assingment on cost benifit analysis (zbk).doc

Market feasibility

HOTEL LAKE CASTLE

SL. No

Types of Room No.of Rooms

Rate In Taka1$ = 82 Tk.

Occupancy(Annual)

1 Single 24 $ 100 8200

70%2 Twin 16 $ 120 9840

3 Double 12 $ 120 9840

4 Super Deluxe 08 $ 130 10660

Total Room 60

HOTEL WASHINGTON DHAKA

SL. No



Occupancy(Annual)

1 Premier Single 25 $ 100 8200

77%

2 Deluxe Twin 22 $ 130 10660

3 Jr. Ambassador suite

18 $ 130 10660

4 Ambassador Suite 5 $ 150 12300

5 President Suite 4 $ 220 18040

Total Room 74

ASCOTTSL. No



Occupancy(Annual)

1 Standard 21 $ 60 48

81%

2 Deluxe 14 $ 65 5330

3 Super Deluxe 08 $ 75 6150

4 Suite 06 $ 85 6970

5 President Suite 05 $ 100 8200Total Room 54

Sales Analysis Total no of room

Name of hotel No of rooms Hotel Washington 74 Hotel Lake castle 60 Ascott 54 Total 188

Average no of room = 188/3 = 62.67

ANNUAL OCCUPANCY PERCENTAGE

Name of hotel Occupancy percentage

Hotel Washington 77% Hotel Lake castle 70% Ascott 81%

Average occupancy percentage = {(77% + 70%+81% / 3} = 228%/3

= 76%

Profit Analysis

Weighted Occupancy = {No of room X % of occupancy (Each hotel) / Total no of room} = {(74 X 77) + (60 X 70) + (54 X 81) / 188} = (5698 + 4200 + 4374) / 188 = 14272 / 188 = 75.91

Demand supply gap= (Weighted occupancy–BEP) X (Total no of room /100) = (75.91– 50) X (188/100) = 25.91 X 1.88 = 48.71

Note- We assumes BEP (Break Even Point) as 50%; which can be estimated between 45% to 55%.

Numbers of room which can be established without making lose:

= (Demand Supply/ BEP) X 100 = 48.71 / 50 X 100 = 68.24 or 69 (Approx).

So, By analyzing all the data that we collected from the mentioned three hotel, we can establish 69 rooms hotel without making lose at Dhaka city that will provide 3 star facilities.

Decision Making

Visiting three hotels gropingly as well as we have collected some data and based on those data we have found 69 rooms which can be established without making any lose. At the eleventh hour we have come to point of view in order to build up a hotel basis 70 rooms. About our dream Hotel

A model of Hotel Blue Bird

Project Details

Name : Hotel Blue Bird (3 star)Address : House-63, Road – 18, Block – B, Bir Bickrom Major Hafiz Shorok, Dhaka.Project name Hotel Blue BirdTotal No. of Room 65

HOTEL DETAILS

Project profile

1. Ground Floor = Reception, Lobby, Gift Shop, Fast Food, Smoking Zone.

2. Parking Area = we have 1440 Sq. ft land available for parking.

3. 1st Floor = Restaurant, Kitchen, Smoking Zone, health center.

4. 2nd Floor =Administration Office, Banquet; Double-4; Suite-3, single room- 8:

5. 4th Floor = Single Room-7; Deluxe Twin 5; Double-4; Suite-3;

6. 5th Floor = Single Room-6; Deluxe Twin 3; Double-4; Suite-3; Executive Suite-2; Smoking Zone.

7. 6th Floor = Single Room-7; Deluxe Twin-4; Double-3; Suite-1; Executive Suite- 3; Smoking Zone.

8. Roof = Sky Restaurant , Swimming pool, Laundry , Game Zone; Mini Conference Room; Prayer Hall;

PROPOSED FACILITIES

Lobby Swimming Pool

Restaurant Coffee shop

Sky Restaurant Fast Food

Banquet hall Gift Shop

Bar Prayer Hall

Gym Medical Center

Laundry Smoking Zone

Parking Salon

Mini Conference Center Game Zone

Color TV with satellite Channels Wi-Fi & Broad Band Internet

Security.

Financial Statement

Cost Analysis

Cost of land

Require Land = 6500 Sq. Ft.

Cost of Land = Size of Land X Rate (per sq. ft)= 6,500 X 80,000= 5200.00 (lakes)

Cost of Convergence = 10% of Cost of Land.= 10% of 5625.00 lakes= 520.00 lakes

Cost of Development = 10% of Cost of Land.= 10% of 8000 lakes= 520.00 lakes

Total Cost of Land= (Cost of land + Cost of Convergence + Cost ofDevelopment)

= (5200.00 + 520.00 + 520.00 )= 6240.00 lakes.

