Financial Analysis Palace Hotel Sinaia

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https://www.tradeville.eu/tradepedia/indicatori-economico-financiari

Table of contents

1. General information – destination
2. General information-company
2.1 Location

2.2 Accessibility

2.3 Hotel fact sheet

2.4 Branding

2.5 Organization and employment

3. Market performance

4. Financial performance

5. Conclusion

6. Bibliography

1. General information – destination

„Sinaia is a city in Prahova County, Muntenia, Romania. Located in the Prahova Valley, it has developed along with this tourist region and was chosen as a royal residence by Carol I, who built the Peles Castle here”. (Predescu 2016, p. 78)

The town is located in the north-west of the county, on the border with Dâmbovița County, on the banks of Prahova, where it receives the waters of the small affluent Peles. It is crossed by DN1 national road.

At Sinaia, the national road DN71, which leads southwest to Târgoviște, Răcari and Tărtășești (where it ends in DN7 close to Bucharest), branches from this road.

According to the 2011 census, the population of Sinaia is 10,410 inhabitants, down from the previous census in 2002 when 12,512 inhabitants were registered. Most of the inhabitants are Romanian (93.03%), with a minority of Roma (1.24%). For 5.04% of the population, ethnicity is unknown. From a confessional point of view, most of the inhabitants are Orthodox (91.68%), with a minority of Roman Catholics (1.48%). For 5.12% of the population, confessional membership is unknown.

„Sinaia, one of the most beautiful mountain resorts in Romania, presents the visitor with a rich cultural and social past. The former residence of the kings, and bearing a holy name, that of Sinai Mountain, which was first given to Sinaia Monasterie by Sparatorul Mihail Cantacuzino (XVII century), Sinaia unprecedentedly invites the beauty of nature and that of architectural art”. (Predescu 2016, p. 82)

The resort is situated at an altitude between 798 and 1055m, on the south-eastern slope of the Bucegi Mountains, along the Prahova valley. The forested forested valleys of the Furnica Mountains, Zgarbura, Barbes' Colts and the Izvorul Summit surround the resort in a beautiful green scene. At a distance of 123 km from Bucharest, 106 km from Henri Coandă International Airport (Bucharest) and 37 km from Brașov, Sinaia is located along DN1, with access by rail. Sinaia is the place of dreams that come true.

2. General information-company

General facilities: The hotel has a restaurant, bar, terrace, conference rooms, internet access, safe at the reception, spa center, laundry – dry cleaning, information desk, disco, parking (within the limits), beauty salon.

Room facilities: „The 150 rooms available for the complex are available in a single, double twin and matrimonial style, the studio and the apartment, each with high-quality facilities corresponding to the 4-star category”. (https://palacesinaia.ro)

The spacious, bright and comfortable rooms have:

„- cable TV;

– direct telephone line;

– minibar;

– Internet access;

– hairdryer;

– central heating system”; (https://palacesinaia.ro)

Meals: The Palace Restaurant offers a wide range of traditional Romanian and international cuisine in a special atmosphere. Refined beverages come from all over the world, and wines are selected from the most representative vineyards.

The classic saloon of the 230-seat Palace restaurant offers full service: from breakfast (Swedish buffet) to cocktails, receptions, business meetings, festive dinners.

SPA: „The LAVENDER SPA center at Palace Hotel **** is the perfect place to relax. It features an indoor pool, a jacuzzi, a fitness room, a wet and dry sauna, salt baths, a massage and a relaxation area. It is an oasis where you can pamper yourself in a relaxing atmosphere, where the mind, body and soul relax and harmonize”. (https://palacesinaia.ro)

Free services: parking, wireless internet

Paid services: car rental; room-service, laundry-dry cleaning

2.1 Location

Address: Strada Octavian Goga, nr. 4, Sinaia, Prahova county 106100 (https://palacesinaia.ro)

Situated in the city's garden, right in Dimitrie Ghica Park, the hotel was recently renovated and brought back to its glorious days.

„Palace Hotel is certainly a palace not only through architectural creation, but also through the level of comfort and quality of the services offered”. (https://palacesinaia.ro)

2.2 Accessibility

Beyond the classical elegance of the 20th Century, Hotel Palace enjoys a truly privileged position: in the center of the city, in the immediate vicinity of the Casino of Sinaia, the Caraiman Hotel and only a few minutes walk from the city's shopping center by the Sinaia Monastery. (https://palacesinaia.ro)

2.3 Hotel fact sheet

Below we will present the hotel's corporate information sheet.

