate in order to improve the sales revenue, profitability position and the overall performance of the business. Through the calculations, it has been found that the total sale volume variance explains about the unfavourable performance of the company as the total sales units of the company are lower.

The market variance analysis study has been performed further in order to measure the total changes which has been occurred into the market performance of the business. Earlier it has been estimated that the occupancy rate of the business would be 59.50% whereas the occupancy rate of the hotels were 55.30% only (Chandra, 2011). It explains that the changes among the occupancy rate are higher because of the lower marketing position of the business.

Qualitative analysis:

After the study on quantitative facts and figures of the company, the next study has been performed on the qualitative values of the company. The case explains that the occupancy rate of the local competitors of the company is higher than the total occupancy rate of the hotel of the business (Rabin, 2013). It has also been found that the HR department of the hotel has focused to manage the staff in better way. The hotel is taking the maximum utilization form the minimum resources of the hotel. It further explains that the HR department has allotted the right people at the right post so that the position and all the expenses and performance of the company could be managed in better way.

Though, it has been found that the employee turnover of the hotel is higher because of few strict policies of the hotel such as the employees are not paid any kind of benefits and the leaves are not approved by the management of the company. Further, the market factors of the business have been discussed and it has been found that the market performance of the hotel has been lowered against the last year and in context with the competitors of the hotel (Barnes, 2007). Earlier it has been estimated that the occupancy rate of the business would be 59.50% whereas the occupancy rate of the hotels were 55.30% only. It explains that the changes among the occupancy rate are higher because of the lower marketing position of the business. The company is required to focus on the marketing factor more in order to improve the position of the business and manage the performance of the business (DemaMoreno, 2009).

Sales Volume Variance Analysis

It has also been measured through the various statement of the hotel that the market share, performance etc of the hotel is reducing at great level by time because of the huge competition in the market and the ignorance of marketing strategies by the company.

Conclusion:

On the basis of the study on the quantitative analysis and the qualitative analysis of the company, it has been measured that the static figures explain about bad position of the company and few changes must be done in order to improve the positive whereas the flexible figures adds that the position of the company is quite better. In addition, on the basis of the sales variance, budgeted units are quite higher than the actual occupied rooms of the business

The sale volume variance explains about the unfavourable performance of the company as the total sales units of the company are lower. Further, on the basis of the market analysis, it has been found that the changes among the actual and budgeted occupancy rate are higher because of the lower marketing position of the business.

In addition, on the basis of the HR department, it has been found that the department has assigned the right people at the right post so that the position and all the expenses and performance of the company could be managed in better way. However, employee turnover of the hotel is higher because of few strict policies. In addition, it has been found that the marketing factors and the technological factors of the company are also not competitive and few changes are required.

After the evaluation on the various factors of the business, it has been measured that few changes must be done by the business in order to ensure the better position in the market along with the better profitability level and market share. First, it is recommended to the business to reduce the cost level so that the profitability level could be achieved by the business. Further, it has been found that the occupancy rate of the business is lower than the expected. Few changes into the marketing policies and attractive benefits to the guest of the hotel etc could help the hotel to meet the expectations (Rose & Hudgins, 2012).

Further, on the basis of the human resources department, the turnover of the hotel is improving which could be reduced through the management by disallowing strict policies of the hotel such as the various kinds of benefits could be offered to the employees of the company. The company should hire more employs in order to assure that the enough human assets is kept and managed by the business in order to manage the overall position and a better level in the industry. The marketing strategies of the hotel must also be assure and managed by the business in order to manage the overall performance of the business.

References:

Barnes, P. (2007), The Analysis and Use of Financial Ratios: A Review Article, Journal of Business Finance & Accounting, 14 (4), p. 449-461

Chandra, P. (2011). Financial management. Tata McGraw-Hill Education.

DemaMoreno, S. (2009). Behind the negotiations: Financial decision-making processes in Spanish dual-income couples. Feminist Economics, 15(1), 27-56.

Higgins, R. C. (2012). Analysis for marketing management. McGraw-Hill/Irwin.

Koropp, C., Kellermanns, F. W., Grichnik, D., & Stanley, L. (2014). Financial decision making in family firms: An adaptation of the theory of planned behavior. Family Business Review, 27(4), 307-327.

Madura, J. (2011). International financial management. Cengage Learning.

Porcelli, A. J., & Delgado, M. R. (2009). Acute stress modulates risk taking in financial decision making. Psychological Science, 20(3), 278-283.

Rabin, M. (2013). Risk aversion and expected-utility theory: A calibration theorem. In Handbook of the Fundamentals of Financial Decision Making: Part I (pp. 241-252).

Rose, P. S., & Hudgins, S. C. (2012). Bank management & financial services. McGraw-Hill Education.

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