Cost of Building & Civil Work

Cost of Building = Total Build up area X Rate= 45500 X 9200 (Per Sq. ft)= 4095.00 lakes

Electricity = 10 % of Cost of Building= 10% of 4095.00= 409.50 lakes

Draining & Plumbing = 5 % of Cost of Building= 5% of 3680.00=204.75 lakes

Total Cost of Building & Civil Work = (Cost of Building + Electricity +Draining & Plumbing)

= (4095.00 + 409.50 + 204.75)= 4709.25 lakes

Total Fixed Assets

SL.No. Particulars Taka In Lakes01 Cost of Land 6240.0002 Cost of Building & Civil work 4709.2503 Plant & Machinery 211.7504 Furniture & Fixture 128.0005 Miscellaneous 31.00

Total Fixed Assets 11320.00

Margin for Contingency

= 10% of Total Fixed Assets = 10% of 11320.00 = 1132.00 Lake

Pre – operation & preliminary Expenses

S.No Particulars Taka in Lakes01 Salaries & Wages For 3 months 15.3002 Loan processing & application fee 1.7003 Project report fee 1.0004 Registration & establishment 0.7005 Insurance(2% of building, Plant &

machinery, furniture & fixture85.70

06 Advertisement & publicity 1.6007 Electricity board 1.0008 Telephone 2.0009 Water supply board 1.5010 Margin for working capital 1.0011 Miscellaneous expenses 1.50

Total 113.00

Particulars In lakes

Cost of land 6240.00Building & Civil work 4709.25Plant & Machinery 211.75Furniture & Fixture 128.00

Miscellaneous Assets 30.00Margin for Contingency 1132.00Preliminary & Preoperative 113.00

Total Expenditure 12566.00

Means of Finance

DEBT

Long term loan 12% from Sonali Bank = 5358.50 lakes

EQUITY

Share capital = 7200.00 lakes(72.00 lakes Share @ 10/-)Promoters Contribution = 7.50

Debt Equity Ratio (DRE): DER = Debt/ Equity = 5358.5/7200 = 0.74

(For every 1 taka we put the bank gives a loan on taka 0.74)

Estimation of Expenses

Particular 1st 2nd 3rd 4th 5th

Raw Materials(30% of F&B Sales)

596.89 646.6 695.27 744.98 793.56

Electricity(6% of Total Sales)

288.00 311.98 338.65 372.66 392.76

Salaries(10% Increase Every 2 years)

72.00 72.00 79.20 79.20 87.12

Admin & Management

144.00 155.99 169.33 186.33 196.38

(3% of Total Sales)Advertisement(2% of Total Sales)

96.00 103.99 112.88 124.22 130.92

Insurance & Legal(1% of Total Sales)

48.00 52.00 56.44 62.11 65.46

Miscellaneous(2% of Total Sales)

96.00 103.99 112.88 124.22 130.92

Total 1340.89 1446.55 1564.65 1693.72 1797.12

Depreciation Schedule

Year

Building & Civil works10%

Plant & Machinery

20%

Furniture & Fixture 10%

Misc. Fixed Expenditure

5%Total taka in

lakesValue Dep. Value Dep. Value Dep. Value Dep.

1st 3941.28 394.13

200 40 120 12 30 1.5 447.63

2nd 3547.15

354.72

160 32 108 10.8 28.5 1.42 398.92

3rd 3192.44

319.24

128 25.6 97.2 9.72 27.08 1.35 355.91

4th 2873.19

287.32

102.4 20.48 87.48 8.74 25.72 1.29 317.83

5th 2585.87

258.59

81.92 16.38 78.73 7.87 24.43 1.22 284.06

Estimation of income from room

Single

Year No of room

Occupancy% Rate Room Sold

Days Total taka in lakes

1st 28 60% 12300 15 365 673.42

2nd 28 65% 12300 16 365 718.323rd 28 70% 12300 18 365 808.114th 28 75% 12300 19 365 853.005th 28 80% 12300 20 365 897.90

Deluxe Twin

Year No of room



1st 15 60% 14760 9 365 484.872nd 15 65% 14760 10 365 538.743rd 15 70% 14760 11 365 592.614th 15 75% 14760 11 365 592.615th 15 80% 14760 12 365 646.48

Double

Year No of room



1st 15 60% 14760 9 365 484.872nd 15 65% 14760 10 365 538.743rd 15 70% 14760 11 365 592.614th 15 75% 14760 11 365 592.615th 15 80% 14760 12 365 646.48