The conference rooms are equipped with modern equipment: flipchart, videoprojector, overhead projector, screen, internet, copier, scanner, telephone, fax.

– conference room I (George Enescu) is situated on the ground floor of the hotel, with natural light with an area of ​​120 sqm:

– Minimum capacity of 50 seats in U shape

– maximum capacity 110 places in the theater

– conference room II – (Nicolae Iorga) is situated on the ground floor of the hotel, naturally lighted with a surface of 48 sqm:

– Minimum capacity of 20 seats in U shape

– maximum capacity of 30 seats in the theater arrangement

– conference room III – (Mircea Eliade) is situated on the ground floor of the hotel, naturally lit with an area of ​​68 sqm:

– minimum capacity of 30 seats

– maximum capacity of 45 places in the theater arrangement

– conference room IV (George Emil Palade) is situated on the ground floor of the hotel, naturally lighted with an area of ​​48 square meters:

„- Minimum capacity of 15 seats in U shape

– maximum capacity of 25 seats in the theater arrangement

– conference room V – (Constantin Brancusi) is situated on the ground floor of the hotel, lighted natural with an area of ​​95 sqm:

– Minimum capacity of 40 seats in U shape

– maximum capacity of 80 seats in the theater arrangement” (https://palacesinaia.ro).

2.4 Branding

Hotel Palace is a true brand for its services. The Palace Hotel, built in 1911 according to the plans of the architect Petre Antonescu, is one of the most beautiful buildings in the Sinaia resort. The hotel has a capacity of 145 rooms and 280 people. The two-star Caraiman Hotel, built in 1881, has 71 rooms. After a not quite happy time, Hotel Palace is again what it was: a stylish, comfortable place with refined ambience and good service.

2.5 Organization and employment

The organizational structure of the Palace Hotel is composed of:

– the production structure, which includes all the departments where the services are produced, they are registered as receipts and costs, and are: accommodation, food and services which directly provide services (telecommunication, halls, hairdressing salon, swimming pool, fitness center, parking, laundry);

– the functional structure, consisting of the totality of the compartments in which the activities of functional, decision-making and decision making are carried out; they do not directly provide customer service and generate direct income (financial – accounting department, reservation department – sales – marketing and human resources department).

Hotel Palace has the organizational structure represented by the organization chart present for each department, job descriptions (job descriptions) (see annexes).

In addition, for the description of the general framework of behavior and provisions regarding the labor discipline of all workers, an internal order is made, which is considered a kind of "manual of the firm" (the rules of the house – see appendix) which refers largely only to the mandatory rules of the conduct of the hotel staff.

The entire managerial structure of the hotel is made up of all positions of responsibility and authority at the top of management that is represented in the hotel by the Board of Directors.

Chiefs of operational departments are known to be managers of the same hierarchical level, with direct responsibilities and subordinate to superiors and subordinate to each operational department.

Heads of departments are specialists who offer expert advice and services.

The front-office service and the top floor service, according to the organizational structure of the Palace Hotel, form the accommodation department.

Each of these is run by people with specific functions: Front-Office Manager and Housekeeping Manager

The departments and front-office staff are: reception, lobby and telephone.

Source: personal processing based on information taken from: (https://palacesinaia.ro)

Reception is the place where the customer's first contact with the hotel was established. Reception staff have the obligation to present themselves impeccably; personal hygiene, uniformity, attitude, perfect manners must outline a pleasant image of good education and training. Along with the organization of the activity and the constant attention given to the client, these aspects contribute to the shaping of a superior service from a qualitative point of view.

Role: Promotion and sale of hotel services, accommodation and additional services.

The Front – Office Department is the most visible department in a hotel. The focus of activity within the department is the reception desk. This is usually the place where customers make their first significant impressions in a hotel. It is also the center of communication for all hotel operations.

The reception takes place in the reception of the clients and the assignment of the rooms (check-in). It has a total of 37 employees, assigned to 4 types of functions. This is the Front Office Manager under Shift Leader (3), and they also have a total of 13 daily and 2 night shift tours.

The key post is the one of the receptionist among whose tasks we find: carrying out the operations of teaching / receiving the bearing fund; performing currency exchange operations, only in the sense of buying the currency and only for the benefit of the hotel's clients; making tours of operations and records for arrivals and departures of tourists.

