Gr Hotel Essay

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From: Chris Mell, Controller To: Board of Directors, GR Hotel Subject: Strategic options for 2008 Executive Summary GR Hotels Corporation operates two large mid-scale hotels, one in Montreal and one in Toronto as one of the airport hotels. The future outlook for the hotel industry brought up new goals for the corporation: moving to upscale hotels and focusing more on business travellers. We have options to upgrade both Toronto and Montreal hotels, build conference center in Montreal and attract more leisure travellers. The recommendation is to upgrade the 2 hotels due to significant positive incremental cash flow, increasing need for luxury hotels, and board preference. Introduction GR Hotel is a recognized mid-scale hotel located both in Toronto and Montreal. Current performance metrics show that GR Montreal performing below average for mid-scale hotels; GR Toronto performing above average for mid-scale hotels; GR Toronto performing below airport hotels Issues: How do we improve occupancy rates and attract more business travelers given the profitability and funding constraints? Alternatives: 1. Upgrade one or both of the hotels to upscale status 2. Exercise land option in Montreal to: a. Sell immediately for quick profit b. Build a conference center 3. Attract more leisure travelers Analysis: 1. Upgrade one or both of the hotels to upscale status * GR already have good service to meet customer’s expectation for luxury hotels * Demand for upscale hotels is growing at a faster rate than mid. GR can use this opportunity to expand its business and mitigate the risk of a shrinking mid-scale market * According to the Industry performance metrics, upgrading to upscale hotels lead to higher occupancy, which is in line with the board’s target. * Return on investments after tax for both Montreal and Toronto are more than

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