Newspaper And Hospitality Industry Harvard Case Solution & Analysis

Hospitality Industry:

This is a part of the service sector, which is involvedin providing services like hotels and lodging, transportation, theme parks, event planning and other services related to the tourism sector. Generally hotel and lodging business takes the largest share in the hospitality industry.

As every nature of business in every industry is different from oneanother, so when we need to analyze the financial performances of the firms operating in the hospitality industry, we need some specific financial ratiosbut even within the industry, companies use different types of strategies and business model to compete with other firms.

Now, initially we will outline the major differences in nature of both companies based on the information available and then we will analyze the financial data and ratios of both companies. After doing so, we will be able to identify Company G and Company H.

 

 

Step-1: Business Nature

Outline some major facts about the companies based on the information available:

Company X

Company Y

It only operates (not owns) hotels and residential complexes. Its strategy is to fully own all of its properties
The firm manages itself or franchises its hotels to the third party, so it collects its revenues in two ways.

1) Franchise fee.

2) The management fee for operating hotels.

This firm operates by providing full-scale services by both owning and operating several hotels and resorts.
Growth type is inorganic, rather than owning hotels, it buys the rights to use brand names or manages existing chain of hotels.
The company has also repurchased a significant proportion of its common shares.

Newspaper And Hospitality Industry Harvard Case Solution & Analysis

Step-2: Financial Data and Ratio:

Now based on the given information on financial data and ratios of both firms, we will analyze and compare our analysis of financial data and ratios of the company with the information given above. In this way, we would be able to identify and relate both companies (G and H) with the information above.

Balance Sheet Analysis:

By looking at the commonly sized balance sheet, Company G has 15% current assets as compared to 23% of company H. Moreover, 53% of the total assets of Company G comprises of net property and equipment but company H only has 17% in net property and equipment. Other major difference in thevalue of goodwill is 39% for company H, as compare to just 9% for company G,which indicates that, company G has more fixed assets in its possession than company H.  Further, its liability and owner’s equity side shows that Company H has 159% in its liabilities and -59% in equity but company G has very favorable debt to equity ratio of around 0.9. As company G seems very similar to Company Y, which fully owns its property and it is most likely that company H is actually company X because of its negative equity balance and large liabilities for managing the operations of its hotels.In this way, we would be able to identify and relate both companies (G and H) with the information above..................

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