ACC1115 Management Accounting

You are required to work in Pairs to answer the following:

Garnet Hotels operates a chain of hotels in historic towns and cities in the  UK. The hotel group is considering expanding its operation in London by adding additional room space. The company is considering investing in ONE of the following two options:

i)A city center budget hotel offering 80 compact rooms and minimal additional extra services.  This would be a new venture for the hotel group designed to meet growing demand for centrally located hotels attracting guests on a low budget for short breaks and low budget business travelers. The group have identified an existing building that is available on a rental lease and could be re-fitted; it is estimated that the re-fit would take 6 months.

Features of the hotel would include:
Compact rooms with ensuite shower rooms
Online reservations and digital check-in service and key drop
Café lounge open 6am to 8pm serving light meals, tea and coffee and refreshments.
Mini self-check-in gym
Online check-in meeting rooms
High speed internet

ii)Expand an existing boutique hotel, which is situated in a busy upmarket suburb.  The hotel has identified space to build a side block adding 40 large bedrooms to the existing 90 available on site. The hotel group is well established in this sector, the existing portfolio of boutique hotels is designed to serve demand for luxury small hotels within 30 minutes of the city center for business travelers, short and long stay guests. It is estimated that it would take 18 complete the project.

Hotel features already include:
Large ensuite bedrooms
Online reservations and telephone bookings
24hour reception staff and room service
Full dining options in restaurant and café/bar lounge
Spa and treatment rooms and gym facilities
Meeting rooms, conference facilities and events venue

Part One

You have been invited to write a report evaluating each option. Outline how planning, decision making and control could help with these decisions. Your discussion should identify fixed and variable costs and any other factors that you feel are relevant including any non-financial costs and benefits



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