Financial Statement for Oaks Hotel & Resort Limited - Case Study Example

Oaks Hotel & Resort Limited which performs in the hospitality sector had witnessed a difficult year in 2009 due to economic recession. The economic conditions engulfed the working style of Oaks Hotel & Resort Limited and resulted in the company using its reserves to carry out their normal operations. The economic condition worsened to such an extent that despite growth in revenue from $116,652,000 in 2008 to $126,994,000 in 2009 the company witnessed a decrease in profits from $14,650,000 in 2008 to $9,753,000 in 2009 which is a cause of worry and highlights the manner the external environment was influencing the working of the company. The inability of the company to generate revenues from its normal operations made business difficult and resulted in a company having negative reserves of $737,000 and decrease in retained earnings to $10,635,000. This was a cause of worry and requires changes in the manner the hotel works and will have to rethink towards devising the pricing strategies and look towards selling off some of their assets to be able to have sufficient liquidity and to ensure long term profitability from the business. This essay thereby embarks upon and presents the different pricing and selling of strategies that Oaks Hotel & Resort Limited has to use to be able to generate sufficient liquidity and revenues to be able to finance their daily business activities. The financial statement for Oaks Hotel & Resort Limited highlights that the company had a difficult time in 2009 and had to look towards formulating strategy through which they could finance their different operational requirements and ensure maximum leverage for the company. Oaks Hotel & Resort Limited looked towards selling off some of its properties so that they could finance the business and had the required liquidity which ensured that operations were carried out effectively. In addition to it Oaks Hotel & Resort Limited also slowed down the pace of the inventory that were in their pipeline and just opened three new properties in Dubai, Townsville & Adelaide (Annual Report, 2009). This showed that the company had a conservative approach where they looked towards preserving funds so that they could finance their daily expenses. Despite the steps taken by Oaks Hotel & Resort Limited Company having negative reserves of $737,000 and decrease in retained earnings to $10,635,000 which raises concern and requires that some strategies are developed which will embark upon better business opportunity and will help to generate the required liquidity within the system. One of the major areas which Oaks Hotel & Resort Limited has to look towards is promotional offers so that more and more rooms at their different resorts and properties get occupied. This will help to ensure that Oaks Hotel & Resort Limited is able to generate revenues from its operational activities which will help them to finance their daily expenses. This will also provide the required directives through which the management will be able to forecast their revenues and expenses and will be in a better position to ensure that they don’t get into a liquidity trap and use all their reserves which have been created to finance future projects (Filbeck & Krueger, 2005). A more detailed look at the different properties which Oaks Hotel & Resort Limited have suggest that most of the holding that Oaks Hotel & Resort Limited has are resorts and properties which are aimed at the higher income group. The economic conditions had affected the number of people visiting the resorts as the decreasing power of money has made people to look towards other properties which are cheaper. This requires an urgent measure by Oaks Hotel & Resort Limited to ensure discounting on their properties which can also act as a promotional method. This strategy should be short lived and should be mainly aimed at ensuring that the present economic conditions are dealt with. Consideration should be given to ensure that which looking to provide discounts Oaks Hotel & Resort Limited doesn’t looses its brand image and can continue in a similar fashion after the economic condition improves (Filbeck & Krueger, 2005). Oaks Hotel & Resort Limited can look towards devising strategies which looks towards ensuring that the rates of the rooms are reduced but doesn’t affect their brand name. This can be achieved to a large degree by offering a free night accommodation on different packages which will help to ensure that the overall cost for the room reduces. This will also act as a method through which the company will be able to promote its properties and resorts. This will thereby have a positive bearing on the overall manner in which the company is working and will provide the required directives through which they are able to act in the most positive manner. Oaks Hotel & Resort Limited can look to think in this line primarily because of the fact that the hotel has the required scope to work in that direction. This is primarily on the backdrop that that all the rooms of the resort and the properties are not occupied. Using this strategy will ensure that the rooms gets occupied and will show a higher occupancy rate. This will also act as a method through which the company will be able to generate positive revenues as the upside due to it is more that the downside for the company. This will thereby highlight that Oaks Hotel & Resort Limited will be better positioned and will be able to provide the required impetus through which maximum efficiency can be achieved within their working system. The fact that Oaks Hotel & Resort Limited has diverse hotels and resorts at different places all over the world are affected by different economic factors which requires that the management looks towards dealing with those factors in the most efficient manner. This will require that the business looks towards dividing the management structure so that some of the required personnel can look towards developing strategies which will take care of core business i.e. their resort and hotel business and will look towards dealing with the way the business can ensure sufficient liquidity and develop a mechanism which will allow the business to grow. This strategy will help Oaks Hotel & Resort Limited to ensure that differentiation in the roles will help the management to look into the different environmental factors in a better way. This will thereby provide the required directives through which the business will be able to identify the different areas based on which the overall performance will get enhanced. This will ensure that Oaks Hotel & Resort Limited will be able to have better control measures which will help to monitor the revenues and expenses and will look towards cutting down the unnecessary expenses. This will reduce the pressure that the business presently has to face due to increased expenses and will be able to control the entire structure through which better opportunities for growth and proper performance management strategies can be developed. Oaks Hotel & Resort Limited through this process will be able to ascertain the different factors and the role the factors have on the performance. This will thereby enable in the development of strategies through which better coordination among the different departments can ensure that strategies based on their requirements are developed. This will help Oaks Hotel & Resort Limited to garner maximum efficiency and will be able to ensure that a proper strategy is developed through which better control on the expenses is achieved. This will help Oaks Hotel & Resort Limited to ensure that they are able to deal with the different economic conditions in the best possible manner and will be in a better position to take decisions which will have an influence on the overall strategies and help them to achieve the goals in the most planned manner (Lyroudi & Lazaridis, 2000). Oaks Hotel & Resort Limited has to ensure that their strategies will be able to provide maximum leverage and will be able to achieve best alternatives through which better achievement of the goals is possible. This will act as a method through which Oaks Hotel & Resort Limited will be able to reduce the price charged and will be able to ensure that the entire manner in which the management is working will be able that the business is able to control the manner in which the business is performing and will be able to ensure sufficient liquidity. Thus, Oaks Hotel & Resort Limited has to look towards developing ways through which cost is reduced for the rooms for the hotel by ensuring that the business looks towards monitoring the entire expenses. This can be achieved by ensuring that that company has to look towards reducing the rate of the room but should be presented in such a manner that it appears that it’s a marketing strategy and doesn’t affect the brand name. In addition to it also having different responsibilities for the different functions will improve monitoring and will help Oaks Hotel & Resort Limited to be able to deal with the crisis and ensure sufficient liquidity to finance the future projects. References Annual Report. 2009. Oaks Hotel & Resort Limited. Retrieved on December 15, 2012 from http://www.oakshotelsresorts.com/DocumentLibrary.aspx?pid=362&cdlcid=7 Filbeck, G., & Krueger, T. M. 2005. An analysis of working capital management results across industries. Mid-American Journal of Business, 20(2), 10-17. Lyroudi, K., & Lazaridis, Y. 2000. The Cash Conversion Cycle and Liquidity Analysis of the Food Industry in Greece [Electronic Version]. EFMA 2000 Athens Read More