The Royal Hotel

90

Cases

in management accounting

CASE FIVE

€ millions

1,200 1,000 800 600

400

-

The Royal Hotel*

Peter

J.

Clarke

200

0-'

19881989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Project time '--Cash outflow (dise.) .... Cash inflow (dise.) - - - Cash outflow Cash inflow

Introduction

Il is said that the difference between an Irish summer and Irish wint,r is that in

• The non-discounted pay back equals 5.9 years • The discQunted pay back equals 6.6 years Figure 4./1 Pay back (non-discounted, discounted)

summer the rain is warm! Recalling this, Pascal Burke smiled as the rain drops gathered on and lazily meandered down the window pane outside. It was midafternoon but the dark, heavy rain clouds outside necessitated the use of desk Iamps for those working indoors. Pascal had not expected ta be at his desk this Friday afternoan. Indeed, Pascal had not expected ta be at any desk at tbis time! He should have been on holiday. He had just fini shed his MBA degree, as a full-time student and had graduated near the top of his class and had been vated by his fellow students as 'the persan most likely ta he famous'. While the award was made slightly tangue in cheek, Pascal, nevertheless, took il seriously. Pascal took most things seriously - especiatIy work. as of July 1991? On leaving school, seven years earlier, he studied for and earned a degree hotel management. His father owned a hotel in a provincial town in Ireland which Pascal spent most of his school holidays working. He developed in in

ADDITION AL STUDENT Referring to the Appendix:

ASSIGNMENTS

7. 8. 9.

Which measures

were taken to reach the improved project suggested

situation

Evaluate the quality improvement

by Ml' Aitendorf! risk point?

a keen

Is DIAMED able to realize a return

from the project that would compensate

their capital costs? How do you judge the project

interest in the hospitality industry and his de ci sian...