Week 6 Assignment Company Analysis Framework

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Company Analysis Framework Mirna Ramos Capella University DBA 8415: Strategic Decision Making Dr. Robert Krell February 10, 2024

Company Analysis Framework Morgan-Eskola Hospitality Partners (ME-HP) LLC This partnership is interested in acquiring European-style boutique hotels and spas targeted at hosting business meetings, retreats, weekend getaways, and upscale tourism, beginning with one location each in San Francisco, Los Angeles, New York, Chicago, and Boston, post the Covid-19 pandemic. I will discuss the best decision-making frameworks to determine acquisition criteria in this analysis. To effectively evaluate the potential acquisition of a boutique hotel chain, it is essential to establish comprehensive acquisition criteria. These criteria should encompass general, operating, and financial aspects to ensure a thorough investment opportunity assessment. Therefore, I will discuss different areas to consider when analyzing the company’s framework. Relevance of the framework: Hospitality firms need to decide what frameworks work best for them, depending on what goals they are trying to reach. They need to have market data, including competitor performance, customer preferences, and industry trends, which is essential for understanding the competitive landscape and identifying opportunities and threats. They also need financial data, such as revenue, expenses, profitability, and cash flow, which is crucial for assessing market conditions. Additionally, historical data offers insights into past trends and patterns, serving as a basis for forecasting and identifying potential future scenarios. Frameworks are organized platforms that provide a way to divide complex goals and processes into managing portions while retaining relationships and dependencies between the components. There are a few ways to assess a framework's applicability.

Strategic Management Frameworks , Market analysis rationale. This section analyzes the industry, market trends, competitive geography, and customer preferences. ME-HP must evaluate potential growth opportunities, market saturation, and the competitive positioning of current players to make strategic decisions about pricing strategies, location selection, and other business-related matters (Seyitoğlu & Ivanov, 2020c). Strategic Planning: ME-HP must create a clear strategic plan for acquiring, developing, and running boutique hotels and spas in the target cities. This plan must include defining the scope of operations, identifying competitive advantages, assessing risks, and establishing performance metrics to monitor progress over time. Strategic planning entails setting objectives, formulating strategies, and allocating resources to achieve long-term goals. Resource-Based view. (RBV) looks at the firm as a bundle of resources that are the source of its sustainable competitive advantage. Resources such as trademarks can be physical, financial, human, and intangible. To provide a competitive advantage, they must be valuable, rare, inimitable, and non-substitutable (Seyitoğlu & Ivanov, 2020c). Value Chain Framework: ME-HP must provide top-notch service experiences at their European-style boutique hotels and spas. This entails paying close attention to details like housekeeping, food and beverage service, concierge services, and event planning. Critical operations and service delivery activities guarantee guest satisfaction and loyalty in the hospitality industry. Procurement and human resources are crucial support functions that enhance ME-HP's overall operational effectiveness (Seyitoğlu & Ivanov, 2020c). Procurement entails locating premium materials, amenities, and supplies to uphold the European-style ambiance and satisfy guests. HR management is critical for hiring, developing, and retaining qualified

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employees who can provide outstanding service and leave an impression on guests. Moreover, HR creates opportunities to save in risk management, OSHA compliance, and retention. Stakeholders’ strategy : The framework looks at the relationship. It focuses on the interests of investors, clients, staff, local communities, and regulatory agencies, ranks them in order of importance, and creates plans to match their goals with the venture's goals (Seyitoğlu & Ivanov, 2020c). PESTEL Analysis: Political stability and economic conditions can significantly impact the hospitality sector. ME-HP must evaluate aspects of each target city's economy, including GDP growth, employment rates, consumer spending, government regulations, and tax laws. This will affect occupancy rates and pricing strategies. It can help the organization to the external factors that can affect them and allow them to assess their resilience (Seyitoğlu & Ivanov, 2020c). Positional Strategy: This framework discusses market positioning. ME-HP can set itself apart from competitors in the target cities with distinctive offerings like genuine European design or other more applicable depending on the geography of the hotel, individualized services, premium amenities, and customized experiences for business gatherings, getaways, and upmarket travel by strategically positioning themselves as premium travel destinations for discriminating tourists (Seyitoğlu & Ivanov, 2020c). Brand Strategy: In the cutthroat hospitality industry, brand awareness, credibility, and loyalty are crucial. Customers want to feel like they belong and welcome. Therefore, ME-HP must create a strong brand identity that embodies its heritage, values, and dedication to quality. This includes creating a unique logo, developing a brand message, and utilizing digital and social