Very important are the details of how to collect money from customers (when they are made in cash – lei or foreign currency) and their surrender. The system has the following formula in Hotel Palace: each reception staff works in relation to the client when it comes to settling hotel services on the accommodation side as well as a cashier. All the proceeds so made are deposited at the end of the shift in a sealed envelope in the presence of a witness and under the signature, and the envelopes are placed in a vault. The safe will open the next day when the cashier will take over the envelopes and also in the presence of a witness will confront their contents with the mentions made in the register by the receptionists when depositing them in the safe.

However, I note that less and less payments are made in cash, and the cards are the main payment method used.

Reception Headquarters Head Office is responsible for the Reception Manager (much more appropriate Front Office Manager), whose subordinate responsibility also includes the entire front office service.

3. Market performance

Classical elegance recommends Palace Hotel as an inspired choice not only for a stay but also for private or business events. Those who will visit Palace Hotel will enjoy elegance, along with facilities within reach of any tourist.

Hotel Palace performs on the hotel market. The media often publish various information about Palace Hotel; One thing is certain, the Palace hotel performs performance in the field of accommodation services.

The tourist has a wide choice of rooms, depending on the view from the window, the interior, the furniture, the linen used, and the decoration elements used inside the hotel room. In these cases, the client's preferences and perception of the elements mentioned above was taken into consideration, the rooms of the Palace Hotel predominate in a pleasant environment, created by the degree of endowment, the way the room is arranged and the space made in such a way that the client to feel comfortable, to have the impression that he is in an intimate space.

The colors in the hotel rooms are pleasing to the eye, a creamy and relaxing green, simple and floral wallpaper. The furniture is in modern style, it is extremely comfortable and harmonizes with the air of the place, the space is wide, the furniture in the rooms being placed at an ideal distance from each other, so as not to inconvenience the clients, the rooms being quite spacious.

4. Financial performance

Source: personal processing based on information taken from: www.bvb.ro

Source: personal processing based on information taken from: www.bvb.ro

As we see, net turnover fell from 8,610,072 lei in 2015 to 8,277,461 lei in 2016, and then increased to 8,852,446 lei in 2018.

The current result has grown over the period 2015-2018, from 414,897 lei in 2015 to 654,120 lei in 2016 and at 1,018,548 lei in 2018.

Total revenue fell from 8,712,901 lei in 2015 to 8,384,805 lei in 2016. In the year 2017 there were total revenues of 9,529,671 lei.

The net result experienced an increase over the period 2015-2017, from 406,187 lei in 2015 to 550,162 lei in 2016 and to 828,484 lei in 2017.

During the analyzed period, 2015-2017, the company does not record overdue payments, overdue liabilities to the social security budget or taxes not paid on time to the state budget.

The average number of employees in the analyzed period was 19 employees in the years 2015 and 2017 and 21 employees in 2016.

The current rate measures the relationship or balance between current assets (special receipts, easily achievable securities, customer accounts, and stocks) and current debts (supplier accounts, current payment notes and any part of a long-term debt that must be repaid in current mode). The rate is calculated as follows:

Current rate = current assets / current liabilities

Current rate 2017 – 3.541.966/2.899.721 = 1,221.

Current rate 2016 – 2.813.976/1.822.297 = 1,544.

Current rate 2015 – 1.643.823/1.395.012 = 1,178.

As we can see, the current rate rose from 1,221 in 2017 to 1,544 in 2016 and then dropped to 1,178 in 2015.

The leverage ratio is particularly important in the banking financial activity when granting new credits.

Debt rate = Total debt / equity

Debt rate 2017 – 2.899.721/13.797.010 = 0,210.

Debt rate 2016 – 1.822.297/13.578.453 = 0,134.

Debt rate 2015 – 1.395.012/13.028.291 = 0,10.

As we can see, the debt ratio increased from 0.10 in 2015 to 0.134 in 2016 and to 0.210 in 2017.

Analyzing the rate of profitability of consumed resources

Highlighting resource consumption is made in the spending accounts. The efficiency of these consumptions can be appreciated in relation to the results obtained, based on the profitability ratio of the consumed resources, also known as the cost-of-cost ratio. By definition, the rate of return on consumed resources reflects the ratio between the turnover result and the total sales costs:

Rate of profitability of consumed resources = (turnover related to turnover: turnover) x 100

Rate of profitability of consumed resources 2015 = (828.484: 8.511.123) x 100 = 9,73.

Rate of profitability of consumed resources 2016 = (550.162: 7.730.685) x 100 = 7,11.

Rate of profitability of consumed resources 2017 = (406.187: 8.298.004) x 100 = 4,89.

As we can see, the rate of return on consumed resources declined in the period under review, from 9.73 in 2015 to 7.11 in 2016 and 4.89 in 2017.

Analysis of profitability based on stock market indices

The analysis of a listed company involves an additional study, based on stock data, to serve to elucidate policy issues in the portfolio of securities. The analysis of the stock exchange profitability consists in the correlated calculation and interpretation of the most important stock exchange indices, ie indicators at the level of action or market rates.

These stock indices are calculated using the current stock exchange rate, and previous, current or projected values can be used to express the other elements involved. The way these indicators are calculated depends on the existing financial and accounting data, the analysts' forecasts and the needs of the investors.

Net profit per share – shows net earnings per share and is determined using the formula:

Net profit per share = Net profit / No. of shares

Net profit per share 2015 = 828.484/ 37.800.947 = 0,02

Net profit per share 2016 = 550.162 / 37.800.947 = 0,01

Net profit per share 2017 = 406.187 / 37.800.947 = 0,01

As we can see, net profit per share declined from 0.02 in 2015 to 0.01 in 2016 and 2017.

This indicator provides useful information especially for major shareholders who are interested in the company's long-term return. The more net returns a share, the more the shareholder's wealth grows.

Equity per share – represents the accounting estimate of the value of an action.

Equity per share = Equity / No. of shares

Equity per share 2015 – 13.028.291 / 37.800.947 = 0,34

Equity per share 2016 – 13.578.453 / 37.800.947 = 0,35

Equity per share 2017 – 13.797.010 / 37.800.947 = 0,36

As we can see, Equity per share rose from 0.34 in 2015 to 0.35 in 2016, and 0.36 in 2017. Equity per share is the result of policies and corresponds to the value invested by shareholders capital and net reinvested earnings) in the enterprise.

Measuring profitability

Profitability is a synthetic form of expression of economic efficiency that reflects a company's ability to make profit. Under market economy conditions, profit is the basic objective of any enterprise. Increasing it and, implicitly, profitability is an objective necessity, vital to the existence of the enterprise itself. Enterprises that prove to be unprofitable are bankrupt. Profitability thus appears as a decisive tool in the market economy mechanism, in orienting production in relation to consumer demands (productive or individual). Profitability implies obtaining revenue, after selling and collecting the manufactured output, higher than the expenses incurred by its realization.

Total Return on Equity is obtained by dividing the profit obtained from the payment of taxes and corporation tax on the total assets of the corporation:

Total Return on Equity = Net income/ Total assets

Total Return on Equity 2015 – 828.484 / 14799217 = 0,05.

Total Return on Equity 2016 – 550.162 / 15708762 = 0,03.

Total Return on Equity 2017 – 406.187 / 16746881 = 0,02.

As we can see, Total Return on Equity Ratio fell from 0.05 in 2015 to 0.03 in 2016 and 0.02 in 2017.

Profitability rates are synthetic indicators that measure, in a relative form, the profitability or the ability of an enterprise to generate profit. The rate of return, as a performance indicator, may have several forms of expression, depending on how to report an impact indicator or the results obtained (profit, EBE or other partial profitability indicators) to a global activity indicator turnover, operating income, value added) or to the economic means advanced or consumed to obtain the respective result (as effort indicators). The most important rates of return are: economic profitability rate, financial profitability rate, profitability rate of consumed resources, rate of return on income.

5. Conclusion

Every department, service and compartment works in intercondition with the others. The key to Palace's success lies primarily in the relationships between its components and ensuring a harmonious and effective work environment.

The functions of the front office staff and its attributions, find it necessary to mention a close relationship with the following departments: reservations, marketing – sales, housekeeping, food & beverage, technical,

The IT department inside the hotel has all the compartments in order to identify the needs and adjustments of the operating software programs, for their better functioning. Educate users in the effective use of computerized applications and assist them in all the specific problems that may arise

The marketing and sales service relations are performed at the level of the departments: Front-Office, Reservations, Banqueting, Restaurant, Public Relations – regarding the internal contacts and in relation to the local and regional travel agencies.

The activity of the service is always coordinated with the reception activity – which communicates customer arrivals – as well as sales, so that the respective service, informed about the hotel's planned occupation, will take the necessary actions.

6. Bibliography

1. Predescu, Eugenia, Rοmânia ghid turistiϲ, vοl III, Εditura Ρеntru Τurism, Buϲurеști, 2016.

2. Untaru, Ciprian, Τurism în Rοmânia, Εditura Аldinе, Sibiu 2014.

3. www.bvb.ro

4. https://palacesinaia.ro/