Maxi Hotel Case Study

3.1 Financial Projection The five-year financial projection for Maxi Hotel under management by MI is presented in appendix F. Maxi hotel is scheduled to open in 2018 after completing construction and necessary business registration and application. Before a new Marriott property opens in 2021 (STR Global, 2016), the occupancy is estimated to grow 10% yearly but will experience a slowdown to 5% in 2022 due to increased room capacity along the riverside. At the same time, ADR is expected to increase between 250 THB to 400 THB each year partly from the dedication of 8% to 9% of the annual total revenue in hotel promotion. The net present value (NPV) deduced in table 21 is positive, around 1.2 million THB and the internal rate of return (IRR) is 2.22% higher than Thailand Bank’s interest rate of 1.5%. These imply a profitable project investment and future growth.
Table 21. NPV and IRR

3.2 Valuation Techniques
The current value of future economic profits in addition to the possession of the property, also known as the hotel value, typically consist of recurring cash flow and revenue from sale (Jackson, 2008). Presuming that the hotel has operated for 3 years, the owners have adopted specifically the band of investment - one stabilized year, band of investment – three-year buildup, market capitalization rate and room-rate multiplier valuation techniques in order to understand, compare and confirm the hotel value (deRoos & Rushmore, 2003; Fu, Sheel, & Lang, 2013; Jackson, 2008; Korobkin, 2011; Rushmore,