QUESTION: Mr. Horwell is unsure that NOBU has the resources to support the entire IMC you suggested in Q3(advertising, personal selling, public relations, social media marketing, sales promotion). Please rank the promotional mix tools (1= highest priority to 4= lowest priority) and justify.

Traveling in Nobu Style: Converting Restaurant Patrons to Hotel Guests The name “Nobu” is synonymous with an exceptional Japanese dining experience, perfected by chef Nobu Matsuhisa over a more than 30-year career. Matsuhisa, together with actor Robert De Niro and restaurateur Drew Nieporent, opened the first Nobu restaurant in 1994 and to date, there are now 38 Nobu restaurants worldwide. But if you talk to Trevor Horwell, the CEO of Nobu Hospitality, Nobu represents much more than just a restaurant experience. It’s a true lifestyle brand that also encompasses a relatively small, but growing portfolio of luxury hotels, too — eight of which are open now, and eight more are in the pipeline. Horwell’s primary focus as CEO is to continue to grow the Nobu Hotels brand and as he opens up diners’ eyes to the fact that cannot only eat at a Nobu but stay at one, too, he hasn’t forgotten the brand’s origins in the process. “We don’t normally do a hotel unless we think that a Nobu Restaurant can do well in that location,” said Horwell. “That’s very important because what we want to do first and foremost is to make sure there is a draw for locals, and that really comes down to the Nobu Restaurant.” Horwell said the majority of his Nobu hotel restaurant diners — 80 percent on average — are local residents, not hotel guests. “It’s not like a tourist restaurant. We like to attract the locals. We want that built-in customer.” “We are defined by the restaurant, in a way,” he said. “We play to our strengths. If you look at the hotel business today, the majority of hotels are suffering because they don’t lead with food and beverage. don’t have strong food-and-beverage concepts, and a lot of hotels are losing money. Today, we play to our strengths because that is one area that we do very, very well, and we bring in locals.” The idea to launch Nobu Hotels, he said, came from the fact that when Nobu Restaurants were located inside of a hotel, they “were the draw for the hotel and we were bringing in customers.” “If I only convert 5 percent of my customers in Nobu Restaurant to stay in our hotels, then at the end of the day, we’re filling out hotels. It’s not a tall order to do that, and you can do that very well and very quickly if you offer the right product.” Nobu Hotels has the advantage of having built its brand over a 24-year period with its restaurants first, followed by the first Nobu hotel that opened within Caesars Palace Las Vegas in 2013. “The first focus for us, really, is to expose the brand to our restaurant customers,” Horwell said. “We touch all types of Nobu customers. And we also provide instant identity. If you put ‘Nobu Hotel’ on a hotel, the word ‘Nobu’ says something and it attracts a certain type of customer.” Horwell said that, for example, when the first Nobu opened, the hotel had “more than one billion media impressions.” So, what’s next for the brand, and how does Horwell plan to grow Nobu Hotels? He explained, “We’re not driven by reservations systems because we’re small. It isn’t as if we need a huge reservations system to fill a 400-room hotel. That’s why a lot of these corporations do well, because they have the reservations platform to fill the big hotels.” Nobu Hotels, by comparison, average anywhere from 100 to 150 rooms generally. “The reason why those young lifestyle brands have emerged is because they’re like us. They are entrepreneurial, they’re unique because it’s a concept that’s come from the heart, from whoever is the original founder. But when it’s absorbed by a corporation, the whole thing changes. At the end of the day, the specialness is lost because then the corporation’s running it, and then, I think you lose what your original concept was all about. I think that’s the biggest issue.” Horwell also doesn’t necessarily think of Nobu Hotels as occupying a place in luxury hospitality, instead referring to the brand as “special.” “I look at our hotels not as luxury,” he said. “I look at them as special. I like us to be special, in each location we’re in. ‘Luxury’ is a word that’s used too much in terms of ‘everything is luxury today.’ For us, we’re ‘special.'” “That’s why I’m saying, from a company perspective, we’re very entrepreneurial. Today’s evolving luxury traveler is seeking “youthfulness” no matter what age they are, and they are “very curious and very adventurous. Because of that, it’s important for hospitality brands, Nobu included, to not just say they’re unique but to really offer unique experiences. He pointed to Nobu Ryokan Malibu in California as an example. The 16-room retreat overlooks the beach and is right by the ocean, and right next door to the Nobu Restaurant in Malibu. It becomes a destination, and that’s something Nobu wants to offer. It’s also a different concept from what the other Nobu Hotels have. While Nobu Hotels are places where there’s an emphasis on bringing in the locals, the Ryokans are meant to be more private. “The Ryokan is actually a place where people don’t want to necessarily be seen,” Horwell explained. “It’s a hideaway, a retreat. You can only book through a general manager and it’s a special place.” He added, “We will do more Ryokans, definitely, in locations that we think is right.” A major focus for Nobu Hotels is to grow the company and the brand with the right talent and partners, as well as make sure that the Nobu Hotels brand is reaching the right consumers. “The most important thing, from our perspective, is to build a relationship with our existing customers,” he said. “It’s about, first and foremost, on digital, working our databases. We like to do that through email, through a lot of channels. We just brought on a new head of digital. Capturing data is very, very important now, and that’s something that is a main focus and her team.” “I think the main thing for us is the customer relationship management (CRM) because you can do so much with it,” he said. “You can know your customer. It’s one part of the business that we are heavily focused in in and we can extract a lot of information from that.” In addition to beefing up its customer relationship management system, Nobu is also testing out a loyalty partnership, of sorts. The Nobu London Shoreditch joined Design Hotels last year, giving the property access to distribution on Design Hotels’ site, as well as a connection to the Starwood Preferred Guest loyalty program. Three Nobu hotels are also members of Leading Hotels of the World. “A lot of our customers aren’t driven by points,” he said. “When I travel, I don’t go for points. I want to stay in a hotel where I enjoy the staff, the food and beverage, the products — all of that — and I will pay a premium for it.” Appendix A Additional Information about NOBU Nobu Hotels "A Place to go and be seen" By “wrapping” the concept of a luxurious boutique hotel around energized public spaces, Nobu Hotels creates powerful stages for shared experiences of excitement and escapism. Featuring the best of everything with imaginative new restaurants, high- energy bars, relaxing rejuvenation, distinctive service, remarkable retail and an air of celebrity, Nobu Hotels will afford guests and privileged owners the most exclusive entry into unparalleled experiences that lay at the crossroads of innovation and imagination. Source: Excerpted from ‘Nobu Hotels CEO on a Restaurant-First Approach to Hospitality’ by D. Ting. Skift – March 22, 2018. +Experts and image from Nobu restaurant and hotel website

