Case Study - Hotel Icon

Contents

1 Introduction        

1.1 The strategic issues        

1.2 Timeline        

2 Decision making        

2.1 Methodology        

2.2 Decision Point 1: PolyU announce upgrade in 2007        

2.3 Decision Point 2: Impact of the global financial crisis at end of 2009        

2.3.1 Excluding irrelevant cost and using different cost estimator        

2.4 Using actual market data        

2.5 Conclusion of decision making        

2.6 Discussion        

3 Performance measurement        

3.1 Period 2005 to 2011        

3.1.1 Profitability        

3.1.2 ROI        

3.2 Period 2012 - 2013        

3.2.1 Profitability        

3.2.2 ROI        

3.3 Other concerns        

3.3.1 Hidden expenses        

3.3.2 One dominant investment        

3.4 Conclusion for performance evaluation        

4 Pricing Decision        

4.1 Target Selling Price        

4.2 Conclusion of Pricing Decision        

5 Ethics        

1 Introduction

1.1 The strategic issues

The public and the hotel industry are arguing about reason of the Hong Kong Polytechnic University (PolyU) to build a 5 Stars luxury teaching facility instead of a 3 Stars, a more modest teaching facility, which was originally planned. Some of them think that it is not necessary to build a five-star hotel for teaching purpose. Some of them argue that PolyU has invested too much in only one project and PolyU will not be able to cover the construction cost as the redevelopment budget was required to revise from HK$500 million to HK$1.3 billion to cover inflation and construction cost increases. In sum, most of the outsider are wonder whether PolyU have made the right decision in building a five-star teaching hotel. Therefore, our project would like to analyze this interesting case by considering several approaches and try to make some comments and suggestion about PolyU decision.