FINANCIAL ANALYSYSIS

FINANCIAL ANALYSYSIS - FINANCIAL ANALYSYSIS AAF001-6...

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FINANCIAL ANALYSYSIS AAF001-6 SEPTEMBER STARTS 2009 ASSESSMENT 2 – CASE STUDY DUE DATE AT THE STUDENT CENTRE BEFORE 4.30PM ON THURSDAY JANUARY 21 ST 2010 2009/10, Sept starts, Assignment 2 Case study, Sovereign Lodge
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Sovereign Lodge Case Study The Sovereign Lodge is an old, but well maintained property that has changed ownership several times over the years. It has no restaurant or bar. It is positioned as a mid-price, good quality "destination" resort lodge. The Sovereign Lodge is open during the skiing season. It opens on December 2 and closes the last day of March. The ski mountain it serves operates on a permit from the state which allows only 120 days of operation per year. Each of the 50 rooms in the east wing rents for $15 for single occupancy or $20 for double occupancy. The west wing of the lodge has 30 rooms, all of which have spectacular views of the skiing slopes, the mountains, and the village. Rooms in this wing rent for $20 and $25 for single or double occupancy, respectively. The average occupancy rate during the season is about 80% (typically, the Lodge is full on weekends and averages 50 to 60 rooms occupied on week nights.) The ratio of single versus double occupancy is 2:8, on average. Operating results for the last fiscal year are shown in Exhibit 1. Mr. Kacheck, the manager of the lodge, is concerned about the off-season months, which show losses each month and reduce the high profits reported during the season. He has suggested to the owners, who acquired the lodge only at the end of the 2006 season, that to reduce the off-season losses, they should agree to keep the west wing of the lodge operating year-round. He estimates the average occupancy rate for the off-season to be between 20% and 40% for the next few years. Kacheck
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FINANCIAL ANALYSYSIS - FINANCIAL ANALYSYSIS AAF001-6...

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