TASK 1 (a)

BRIEFING NOTE
TO: Finance Director

FROM: Senior Business Analyst

SUBJECT: HiLite's Sucess in Deeland

DATE: 08 November 2024

This briefing note discusses the key factors which have enabled HiLite to be successful in its home
country of Deeland.

EXTERNAL FACTORS

Developed Economy

Deeland has a developed economy, which has experienced strong growth in the last 15years. Strong
economic growth leads to higher consumer spending and contributes to growth in the business
envionrment.

Thriving Tourism Enviornment

Tourism has continued to thrive in Deeland, despite the continued global effects of the recession, with
hotels seeing an average rise in visitors by over 8% on 20X7. Deeland has a highly-developed hotel
and travel industry. This results in increasing demands of hotels and hence resulting in increased
revenues.

Government Support

Deeland government’s continued investment in national infrastructure, particularly the new airport
recently opened in Boria, Deeland’s second largest city. This generated an additional 2·5 million
international visitors last year, approximately 80% of them visiting Deeland for leisure. Strong support
from the government results as a postive sign for hotel industry and results in increased revenues and
profits.

INTERNAL FACTORS

Significant Investment in Web-based Technology

We have made significant investment in web-based technology, which has resulted in over 75% of
room bookings in the 20X7/20X8 financial year being completed through the HiLite website. Our
website, [Link], welcomes 80% of our customers who choose to book directly with us.
This make it convenient and efficient for customers to make bookings with just a click of buttons and
reduces any agent costs.

Staff Development

Eventhough we operate with low numbers of staff in each hotel but the staff in these hotels is highly
trained to provide excellent customer service. This helps to reduce our cost and increase profits. Our
Staff retention rate is 52% and provide 6·2 training days per employee showing great emphasis in
valuing our staff highly, and strong commitment to staff development and retention. We pay above the
Deeland national minimum wage in order to encourage staff commitment and loyalty. In the hospitality
industry, loyalty and relationship building is at the pinnacle of the succes.

Branding

In HiLite we have created Deeland’s most popular hotel brand. It is the strength of our brand, along
with our superb hotel staff who deliver great service everyday, which underpins our success and is a
key driver of our future growth. Having a strong brand creates trust and within our stakeholders
leading to more retention and increased profits.

Market-leading Customer Experience

We continue to deliver a market-leading customer experience by focusing on the quality of our service,
the best choice of locations and great value for money. The great emphasis on customer experience
has led to a 91.6% of Customer satisfaction rate and Customer retention rate of 47%.

Wide Choice of Locations

Through our network of 510 hotels (almost 46,000 rooms), we offer customers the widest choice of
locations (20% more than our nearest competitor). This means our guests are able to stay closer to
their destination, which is important to both our business and leisure customers. Hence our average
room occupancy rate 79·5%.

FINANCIAL FACTORS

In the financial year to June20X8, total sales grew by 9·1% on the previous year to $1,072million. We
achieved a 9·5% growth in our underlying pre-tax profit to $236million and this growth in profit has
produced a strong operating cash flow

Best Regards

Senior Business Analyst

TASK 1 (b)

REPORT
TO: Finance Director

FROM: Senior Business Analyst

SUBJECT: Proposal to Acquire the Comfi Stay Hotel Chain

DATE: 08 November 2024

This report discusses the key factors which have enabled HiLite to be successful in its home country
of Deeland.

SUITABILITY

Deeland

Deeland also has a highly-developed tourism industry which has experienced strong growth in the last
15 years. Although it is currently the leading hotel brand in Deeland (in terms of market share), HiLite
faces fierce competition from several home-based and international hotel chains. Competitive
landscape is changing. One evident trend is increasing consolidation, especially among hotels.

Veelandia

Veelandia is 5000 miles from Deeland and has a developing economy. Although Veelandia has a
thriving tourism indusrtry, but suffers low wage rates and there is some evidence of poor employment
practices in the country. Some evidence of use of under-age labour (minors) in the hotel industry has
been found.

Comfi Stay Hotel

Comfi Stay is a family-run business, which has lacked investment in the last 10 years. There are 20
hotels in the chain and have been running for over 18 years and are located in main coastal resorts of
Veelandia. These are in premium locations but with out-dated facilities. They are viewed as Mid-range
hotels and are not classed as budget hotels which in my view deviate from our strategic goal of having
a competitive price advantage.

FEASIBILITY

Technology & Brand

We have made significant investment in web-based technology, which has resulted in over 75% of
room bookings in the 20X7/20X8 financial year being completed through the HiLite website. Once we
acquire Comfi-Stay our reputation as a brand and web-based technology can be used to our
advantage.

Human Resources

Although we have significant experience in running hotel business in Deeland we dont have
experience of acquisition or running a business in an overseas country. It is expected that some of
Deeland's hotel managers would need to relocate to Veelandia on a temporary basis to assist in
training and staff development in the first year of operations.

Financial Resources

Finance for this investment would be available through a combination of equity and debt finance.

ACCEPTABILITY

Since ‘HiLite’ hotels (HiLite) is a listed hotel chain, the shareholders will accpept the investment
proposal because of positive NPV of $10.5 million.

Cultural differences needed to be considered since Veelandia is a different country.

Financial Analysis

The below are few facts and points that require further investigation:

1. We have a positive NPV of $10.5 million and a payback period of just under 4 years.

2. In my view its unreasonable to have a constant revenue and operating cost for multiple years. It
also needs to be justified on what basis have we obtained the figures.

3. Tax implications need to be considered in our calculation.

Best Regards

Senior Business Analyst