Anne, Bob, and John agree to form a partnership to own and operate The Riverside. Anne and Bob will each contribute one-half of the capital. Bob will contribute the real estate at a value of $3 million. Anne will contribute the equipment and the restaurant furnishings at a value of $1 million and the cost of improvement, which amounts to $2 million. John will oversee the construction and when complete, he will vest in a 5 percent interest in the partnership’s capital. On an ongoing basis, John will oversee the partnership’s operations in exchange for a fixed salary and 20 percent of the partnership’s ongoing profits. The construction is estimated to be completed in June of 2016, and his capital interest is estimated to be valued at $400,000 at that time.

What are the tax consequences if the trio forms The Riverside as a partnership to own and operate the restaurant?

November 21, 1980, was the day of a tragic fire in the MGM Grand Hotel in Las Vegas. At the time of the fire, the hotel had only $30 million of liability insurance. One month after the fire, the hotel bought an extra $170 million of liability coverage for a premium of $37.5 million, retroactive to November 1, 1980 (before the fire). Based on your knowledge of present value concepts, why would insurers be willing to issue insurance to MGM under these conditions?

If the equilibrium wage is $9 in the market for hotel workers and $8 in the market for restaurant workers and both markets have similar elasticities of labor supply and demand, then a minimum wage of $10 in both markets will:

Assume you are an SMC Hotel Manager for and an Interview has been conducted for You

Answer the following questions in Brief

4. State and explain any three (3) significant errors you identified during the audit of SMC hotel?

5. Discuss any 2 situations in which the auditor can be sued or liable?

6. State and explain any 3 qualities of an auditor?

7. Explain how you used interviews and listening skills during your audit of SMC hotel?

3) A stock market analyst wants to determine if the recent Hotel C upgrade to 4 starts has changed the distribution of shares of the hotel market. The current market share for the existing 3 hotels is shown in table below. The analyst collects data from a random sample of 200 investors. The table below shows the observed investors’ share holdings (f_i ). When using this random sample the analyst needs to be 90% confident of test results. The hypothesis to be tested follows:

H₀ : P_a =0.25; P_b =0.45; P_c =0.30 ; market shares have remained same

H_a : P_a ≠0.25; P_b ≠0.45; P_c ≠0.30 ; market shares have changed

1. Compute the test statistic

B. Has the recent upgrade of Hotel C to 5 stars changed the hotel market composition? Why?

Near money are those financial assets which can be converted into cash:? Select one:

a. With less cost b. With less risk c. With less delay d. All of these

Alliston spa, a California company, has been expanding in the Northeast. It has opened a spa in Stowe, Vermont, and another in the Berkshires, Massachusetts, and is now planning to open a third one in the East End’s South Fork of Long Island, New York. Alliston is eyeing an unused space owned by Orange Shores Inn. The space is located on the third floor of the main building. About 1/5 of the 10,000 sq. ft. space will be used to build a wide pathway with a garden trellis along the path to connect the main building to a new addition under construction. The rest of the space can be rented out to a third party.  

Alliston spa has offered to lease the unused property with Orange Shores Inn for 4 years for a monthly rent of $22,000 for the first 2 years, and a 7% annual increase for the next two years

Orange spa has the following two options :.  

Alliston spa.   The Orange hotel has to make the space ready for lease. It has to set up the partitions and put in all the necessary plumbing and new flooring. The estimates for the up-front renovation costs range from $200,000 to $250,000 to be depreciated over the life of the project using straight-line with a zero salvage value. Any other spa-related installations will be assumed by Alliston. The existing elevators and toilets would be used by Alliston and, therefore, a pro-rata allocation of the costs of the facilities should be based on the area that will be used. It is estimated to be $11,000 per annum. In addition, there will be an allocation of $ 2,000 per annum to Alliston for any repair and maintenance costs that will be incurred. Alliston will pay all utilities and other operating expenses.   

             Orange Spa. If the hotel creates its own spa, the up-front investment is estimated to range between $200,000 to $230,000. Other capital investments will include the installations of whirlpools, sauna, and massage and facial rooms. These additional investments will amount to $150,000.    

Revenues are expected to be generated 30% from hotel guests and the other 70% from outside bookings. Total sales are estimated to be $845,000 the first year of operation. This revenue has been arrived based on expected hotel bookings per year and prediction of demand for spa services from Long Island and the surrounding area. There will also be a spill-over effect from outside spa guests patronizing its own restaurant, adding additional covers per day. It is estimated that this will generate additional revenues of $55,000 per annum.  

             The project is estimated to last for 6 years. Sales are expected to grow at 4% per year. Estimates of the operating costs are as follows:

             Salaries                                                                            15% of Sales

             Other operating expenses                                              30% of Sales

             Depreciation- equipment & furniture                          Straight-line; zero salve value

             Capital expenditure                                                        Equal annual depreciation

             Cost of Capital.    Orange Shores Inn has a capital structure consisting of 40% debt and 60% equity. The debt consists of loans from the Long Island Bank with an interest rate of 6.8%. The cost of equity of the hotel shareholders is 16%. The corporate tax rate is 40%.  

It is possible that the hotel will project a different image to the public if it offers spa services. Instead of a hotel that caters to families, it will be perceived more as a hotel that caters to couples and singles. This might have a negative impact in terms of attracting tourists traveling with children. The total patronage for the hotel might decline by 12%. Below is the projection on net room revenue for the next six years.

Projection of Net Room Revenue

(Room Sales – Room Operating Expenses)

1. What are the relevant cash flows associated with each project?
2. How should the different lives of the projects be accounted?
3. What criteria should be used to evaluate the projects?
4. Which project is recommended

You’ve been monitoring Bletchley Park Corporation and have calculated the following information. The company has a debt to asset ratio of 57.45%, market beta of 1.26, unlevered beta of .82 (at a 40% marginal tax rate), and a cost of equity of 13.67%. The risk free rate is 1.8%. The risk premium due to financial risk is closest to?

1. A) Provide a graphical illustration and interpretation of peak load pricing when there are two classes of visitors to Lory State Park (say high season and low season visitors). B) Discuss two policy alternatives available to manage visitors when demand can exceed capacity at times, but not always. C) Demonstrate graphically when the alternative results in (short term, seasonal) profits to the park. D) What might be done if the Park Service is a nonprofit government agency?