media platforms to interact with target consumers and improve brand perception (Seyitoğlu & Ivanov, 2020c). Demand Analysis: Evaluate current competitors and their offerings to identify gaps in the market that hospitality partners can explore. Conduct market research to understand the demand for European-style boutique hotels and spas in San Francisco, Los Angeles, New York, Chicago, and Boston. Analyze each target market's demographic trends, travel patterns, and consumer preferences. Consider factors like business travel, leisure tourism, corporate retreats, and upscale weekend getaways driving demand. Another aspect to consider is demand forecasting, a fundamental component of a successful revenue management system. ME-HP can benefit from utilizing demand forecasting when considering which hotels to consider for their acquisition. In the hospitality industry, demand forecasting using smoothed demand curves involves predicting future demand for hotel rooms, restaurant reservations, or other hospitality services based on historical data (Van Leeuwen & Koole, 2021). Situational Analysis: Consider regulatory factors, zoning laws, and permits required for acquiring and operating boutique hotels and spas in each city. Analyze socio-cultural trends influencing travel behavior, such as GDP growth, employment rates, and consumer spending. Assess the current state of the hospitality industry in each target city, including market saturation, occupancy rates, average daily rates (ADR), and revenue per available room (RevPAR). Differentiation: Define the unique value proposition of European-style boutique hotels and spas ME-HP offers. Highlight distinctive features such as architectural design, interior decor, personalized service, wellness amenities, and culinary experiences. Emphasize the European- inspired ambiance, diligence, and intimate atmosphere that differentiate these properties from traditional chain hotels. Develop branding and marketing strategies to communicate boutique

hotels and spas' exclusivity and premium experience. Lifestyle hotels are small, medium-sized establishments with modern designs, highly personalized service, and innovative experiences; boutique hotels have superior service, distinctive and intimate experiences, and access to local culture and history (Quadri-Felitti et al., 2022). Service Delivery System: Design a service delivery system that aligns with the upscale positioning of boutique hotels and spas. Implement rigorous training programs for staff to deliver exceptional customer service and create memorable guest experiences. Integrates technology solutions for seamless reservations, check-in/out processes, and personalized guest services. Curate partnerships with local vendors, artisans, and cultural institutions to offer guests unique amenities, activities, and experiences. Establish quality assurance protocols to maintain high cleanliness, comfort, and safety standards throughout the properties. An algorithm can calculate all of these. Algorithms or other technology may accurately predict individual preferences like the preferred room temperature or the preferred type of food if enough reliable data is available at the individual customer level (Kabadayi et al., 2019). Alternatives for Developing Acquisition Criteria: Develop a set of acquisition criteria based on location preferences, property size, architectural style, historical significance, and potential for renovation or repositioning. Consider financial factors such as acquisition costs, renovation expenses, expected return on investment (ROI), and funding sources. Evaluate operational considerations such as staffing requirements, management structure, and scalability of the properties. Assess risk factors such as market volatility, regulatory challenges, and competitive threats in each target city. Explore alternative financing options such as joint ventures, partnerships, or crowdfunding to fund acquisitions and development projects.

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By thoroughly analyzing demand, conducting a situational analysis, defining differentiation strategies, designing a service delivery system, and developing acquisition criteria, ME-HP can effectively position itself for success in acquiring and managing European- style boutique hotels and spas in major U.S. cities. An acquisition strategy should only be implemented if it is anticipated to enhance organizational performance and if it is a more desirable option than other growth strategies (Ooghe et al., 2006). Options for Creating Acquisition Criteria: Create a set of criteria based on your preferences for locations, size, architectural style, historical significance, and whether the property can be renovated or repositioned. Consider operational aspects like staffing needs, management structure, and property scalability. Consider financial aspects like acquisition costs, renovation expenses, and expected return on investment. Financial data and measurements: The COVID-19 pandemic has demonstrated the importance of preparing financially for operating activity disruptions. The business's ability to control the related financial consequences determines the ability to sustain and recover from the operating discontinuity. Therefore, effective risk management should lead to better risk preparedness by implementing physical risk control measures and preparing adequate financial recovery plans (Wieczorek-Kosmala, 2021). As well as considering the economic and financial data and measures needed for the evaluation, such as expected returns. Risk measures such as standard deviation, beta, Value at Risk (VaR), and Conditional Value at Risk (CVaR) quantify the level of risk associated with investment alternatives. Return measures such as expected, historical, and risk-adjusted returns are used to assess the potential gains from investment alternatives.