Suite

Year No of room



1st 5 60% 16400 3 365 359.162nd 5 65% 16400 3 365 419.023rd 5 70% 16400 3 365 419.024th 5 75% 16400 4 365 478.885th 5 80% 16400 4 365 478.88

Executive Suite

Year No of room



1st 2 60% 18040 1 365 197.532nd 2 65% 18040 1 365 197.53

3rd 2 70% 18040 1 365 263.384th 2 75% 18040 2 365 263.385th 2 80% 18040 2 365 263.38

Total Room SalesRoom Name 1st Year 2nd Year 3rd Year 4th Year 5th Year

Single 673.42 718.32 808.11 853.00 897.90Deluxe Twin 484.87 538.74 592.61 592.61 646.48Double 484.87 538.74 592.61 592.61 646.48Suite 359.16 419.02 419.02 478.88 478.88Ex. Suite 197.53 197.53 263.38 263.38 263.38Total 2199.85 2412.35 2675.73 2780.48 2933.12

Food & Beverage Income

Restaurant

Year Capacity Occupancy% Rate Cover Sold


1st 70 60% 2000 42 365 306.602nd 70 65% 2000 45 365 328.503rd 70 70% 2000 48 365 350.404th 70 75% 2000 53 365 386.905th 70 80% 2000 56 365 408.80

Banquet (Food):



1st 400 60% 600 240 365 525.602nd 400 65% 600 260 365 569.403rd 400 70% 600 280 365 613.204th 400 75% 600 300 365 657.005th 400 80% 600 320 365 700.80

Coffee Shop & Bar:



1st 40 60% 6500 24 365 569.402nd 40 65% 6500 26 365 616.853rd 40 70% 6500 28 365 664.304th 40 75% 6500 30 365 711.755th 40 80% 6500 32 365 759.20

Room Service:



1st 70 60% 950 42 365 145.642nd 70 65% 950 46 365 159.513rd 70 70% 950 49 365 169.914th 70 75% 950 53 365 183.785th 70 80% 950 56 365 194.18

Fast Food:


Days Total taka on lakes

1st 45 60% 800 27 365 78.842nd 45 65% 800 29 365 54.683rd 45 70% 800 31 365 90.524th 45 75% 800 33 365 96.365th 45 80% 800 35 365 102.20

Total F & B Sales

Service 1st Year 2nd Year 3rd Year 4th Year 5th Year

Restaurant 306.60 328.50 350.40 386.60 408.80 Fast Food 78.84 54.68 90.52 96.36 102.20Coffee Shop &Bar

569.40 616.85 664.30 711.75 759.20

Banquet ( Food) 525.60 569.40 613.20 657.00 700.80 Room Service 145.64 159.51 169.91 183.78 194.18Total 1626.08 1728.94 1888.13 1965.48 2165.18

In House Income

Transportation Income:



1st 30 60% 850 18 365 55.852nd 30 65% 850 20 365 62.053rd 30 70% 850 21 365 65.154th 30 75% 850 23 365 71.365th 30 80% 850 24 365 74.46 Laundry Income:



1st 60 60% 250 36 365 32.852nd 60 65% 250 39 365 35.593rd 60 70% 250 42 365 38.334th 60 75% 250 45 365 41.065th 60 80% 250 48 365 43.80

Total In House Sales

1st Year 2nd Year 3rd Year 4th Year 5th Year

Transportation 55.85 62.05 65.15 71.36 74.46 Laundry 32.85 35.59 38.33 41.06 43.80Total 88.7 97.64 103.48 112.42 118.26

Income Statement:

Year 1st 2nd 3rd 4th 5th

Room Sales 2199.85 2412.35 2675.73 2780.48 2933.12

F&B(restaurant+Coffee Shop +Fast Food + B. Food )

1989.62 2155.33 2317.57 2483.28 2645.52

Banquet (Rent) 273.75 273.75 273.75 547.50 547.50

In house service 88.7 97.64 103.48 112.42 118.26

Miscellaneous(Telephone+Salon Swimming pool +Health Club)

248.21 260.62 273.65 287.33 301.70

Total 4800.13 5199.69 5644.18 6211.01 6546.1

Profitability Statement

Particular 1st Year 2nd Year 3rd Year 4th Year 5th Year

Operating profit (Income-Exp.)

3459.24 3753.14 4079.53 4517.29 4748.98

(-) Interest 750 600 450 300 150

(-) Depreciation 447.63 398.92 355.91 317.83 284.06

(-) Preliminary & Pre-operating Exp.

