Feasibility Study to Assess Hotel Accommodation Development

Feasibility Study to assess Hostel Accommodation Development Consultancy Project 2010 Mr. Hew Tze Yee Hospitality Excellence Pte. Ltd.

1/10/2010 1. 0 Executive Summary School of Hospitality and Resort Management (SHRM) is one of the private colleges that provide their students with hostel accommodation in Singapore. However, it has been found that the hostel operates as a cost centre instead of profit centre. Thus, it is proposed that the hostel be upgraded to attract more students to stay in the hostel. This project involves the renovation of the bathroom and toilet, the upgraded facilities in both hostel room and public area.The proposed program will be conducted under the close supervision of the school management, with requested funds totaling S$ 2,460.

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Future maintenance of the project will be possible through appropriations from SHRM management. 2. 0 Introduction School of Hospitality and Resort Management (SHRM) started its operation in 2008. It is owned by the Hospitality Excellence Private Limited. SHRM strategically located at the sub-urban area in Singapore where it provides a great study environment for students.

Till today, there are more than 100 students who are pursuing their study at SHRM.In late 2009, SHRM offered hostel accommodation service to their students. SHRM and its hostel share the area with Focus Camp Challenge, an independent leisure centre. Basically, the hostel is divided into two categories. There are 16 units of twin-bedded room and 4 units of six-bedded room.

The hostel is currently running at full capacity due to the high demand among their students. The hostel features with number of shared facilities such as bathroom and toilet, washing machine and an open kitchen. 3. 0 Problem StatementAs far as we concern, the hostel only act as the core centre which it supports the main business – SHRM, operates under the Hospitality Excellence Private Limited. It has also been found that the hostel is a cost centre rather than a profit centre and it suffered from an average net loss of S$3,800/month.

Thus, this proposed project would be beneficial as it could allow the client to turn the hostel into a profit centre. To assess the extent to which the proposed project remedies the problems noted above, it will be necessary to quantify the results to measure the project’s effectiveness.The following are the project objectives: (A) To improve and upgrade the facilities within the hostel. SHRM must improve and upgrade the facilities to create a better living environment for their students. (B) To increase the hostel rental fee. According to our client, the current rental fee was set based on the actual renovation cost.

The profit generated from the hostel rooms is not enough to cover the hostel’s monthly expenditures or either the hostel rental. This resulted in an average loss of S$3,800/month. Thus, it is proposed that the hostel rental fee should be increase to at least cover the monthly expenses. C) To lower the monthly expenditures by tighten the hostel rules. It has been found that the monthly expenditures are on an increase within the hostel.

Thus, hostel rules need to be tightening so that the cost could be lower. 4. 0 Situational Analysis A situational analysis has been conducted to allow us to acquire a better understanding of the hostel’s current situation. The analysis has been divided into two categories: (A) SWOT Analysis Strength The hostel is close to the SHRM campus where it is only a 3 minutes’ walk to the school.The convenience accessibility to the campus is the major factor that attracts the students to stay in the hostel. Besides, the hostel is located at sub-urban area.

There are no business centers or shopping centers surrounded within the hostel. Thus, it is relatively quiet and it provided student a great study environment. Moreover, the hostel is only open to students who study in SHRM where it invisibly creates opportunities for students to have greater interaction among them and truly enjoy their campus life. Weaknesses There are several limitations spotted within the hostel.Firstly, the hostel is pretty far from the city since it is situated at sub-urban area.

It takes at least 30 minutes for student to reach city area. Besides, there are only two public buses passing by the hostel area while neither of them is available 24 hours. Thus, this poses some difficulties to students who sometimes stay out late. Apart from that, there are only 2 coffee shops and 1 pizza restaurant available nearby the hostel. In these circumstances, students choice of daily meal are limited since there are only few restaurant found.

As for the hostel rooms, it has been found that the room does not provide good sound isolation. Students could literally hear almost everything outside their rooms. In addition, there are no windows or ventilation system built within each room and not to mention, the Wi-Fi connection does not work since barely anyone who stays in the hostel could use the Wi-Fi service provided. Opportunities The hostel gained competitive advantages over any housing option available out there. The location is obviously the winning point that beats all its competitors.

Besides, the affordable rental fee is another crucial element that allows the hostel to stand apart from its competitors. Last but not least, the great number of students who study in SHRM could always fill up the rooms available in the hostel. Threats Referring to the weaknesses above, the threats could be found from either the hostel itself or its competitors. One of the biggest threats poses to the hostel is the insufficient of rooms to cater to the demand. SHRM is aware of this issue; however, there is nothing can be done due to scarcity resources.Besides, the poor qualities and facilities provided in the hostel could actually ‘get rid’ of the current tenants.

Students would rather to pay more to rent a room out there since the facilities provide are far better than in the hostel. Competitors do pose threat to the hostel as well. The table below shows how competitors gain advantages over the hostel. Type of accommodation| Strengths| Weaknesses| Housing Estate| Cheap| Strict rules| | More personal space| Restricted activity| | Accessibility to transport| Friction with landlord| Private hostel| Close to city| Expensive| | Better facilities| Far from school| Explore connections| Cultural shock| In this case, the housing estate which is also known as House Development Board (HDB) and the private hostel are the competitors to SHRM hostel. Both of the competitors not only compete on the price but also the facilities.

