Hotel Financial Analysis and Recommendations

Cost of the Building: Land+Construction

When was the building bought? YTD amort.construction 2020 / construction P&L --> it has been amortized x years until 2020

At which price did the company sell the building? ((Land + Construction) - YTD amort.constr) + Profit from selling

useful life of the building? construction / construction P&L

Occupancy: 33%. VERY LOW !! ===> 70 rooms x 600 ADR x occupancy x 365 days = 5.059.000 €

F&B Menu: 7 € ==> VERY LOW & doesn't match with an 600 ADR !! [(80% of 100 people for lunch) + (80% of 100 people per Dinner) ] * Menu Price * 365 days = 409.000 €
F&B Breackfast: 18€/person. Reasonable with 600 ADR 80% of 1,5 clients x 33% occupancy * 70 rooms * 365 days * Breackfast Price = 182.000
Payroll: Very few personal for a Luxe Hotel (600 ADR !!) and 70 rooms (occupancy 33%)
Social Security lower than 31%. Includes indemnizations ?? Current Payroll even lower ??
Probably based in outsourced employees, which seems difficult in an 600 ADR Hotel
Not very low EBITDA (37%) but not enough to pay CUOTE (interest + Capital)
They bought the building 10 years ago (YTD Amort = 10x Year Amortization)
They paid 50 Million for the building, which represented 714.286 €/room, which seems a high price where they are not returning the expected yield
Interest Rate : 5%
They probably bought the building with a high leverage (cost: 50 MM; Equity: 5,1 MM)
Long Term assets (40.000.000) financed with Long Term Liabilities (40.003.000): ok
Equity < 50% Shareholders ==> Disolution cause
A/R for an Hotel should be much lower than they are. Collection Ratio: more than 7 months !!
Stocks are 3 times higher than F&B annual Revenues. Difficult to make them liquid
Current Assets (5.500.000) > than Current Liabilities (5.497.000) but very bad quality of current assets won't be enough to pay Current Liabilities ==> Banckrupty

Increase Occupancy
Increase Payroll (decreasing outsourcing) to give better service
Increase F&B Menu price (if necessary, by decreasing clients) to be accordance with ADR
Refinance Debt (probably with a bullet and decreasing interest Rate from 5% to 2-3%)
Review Stocks & Clients and consider their real value
Decrease Capital by compensating losses in order to avoid Dissolution Cause