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Calculating the financial viability of a hotel

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  1. Introductoin
  2. Cost of the project
  3. Building and civil works
  4. Plant and machinery
    1. Kitchen equipment
    2. Air conditioning plant
    3. Power equipoment
    4. Generator set
    5. Furniure and fixtures
    6. Miscellaneous expenses
    7. Preliminary and pre operative expenses
  5. Manpower requirement and cost
  6. Sales revenue
  7. Working capital requirement
  8. Financing the project
    1. Means of financing
  9. Profitability statements
  10. Break even analysis
  11. Cash flow statement
  12. Ratio analysis
    1. Debt service coverage ratio (DSCR)
    2. Coverage ratio
  13. Conclusion

Tourism industry is one of the fastest growing industries in comparison to other major industries worldwide. The word ?tour' is a Hebrew word derived from the word "torah", which means learning, studying, and research. The Merriam-Webster's dictionary defines ?tour' to mean a journey for business, pleasure, education or other purpose, often involving a circular trip where one returns to the starting point. .

The mobilization of physical and human resources will enable the project to enter the operational phase. One of the important features of the operational phase is that the hotel buys and stores raw materials and uses it for production and maintenance. The raw material undergoes transformation through a working process and results in finished goods and services. The hotel also extends credit to some suppliers and patrons. All of these, taken together, form current assets.

[...] of the hotel project To find out the break-even point of the hotel project To find out the rate of return on the investment in the hotel project To find out the preliminary and pre-operating expenses for the hotel project COST OF THE PROJECT The cost of the project includes the working capital requirements. which is separately dealt with later in this study. The capital items which go into project are as follows: 1. Land 2. Building and civil works 3. [...]

[...] For the proposed of hotel project, it is possible to do a break-even analysis with the help of the sales and costs figures computed in preceding paragraphs. To find the break-even percentage, we segregate the various cost elements into the following two categories: 1. Fixed Cost 2. Variable Cost The break-even percentage is given by the following formula: Fixed cost x 100% x Capacity factor Sales variable cost Corresponding to the sales at 75% of occupancy level, the various cost elements can be segregated into the following two categories: Fixed Cost Repairs and maintenance Rates, taxes, and insurance Administrative overheads Depreciation Amortization Interest on long-term loans Variable Cost Food Salary Power, fuel, water Repairs and Maintenance Guest supplies and replenishment Advertising and sales promotion Administrative overheads Interest on working capital Sales occupancy) A x 100 x 0.75 B.E.P. [...]

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