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Homework answers / question archive / Marriot Hotel, a public listed company owns a chain of hotels and resorts throughout Malaysia
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Marriot Hotel, a public listed company owns a chain of hotels and resorts throughout Malaysia. The company has appointed you to value one of its hotels for the purpose of securities commission. The tenure is freehold, built on a 20,000 sq. metre site. The building is of high-quality construction and finishes, with stylish designed rooms and luxurious suites. Facilities provided include a swimming pool, fitness centre, tennis court and spa. The Hotel Management has furnished you the following information:
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Average occupancy for the past three years is as follows: Weekends: 85% An analysis of trading operations for the past three years revealed the following: |
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a. Gross Income of the Hotel:
| Particulars | Amount(Rm) | Amount(Rm) |
| Revenue | ||
| Room Revenue(i+ii)(6,983,600+10,928,100) | 17,911,700 | |
| Food and Beverage 40% of 17,911,700 | 7,164,680 | |
| Telephone & Fax | 60,000 | |
| Banquet hall | 380,000 | |
| Total Revenue | 25,516,380 | |
| Less: Purchases | ||
| Pillow and mattress | 200,000 | |
| Furniture | 500,000 | |
| Bedsheets | 100,000 | |
| Consumables | 800,000 | |
| Gross Income (Revenue-Consumables) | 24,716,380 |
Workings:
(i) Computation of income from Room Renting for Weekends:
| Room Type | (a).No of Rooms | (b)*No of days | (c).Occupancy Rate |
(d). Total Rooms rent on Weekends (axbxc) |
(e) Room Rate |
(f) Room Rent on weekends (d*e) |
| Superior | 200 | 104 | 85% | 17,680 | 200 | 3,536,000 |
| Deluxe | 100 | 104 | 85% | 8,840 | 300 | 2,652,000 |
| Suite | 15 | 104 | 85% | 1,326 | 600 | 795,600 |
| Total | 6,983,600 |
(ii)Computation of income from Room Renting for Weekdays:
| Room Type | (a).No of Rooms | (b)*No of days | (c).Occupancy Rate |
(d). Total Rooms rent on Weekdays (axbxc) |
(e) Room Rate |
(f) Room Rent on weekdays (d*e) |
| Superior | 200 | 261 | 53% | 27,666 | 200 | 5,533,200 |
| Deluxe | 100 | 261 | 53% | 13,833 | 300 | 4,149,900 |
| Suite | 15 | 261 | 53% | 2,075 | 600 | 1,245,000 |
| Total | 10,928,100 |
*The year has 365 days :
Weekdays =261 days
Weekend days=52 *2 (Saturday & Sunday)=104 days.
b.5 Operating expenditure of the hotel.
c.Disadvantages of profit method :
The profit method does not require major computations. Accountants need to subtract an item’s cost from its sales price and then divide it by the sales price. This results in the gross profit percentage. Multiplying this percentage by total sales will provide the cost of goods sold for the current period. Accountants can subtract the current period’s cost of goods sold from the company’s beginning inventory amount. This provides an estimate for the company’s ending inventory.
Disadvantages:
