Paper Example on Hotel Ampersand's Financial Performance

Introduction

The financial performance analysis for Ampersand Hotel in London below shows how the company has worked to meet the needs of its consumers and to increase their chances of growth. Ampersand is a located a few minutes from South Kensington Underground Station and it has its own Mediterranean environment. It is a cosmopolitan hotel located in a large Victorian building and it offers a wide range of services. It has games rooms and other sports and it has a gym where its customers can relax and exercise during their visit. The pillared foyer has an elegant lighting with cascading chandelier. The exposed brick arches in the underground bar give it a touch of a modern experience and a sophisticated combination of elegance. A patisserie menu is available in the drawing room and the bedrooms are decorated using unique Victorian designs. The rooms are made in a way that the consumers can have a touch of the culture in the area as they sleep. The decorations show different parts of the culture and how people conduct their lives in the area. For example, all rooms have a minibar inside, an en-suite bathroom and a satellite TV that shows numerous satellite channels.

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The hotel also offers horse riding s34rvices and training and those using the gym can get access to a personal trainer. Table tennis is one of the games available in the game rooms. The hotel is also located near the Natural History Museum and also near the Victoria and Albert museums. The Harrods and Hyde parks are also within the area. The meals are unique and customers can make requests to have their meals made in their customized way. The analysis above shows the kind of a hotel Ampersand is and this opens the view of what to expect of its financial performance. Because of the many good deals and the unique nature of the hotel, the hotel has a strong financial performance as shown in the analysis in the rest of the essay. The purpose of this essay is to analyze the financial performance of the hotel in the past two years and to predict its future performance trend.

Financial Statement Analysis

The financial analysis of companies is an indication of the way the company has performed in the past financial periods. Finance is the blood of the organization and it helps the company to run its operations. The analysis in this essay will be done using the scorecards of the hotel and in comparison with the competitors in the industry. In January for year one, the hotel had a market share of 35.32% for the rooms and made a profit of $220, 636. The hotel had a return on equity (ROE) of -0.91%. The management fees were $5001 and in these items, the company performed worse than Hotel A1, Hotel Akinator and Hotel Alpha that operate in the same category. The other performance in the same month was the guest satisfaction and in terms of the refurbishment of the rooms and the public space, the guests were 63% satisfied, while facilities, services, and guest services attracted a 0%, 38%, and 99% respectively. The associate engagement which includes staffing level, competence, pay services, and associated facilities attracted 84.83% success, 99.83%, 100%, and 59% respectively. On the overall, the hotel performed better than the main competitors with an overall rating higher than the competitors. From the above analysis, the hotel fared well in that month as compared to the rest of the hotels.

In April the same year, the hotel made profits worth $83,972 and a return on equity of 0.34% which was an improvement from the previous years. The management fees were $38,662 and the satisfaction of the consumers had increased to 61%. The trend can be observed in more of the hotel's statements and it is justified to conclude that most of the parts of the organization had improved. However, the market share had dropped to 19% and this could be attributed to the increased number of new entrants into the industry. In May for year one, the figures were relatively the same and only slight changes were recorded in almost all parts of the hotel. However, the return on equity was 0.7% and the net profit was $172,953. The hotel performed much better than some of the competitors. For example, Hotel Atlas had lower net profit, lower return on equity and had higher management fees. In July of year one, the hotel recorded a net profit of $250,178 and this was higher than the previous months. The return on equity also reached 1% and this means the hotel had improved its performance. By November of year one, the hotel was making $22, 416 and a return on equity of 0.09% and the management fees were $32,096. The reduced performance is a sign that there was a reduced flow of customers at this time.

Comparisons

The hotel had a different performance trend in year two. For example, in March, the hotel had a net profit of $157,668, which was above the average for the industry as compared to the rest of the competitors. Two of the competitors, Hotel A1 and Hotel Akinator, had higher net profits and the other two, Hotel Alpha and Hotel Atlas had a lower net profit. The return on equity was higher in the company as compared to the rest of the companies. The hotel also recorded lower profits as compared to a similar time in the previous year. The net profit increased to $184,855 in April and the return on equity increased to 0.7% from 0.6% in the previous month. The performance was lower than that of year one in general. The conditions in the market could have changed and there are chances that the hotel had not attracted as many customers as the previous year.

Conclusion

Hotel Ampersand's financial performance as analyzed above is an example of how the hotel industry operates. The data from year one and year two show that the net profit fluctuates from month to month depending on the market conditions. For example, the market could experience an influx of customers during the festive seasons and a lower number of customers in other low season days. The management in the hotels has the responsibility to make sure that the customers are satisfied and can come back again. The services delivery should be done in a well-organized way to secure more return of customers. The return on equity shows the financial performance by dividing net income by the shareholders' equity. The analysis shows that Hotel Ampersand has the potential to grow into a larger business in the future.