A cost of capital reflects the minimum rate of return required by investors. Organizations need to measure the degree of volatility inherent in a particular financial position. What is the best framework and strategy that can also reduce the risk? Firms need to consider what type of return and success they are seeking and make an informed decision on what they are willing to invest, what framework to use, and the risk measures to use (“Risk Measurement-Value at Risk (VAR) Versus Conditional Value at Risk (CVAR): A Teaching Note,” 2018). As well as determining what economic indicators they will utilize, such as GDP growth, inflation, and interest rates (Gasparėnienė et al., 2021) . Explaining liquidity requirements: The pandemic has highlighted the importance of being financially prepared for disruptions. The business's ability to control the related financial consequences determines the ability to sustain and recover from the operating discontinuity. Consequently, effective risk management should lead to better risk preparedness by implementing physical risk control measures and preparing adequate financial recovery plans (Wieczorek-Kosmala, 2021b). Financial analysis entails assessing borrowing capacity and financial profitability ratios like debt to assets ratio and liquidity. Profitability markers include return on assets, equity, sales, asset productivity, and sales revenues. Financial ratios are an essential indicator of a firm's profitability and borrowing capacity. When faced with the inability to generate cash inflows due to an unexpected outflow of customers, businesses with a buffer of available funds experience less problematic liquidity tensions (Wieczorek-Kosmala, 2021) Another aspect to consider is risk mitigation. Liquidity requirements are a risk management tool to assess the target company's resilience to economic downturns or unforeseen financial challenges. Properties with high levels of liquidity should be considered for acquisition.

Weiczorek-Kosmala's liquidity requirements should be incorporated into the due diligence process when evaluating potential acquisition targets. This entails analyzing the target company's financial statements to ensure it meets the liquidity benchmarks outlined in the study (Wieczorek-Kosmala, 2021). When making investment decisions, consider the target company's liquidity position and other criteria like location, property condition, market potential, and growth prospects. Properties that meet the designated liquidity thresholds may be given priority over properties with less favorable financial profiles. During the negotiation process, consider the target company's liquidity requirements. Properties with solid liquidity positions may command higher valuations due to reduced financial risk and more excellent stability. Track the liquidity position of acquired properties after acquisition and implement strategies to maintain or improve liquidity levels over time. This may involve optimizing cash flow management, controlling expenses, and implementing effective revenue management practices. By incorporating Weiczorek-Kosmala's financial liquidity requirements into the acquisition criteria, ME-HP can improve the quality of its decision-making process, reduce financial risks, and increase the success of its investment strategy in acquiring hotels. This guarantees consistency and alignment with the organization's strategic objectives and risk appetite (Wieczorek-Kosmala, 2021b). Recommendations for appropriate acquisitions. 1- Location and potential market. Prioritize properties in high-demand locations for upscale travel, business retreats, and meetings. Consider market dynamics, such as travel trends, economic growth, and demand drivers, to evaluate revenue generation and profitability potential. Examine potential acquisitions based on their location within key target cities (San et al.)

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2- This study evaluates the reputation and differentiation of potential acquisitions in the European-style boutique hotel and spa market. Specifically, properties with a strong brand identity, distinctive offerings, and a devoted customer base should be given priority. Properties that appeal to upper-class clients should be sought after for their distinctive experiences, architectural charm, and personalized services. 3- Look for properties with stable cash flows, healthy profit margins, and the potential to increase revenue through strategic initiatives or operational improvements. Perform a thorough financial analysis of potential acquisitions to assess their performance and viability. Assess vital financial metrics like revenue growth, profitability, occupancy rates, average daily rates (ADR), and revenue per available room (RevPAR) 4- Operational Excellence and Asset Quality: Look for properties with well-maintained facilities, experienced teams, and efficient cost management practices. Assess property condition, maintenance standards, service quality, and operational efficiency. Evaluate potential acquisitions' operational excellence and asset quality to ensure efficient management and long- term value creation. 5- Assess environmental sustainability initiatives, energy efficiency measures, and adherence to pertinent regulations and industry standards. Prioritize properties with a commitment to sustainability, responsible tourism practices, and compliance with local laws and regulations. Sustainability and Regulatory Compliance: Consider regulatory compliance and sustainability practices when evaluating potential acquisitions. ME-HP can identify and prioritize potential investments that align with their strategic objectives, minimize risks, and maximize returns by implementing these acquisition criteria into their evaluation process.