22.2 22.2 22.2 22.2 22.2

Net Profit Before Tax

2239.41 2732.02 3251.42 3877.26 4292.72

(-) Income Tax (20%)

447.88 546.40 650.28 775.45 858.54

Profit After tax 1791.53 2185.62 2601.14 3101.08 3434.18

(+) Depreciation 447.63 398.92 355.51 317.83 284.06

(+) Preliminary & Pre-operating Exp.

22.2 22.2 22.2 22.2 22.2

Available Surplus

2261.36 2606.74 2979.25 3441.84 3740.44

(-) Loan Installment

1000 1000 1000 1000 1000

Net cash Flow 1261.36 1606.74 1979.25 2441.84 2740.44

Return on Investment & Payback Period:-

Return on Investment = (Net Cash Flow / Equity) × 100

1st year = (1261.36/ 6484.21) × 100 = 19.45

2nd year = (1606.74 / 6484.21) × 100 = 24.78

3rd year = (1979.25 / 6484.21) × 100 = 30.52

4th year = (2441.84 / 6484.21) × 100 = 37.66

5th year = (2740.44 / 6484.21) × 100 = 42.26

Payback Period:-

Average ROI = 100 / Average Total on Investment

= 100 / 30.93

= 3.23

= 3 years and 2 months.

Break Even Analysis

Assumed for 3rd year occupancy = 70%

Particulars Taka in lakes

Estimated Revenue 5644.18

Fixed Cost Power 40%

Salaries & Wages

Interest on long term loan

Depreciation

Advertisement & Publicity

Administration

135.46

79.20

450.00

355.91

112.88

169.33

Total 1302.78

Variable Cost Raw materials

Electricity & Power 60 %

Repairs & Maintenance

Miscellaneous expenditure

695.27

203.19

10.00

112.88

Total 1021.34

Contribution Towards Overheads = Income – Variable Cost = 5644.18 – 1021.34 = 4622.84

Breakeven Point

= (Fixed Cost / Contribution) X 100 = (1302.78 / 4622.84) X100 = 28.18

Absolute Breakeven Point

= (Breakeven Point X % of Occupancy) / 100 = (28.18 X 70) /100 = 19.73

Breakeven Turnover

= Estimated Revenue X Absolute Breakeven) / % of Occupancy = (5644.18 X 19.73) / 70 = 1590.85

DEBT Service Coverage Ratio

Coverage – 1 1st Year 2nd Year 3rd Year 4th Year 5th Year

Profit before tax 2239.41 2732.02 3251.42 3877.26 4292.72

Depreciation 447.63 398.92 355.91 317.83 284.06

Interest on long term loan 750 600 450 300 150

Preliminary & Pre-Operating expenses

22.2 22.2 22.2 22.2 22.2

Total 3459.24 3753.14 4079.53 4517.29 4748.98

Coverage – 2 1st Year 2nd Year 3rd Year 4th Year 5th Year

Interest on long term loan 750 600 450 300 150

Installment on long term loan

1000 1000 1000 1000 1000

Total 1750 1600 1450 1300 1150

Average DSCR = coverage-1 / coverage-2 = 20558.18 / 7250 = 2.84Sensitivity Analysis:

3rd Year Operation: Change in income for 1% Occupancy = Total revenue / Occupancy rate= 5644.18 / 70= 80.63

Change in expenditure for 1% Occupancy= Total expenditure / Occupancy rate= 1564.65 / 70= 22.35

Sensitivity Ratio= Change in Income / Change in expenditure= 80.63 / 22.35= 3.61(Either For Every 1TK. Extra We Spend. We Get TK. 3.61 As Revenue )

Cost Benefit AnalysisA = Total Cost of The Project

= 11484.21B = Total Sales – Total Expenses

= 28401.11 – 7842.93= 20558.18

Cost Benefit Analysis = (B / A)= (20558.18 / 11484.21)= 1.79

(It is more than 1TK. So it is beneficial).

Room Types & Tariff

Conclusion We already completed our project regarding a hotel establishment. We analyzing three 3 star hotel data of a specific zone to create one 3 star hotel in that area . Finally we decided to establish one seventy room’s hotel at. By calculating marketing research, feasibility study, financial statement we find that our proposed THE HEAVEN TOUCH HOTEL will be beneficial. Our cost benefit analysis also more than one taka and our return on investment will be back within 3 years 2 months.

Reference:

1. Zumman- Bin- Khaleq (Lecturer of THM) 2. Ronjit Koach (Front office executive of Hotel Washington)3. 4. 5.

SL. No



1 Single 25 $ 150 12400

2 Deluxe Twin 15 $ 180 14760

3 Double 15 $ 180 16400

4 Suite 10 $ 200 16400

5 Executive Suite 5 $ 220 18040

Total Room 70

assingment on cost benifit analysis (zbk).doc

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