The same with the revenue per available rooms, the 6 month average comes out to an index of 99. 9 compared with like hotels. In review of this trend analysis, I believe the occupancy rate can be improved during the summer months because of the location and activities offered by this lodging facility. But, after reviewing Santa Cruz County for the year 2005, average occupancy rate for hotels was at 64. 7% and for the whole state of Arizona the annual average was only 65. 8%. Dreschler appears to be on the upper end of these averages at 72. 6% average for the last 6 months of the year.
This figure could obviously be higher or lower because of the figures for the first 6 months of the year. Based on the figures of having approximately 8 rooms on average per day available out of 30 is not all that bad, nor is it good. When the ADR is at $103. 71 on average for Dreschler while the average ADR statewide is only $90. 39, it could be possible to offer discounts during slower seasons in order to fill the rooms. Another option would be to offer specials to with surrounding businesses such as wine tasting events, art and museum events, cultural events, bird watching events, and even biking or hiking outings.
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Potential Improvements Dreschler has quite a bit to offer as far as amenities in whole and the amount of rooms available. I would start with making changes in the rooms, amount of rooms, and types of rooms. For starters, let us cut back on the amount of rooms that are sharing bathrooms and create more privacy for the guest. I would ensure that all rooms and suites have their own lavoratory at minimum. Single rooms with only bedroom setting and sitting nook should have a bathroom with toilet, sink, and shower. There should be a choice of which type of single room a guest would want by changing up the beds.
Offer some with two twins, or single twin and hide-a-bed sofa and of course the queen. Next room style would be more like a mini apartment suite. This would have a sitting area separate from the bedroom and bathroom. Also offer the choices of bed set-ups in the larger suites such as double twins, queen, and king. The bathroom would be the same as with the single rooms as well. There has to be a deluxe suite of some sort, a couple would be good like a Honeymoon suite or an Executive suite, or maybe both. The honeymoon suite would be approximately 800 square feet of luxury.
The bedroom would be separate from the sitting room, breakfast nook just inside the balcony doors; the bathroom would be private with a bath as well as the toilet, sink, and shower. I would probably suggest this room be on the second floor with a balcony overlooking the garden and possible put a Jacuzzi on this deck. The Executive suite would be geared for business personnel that may be in town or nearby for a convention or meeting of some sort. This room would offer two separate sleeping quarters, sitting area, breakfast nook, full bathroom with toilet, sink, and shower, and a deck as well, that overlooks the garden area.
All rooms will be equipped with satellite television, a sound system that is controlled by the guest, alarm clocks, Wi-Fi connection, and air conditioning. Other amenities will include coffee, tea, and hot chocolate in rooms with mini fridges, microwaves, a desk area, literature regarding the history of the surrounding area, community features, events, and activities, and of course for the bathroom we would offer a hair dryer, ironing board that folds up in the wall, and hand lotions, soaps, and shampoos. Other areas of the establishment could be opened up more for private sitting time or just admiring the beauty surrounding the lodge.
Breakfast is served at the door of all rooms by 7 a. m. every morning, and consists of cheeses, fresh fruits, juices, yogurts, and fresh baked pastries. I would like to see a public dining area in the garden for those who wish to dine on their morning pastry and coffee in the comfort of the morning sun. Funding Options There are several funding options available since we have no working capital. We could go public and offer shares to raise money to invest into the modifications, but the problem with this is that as a business owner you will not get to keep 100% of the profits; you will be paying your shareholders a dividend.
Equity investors will require a percentage of ownership as well as the return on their investment. This can also wind up being costly down the road. Another option is to acquire a loan, but most lending institutes will only lend 60%-70% of the requested amount leaving the borrower having to raise the other 30%-40% in equity. This may not be a bad deal if the equity investor does not demand a large portion of ownership and is patient on returns. Another option is a 7(a) loan since they are the simplest and most common loan type from the Small Business Association.
The financing of a 7(a) loan can be guaranteed for a variety of general business purposes such as working capital, machinery and equipment, furniture and fixtures, and debt refinancing (under special conditions). Loan maturity is up to 10 years for working capital and generally up to 25 years for fixed assets (http://www. sba. gov). These types of loans are easily obtained since many banks in America participate in SBA’s program and structure the loans according the requirements of this program.
The SBA shares the risk with the bank if the borrower defaults. The eligibility requirements are fairly broad to accommodate the most diverse variety of small business financing needs (http://www. sba. gov). To Convert or Not to Convert A couple of benefits to converting this property to either a timeshare, condominium, or mixed-use property would be a) the immediate cash flow available up front from the rooms being purchased by timeshare holders; and b) therefore the owner does not have to wait for the project to generate a return on investment.
Timeshare would be nice in that all rooms would hopefully be sold and utilized throughout the year. The length of time that someone holds a share for can be up to 30 years. The condominium aspect is slightly different in that the investor does not actually use the room but hopes to make an return on his investment in that room. This can pose a problem if there is not much activity in that investor’s room. A mixed use set-up would probably be the most beneficial of the three since it would offer the owner a diverse source of income from a variety of shops and businesses within the hotel.
Although, I do not see this being a possibility here since this is a bed and breakfast establishment with over 90 shops within walking distance. You also have the issues of trying to attract high quality brand name partners to work with you, and selling the idea to other investors and possibly lending institutions could pose a real problem if you do not have a complete understanding of the market demands.
I think that keeping this bed and breakfast as is would be the most beneficial but the modifications and room upgrades need to be more accommodating to a variety of guests in order to achieve the higher revenues possible. New Name Coming up with a new name for the establishment can be a challenge since I am suggesting the modifications that I am. There is no significant “one” type of person that I am trying to attract to this establishment, but more of a variety in order to fill all the rooms on a regular basis.
I would like to offer up the name of Santa Cruz Country Inn since this is in the heart of Santa Cruz County and offers up the scenic picturesque country side that it does. All of the features of this establishment speak country to me. The bird watching, hiking, natural beauty of the landscape surrounding the inn, the state parks, proximity of the Santa Cruz river, and just the all around peaceful feeling one has when here. I would like to offer a bed and breakfast that makes all who stay desire to return because of the comfort and relaxation that they feel while visiting this fine establishment.
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