Acquisition Criteria. The framework ensures comprehensive coverage of pertinent factors influencing the acquisition's success by classifying criteria into general, operating, and financial aspects. It helps identify qualitative and quantitative criteria, enabling a holistic assessment of each acquisition opportunity. The framework offers an organized method for evaluating potential acquisitions, guaranteeing that essential factors are completely analyzed and considered. Incorporating post-Covid considerations like hygiene standards and operational adaptability, the framework ensures alignment with current market-changing aspects and future trends. It adds value by assisting decision-makers in prioritizing criteria based on their importance and relevance to ME-HP's investment strategy and objectives. It facilitates risk assessment and mitigation by highlighting potential challenges and uncertainty associated with each acquisition (Wieczorek-Kosmala, 2021a). During the selection process, the framework acts as a roadmap for comprehensive analyses, gathering necessary data, and making informed decisions. ME-HP can apply the framework iteratively, tailoring criteria and data requirements for each potential acquisition based on unique market conditions and individual hotel properties. ME-HP can validate assumptions by leveraging relevant data sources like financial statements, market research reports, and operational metrics (Seyitoğlu & Ivanov, 2020c). The framework's ability to address critical post-COVID issues in the hospitality industry, such as the significance of cleanliness and hygiene standards and the criterion's general inclusion of cleanliness and hygiene standards, demonstrate the framework's utility. Customers' increased awareness and expectations regarding health and safety are reflected in the framework's

applicability in real-world scenarios, where ME-H (Wieczorek-Kosmala, 2021b). For example, the tourists appreciated the increased transparency and choice afforded by the pricing strategy, as evidenced by their positive engagement with the evaluation process. Hospitality firms must consider service quality and the tourist perspective post-COVID-19 (Al-Moustafa et al., 2023). Reflection: After researching the topic of a hotel acquisition post-pandemic, I understand that there are multiple variables that a business needs to consider before acquiring. As a business owner, you need to understand the benefit value of the property; estimating demand is one of the critical inputs for a profitable business (Van Leeuwen & Koole, 2021). You need to be aware of what variables would come into place, such as geography, market threats, and tourism changes. Utilizing a framework and narrowing down what criteria to consider are essential when selecting a property to acquire. References

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Al-Moustafa, S., Hassan, T. H., Saleh, M. I., Helal, M. Y., Salem, A. E., & Ghazy, K. (2023). Unlocking Tourism’s Potential: Pricing Strategies for the Post-COVID Renaissance. Sustainability, 15 (19), 14400. https://doi.org/10.3390/su151914400 Gasparėnienė, L., Remeikienė, R., Sosidko, A., & Вебрайте, В. (2021). Modelling of S&P 500 Index Price Based on U.S. Economic Indicators: Machine Learning Approach. The Engineering Economics, 32(4), 362– 375. https://doi.org/10.5755/j01.ee.32.4.27985 Ooghe, H., Van Laere, E., & De Langhe, T. (2006). Are acquisitions worthwhile? An empirical study of the post-acquisition performance of privately held Belgian companies. Small Business Economics, 27(2–3), 223–243. https://doi.org/10.1007/s11187-006-0011-1 Quadri-Felitti, D., Su, N., & Day, J. (2022). Consumer perspectives of boutique and lifestyle hotels: Is there a difference? Tourism and Hospitality Research: The Surrey Quarterly Review ., 22(3), 349–361. https://doi.org/10.1177/14673584211054605 Risk Measurement-Value at Risk (VaR) Versus Conditional Value at Risk (CVaR): A Teaching Note. (2018). Journal of Accounting and Finance., 18(6). https://doi.org/10.33423/jaf.v18i6.451 Seyitoğlu, F., & Ivanov, S. (2020). A conceptual framework of the service delivery system design for hospitality firms in the (post-) viral world: The role of service robots. International Journal of Hospitality Management , 91 (2020),10. https://doi.org/10.1016/j.ijhm.2020.102661 Van Leeuwen, R., & Koole, G. (2022). Demand forecasting in hospitality using smoothed demand curves. Journal of Revenue and Pricing Management , 21(5), 487-502. https://doi.org/10.1057/s41272-021-00364-5

Week 6 Assignment Company Analysis Framework

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