Indicative FSP

Feasibility study of hotel management by an international company

This study aims at the evaluation of the company “Sithonia Beach S.A.” and the examination of the subject whether an agreement that assigns the management of the company to an international one would be at its advantage. Currently, “Sithonia” operates both as a hotel and as a casino. However, a possible agreement would affect only the hotel. Therefore, the evaluation consists of an analysis of the two industries, a description of the global situation, a S.W.O.T analysis and an index analysis and it ends up at the conclusion that the efficiency of the company is not satisfactory. As a result, an examination of alternative modes of operation for the hotel is suggested.
Two solutions are recommended: the management contract and the franchise agreement. For their evaluation, the team has created a practical application in MS Excel. This application indicates the cash flows that the company will generate by each alternative. It, also, evaluates these cash flows by using four methods of evaluating investment projects: the Net Present Value, the Internal Rate of Return, the Pay-back Period and the Discounted Pay-back Period. The team has drawn the conclusion that both from the aspect of business strategy (meaning by using qualitative criteria) as from quantitative analysis, the franchise agreement is more efficient.

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