Those HDB which located nearby such as Sembawang, Yishun or Woodland are the most competitors since there are close to SHRM site. Besides, students could have more privacy and shopping malls can be easily found nearby the HDB. As for the private hostel, it is considered as the direct competitor to SHRM hostel due to its similarity.Most of the private hostels in Singapore are located at city area such as Novena. Students could easily access to city area within a short distance. Besides, most of the private hostels are well established and not to mention, the facilities provided within their hostel are far better than what is available in SHRM hostel.

(B) Financial Analysis As mentioned earlier, the hostel is not profitable and it suffered from an average loss of S$3,800/month. This profit and loss statement (P;amp;L) will show in detail. | $| Sales 😐 | Twin-bedded room ($350 ? 15 ? 2)| 10,500| Six-bedded room ($300 ? 4 ? )| 7,200| | 17,700| Less: Expenses| | Hostel rental| 15,000| Miscellaneous | 3,000| Warden| 3,000| Labour | 500| | (21,500)| Operating Income/Loss| (3,800)| Tax? | ? | Net Profit/Loss| ? | 5. 0 Project Description This proposed project is comprised of several different, but related activities: (A) Evaluation of the hostel A series of survey (See Appendix) had been carried out to evaluate on the hostel’s condition. The purpose of conducting this survey is to evaluate the satisfaction level among the students toward the hostel’s facilities so that adjustments could be made to fix the problems.

The graph below shows the evaluation’s result. Through the survey conducted, it has been found that the living conditions within the hostel are poor. Most of the students are not satisfied with the current facilities and services that are provided by the hostel. Thus, it is proposed that renovation and upgrading need to be done to fix those issues. (B) Renovation and Upgrading Referring to the survey analysis above, it has been found that part of the shared facilities within the hostel do not functioning well. Bathroom and Toilet Most of the shower heaters in the bathroom are either spoiled or not functioning.

Apart from that, it has also been found that some of the door in both bathroom and toilet are spoiled as well. However, there is nothing been done as yet to fix this issue. In our opinion, SHRM is responsible to carry out regular maintenance to ensure that all the equipments are always in good condition. Thus, it is suggested that the spoiled shower heater and door need to be fix while maintenance need to be done periodically. Kitchen and Pantry Area SHRM provided students with an open kitchen and a pantry area.

Both the kitchen and pantry area are built under shelter and there are not fully overed. This poses difficulties to students especially during rainy days. Thus, it is proposed that the SHRM management should cover the kitchen and pantry area will plastic cover so that students will be able to cook at whatever time they want. Wi-Fi The hostel provided students with Wi-Fi service. However, it has been found that the Wi-Fi service does not working since few months back.

Students could not log in to the server most of the time. Even if they managed to do so, it took at least three minutes for them to log in to their own home webpage.It is advised that the Wi-Fi modem to be fix so that students could access to the internet at any convenience time. Room According to the survey done, it has been found that the soundproof from room to room is poor. Students could literally hear almost everything from other rooms or noise from outside of the hostel. Besides, students do not feel a sense of privacy due to the poor sound isolation.

Therefore, it is recommended that a soundproof board should be built in each room to create a greater soundproof effect. (C) Cost Investment Required Description| Quantity| Cost/ Unit ($)| Total ($)| . Bathroom and Toilet| | | | Door | 3| 80| 240| Shower heater| 3| 60| 180| 2. Kitchen and Pantry Area| | | | Shelter| 1| 70| 70| Plastic cover | 2| 60| 120| 3. Wi-Fi| * | 400| 400| 4.

Room (Soundproof Board)| | | | Twin-bedded room| 15| 70| 1,050| Six-bedded room | 4| 100| 400| | | | 2,460| The cost investment required for the renovation and upgrading is S$2,460 or an average cost of S$45. 60 per student. This cost investment is only one time paid. (D) Increase the hostel rental fee As mentioned, the hostel is now suffering from an average loss of S$3,800 per month.Thus, it is proposed that the hostel rental fee to be increase by at least S$50 from its original rental for both twin-bedded room and six-bedded room to at least cover part of the monthly expenditures. | Original Rental | New Rental| Percentage (%)| Twin-bedded room| S$350| S$400| 14%| Six-bedded room| S$300| S$350| 17%| ** Prices are not subjected to 7% of government charge.

6. 0 Conclusion Accommodation is an essential thing for student especially those who came from abroad and has no family to stay with, and has no information about it.SHRM hostel is a good example of accommodation for its students. Although the hostel provides basic needed for student, it’s still lack of worthiness as a good place to live. Major improvement as suggested above is the most reasonable suggestion. However due to client’s request to change the hostel from cost centers to profit centers, this suggestion isn’t sufficient since it’s only offer small amount of profit.

The expanding option isn’t feasible although it may generates profit in the future, the initial cost and investment are too big and therefore, it’s not feasible. This project cannot be done.