Question

The Hotel Seawind is one of the premier four-star hotels in Goa. Since its inception in 1990, it has been the favourite of choice of the visitors to the city. It boasts of facilities such as swimming pools, a gymnasium, boutiques, a discotheque, 24 x 7 coffee shop and multi-cuisine restaurant. It has rooms which are classified into three types, as shown below: Class Number of rooms Daily Tariff ($) Economy 200 2,500 Executive 100 4,000 Deluxe 25 6,000 The current financial details of Seawind are summarized below:

(i) Staff Salaries Grade Number Amount per annum per person Total 1 2 3 4 A 1 2,000,000 2,000,000 B 25 800,000 20,000,000 C 70 300,000 21,000,000 D 200 150,000 30,000,000 Total 73,000,000
(ii) Profit from restaurant: $10,000,000
(iii) Profit from the coffee shop: $3,000,000
(iv) Profit from the boutique and discotheque: $2,500,000
(v) Room Tariffs: Economy class: 200 x $2500 x 350 days x 0.40 (occupancy) 70,000,000 Executive class: 100 x $4,000 x 350 x 0.40 56,000,000 Deluxe class: 25 x $6,000 x 35 x 0.40 21,000,000 147,000,000
(vi) Annual maintenance cost (electricity charges, land tax, office stationery and other miscellaneous expenses): $50,000,000
(vii) Profit before tax (PAT/EBT): Total revenues – Total cost Total Revenues $ $ Room Tariffs 147,000,000 Profit from restaurant 10,000,000 Profit from coffee shop 3,000,000 Profit from boutique/discotheque 2,500,000 162,500,000 Total Costs Salary 73,000,000 Maintenance Cost 50,000,000 123,000,000 39,500,000
(viii) Profit after tax (PAT) 13,825,000

Answer 1

The Hotel Seawind's financial exercise involves computing the profit before tax, which is $39,500,000, and the profit after tax, which is $13,825,000, after considering all revenue sources and costs.

Step-by-step explanation:

The subject matter of this exercise is rooted in financial analysis, requiring an understanding of calculating profit before tax (PBT) and profit after tax (PAT) for a hotel business. The Hotel Seawind's financial performance is assessed by quantifying its total revenues from various income streams such as room tariffs, restaurant, coffee shop, and other facilities like the boutique and discotheque. These revenues are then offset against the hotel's total costs comprising staff salaries and maintenance costs to ascertain the hotel's profitability.

The Hotel Seawind's PBT is $39,500,000, and its PAT is $13,825,000, signifying its fiscal outcomes for the year under consideration. Explanation in 200 words: Financial viability in the hospitality sector is gauged through precise metrics such as PBT and PAT. In this scenario, the Hotel Seawind's total revenues amount to $162,500,000. This sum is derived from the annual room tariffs, yielding $147,000,000, and the combined profits of the restaurant, coffee shop, and other amenities which contribute another $15,500,000. Subtracting the total costs, which include a substantial staff salary expense of $73,000,000 and the hefty annual maintenance cost of $50,000,000, we arrive at a PBT of $39,500,000. This figure represents the hotel's profitability before any taxation is applied. Following the deduction of taxes, the hotel's profit after tax stands at $13,825,000, revealing the net income retained by the establishment after fulfilling its tax obligations.