Skibo Castle Case Study
Financial Overview
Current operation. The current operation of the Skibo Castle displays many deficiencies according to the news articles and the income statement provided. First, the Skibo Castle earns very little compared to the potential it has. The property should be able to earn more in room, food, liquor, and other revenues. Moreover, it was clear that some of the expense percentages must be changed to be efficient. Most notably, marketing was at 2.7% of total revenue. For their operation, it is not a problem, but upon our teams suggestions on renovations and expansion, certain figures needs to be changed. Proposed renovation. The proposed renovation for the Skibo Castle was mentioned above. Most significantly, the castle will join the Luxury Collection by Sheraton and various renovations will impact the financial statements. First, the Skibo Castle property is very beautiful, but it lacks capacity to effectively produce revenue with the number of members. The estimated cost of this construction and renovation will be $20 million in total. This estimation was made after considering factors such as other hotel …show more content…
It is bit higher because of the high-end restaurant in the Skibo Castle (). Moreover, successful liquor sales have the cost of 25-28% of the sale. The estimated percentage for the cost of liquor sales is also on the higher side of 27% (). In the undistributed expenses, the payroll continued to be the highest figure of 60% of the gross profit. The current payroll was 70.7% of the gross profit, but we estimated that with the management change and higher revenue, 60% of the gross profit would be an appropriate percentage. Except the administration and general expense, everything has increased. As mentioned above, the castle needs to invest more in marketing and gain 300 members by the 5th year. The other undistributed expenses and fixed expenses have increased due to the expansion and
Current operation. The current operation of the Skibo Castle displays many deficiencies according to the news articles and the income statement provided. First, the Skibo Castle earns very little compared to the potential it has. The property should be able to earn more in room, food, liquor, and other revenues. Moreover, it was clear that some of the expense percentages must be changed to be efficient. Most notably, marketing was at 2.7% of total revenue. For their operation, it is not a problem, but upon our teams suggestions on renovations and expansion, certain figures needs to be changed. Proposed renovation. The proposed renovation for the Skibo Castle was mentioned above. Most significantly, the castle will join the Luxury Collection by Sheraton and various renovations will impact the financial statements. First, the Skibo Castle property is very beautiful, but it lacks capacity to effectively produce revenue with the number of members. The estimated cost of this construction and renovation will be $20 million in total. This estimation was made after considering factors such as other hotel …show more content…
It is bit higher because of the high-end restaurant in the Skibo Castle (). Moreover, successful liquor sales have the cost of 25-28% of the sale. The estimated percentage for the cost of liquor sales is also on the higher side of 27% (). In the undistributed expenses, the payroll continued to be the highest figure of 60% of the gross profit. The current payroll was 70.7% of the gross profit, but we estimated that with the management change and higher revenue, 60% of the gross profit would be an appropriate percentage. Except the administration and general expense, everything has increased. As mentioned above, the castle needs to invest more in marketing and gain 300 members by the 5th year. The other undistributed expenses and fixed expenses have increased due to the expansion and