Financial Projections and Cash Flow Analysis

In order to assist companies in the financing of hospitality and tourism projects, Swiss Hospitality Solution carries out the preparation of financial projections and cash flow analysis for its clients. SHS specialists work on their client’s behalf to quantify the following components:

1.       Pre-financing plan;

2.       Historical trading records, profit and loss statements

3.       Operation revenue projections;

4.       Projected operating cost;

5.       P&L forecast on 5 or 10 years;

6.       Estimation of the working capital requirement;

Financial projections are achieved by means of our bespoke simulation programme, which factors in market and conceptual parameters to accurately forecast the hotel’s operational costs and revenues. Our bespoke model depends entirely on key indicators such as average room occupancy, daily rate and double occupancy to arrive at total rooms revenue as well as utilisation parameters for food, beverage, fitness and other income streams.

Cash flow projections on five or ten years can then be used in estimating the solvency and profitability of the given project. By applying a discount rate reflecting the level of risk and the market conditions applicable to the project, the Net Present Value (NVP) and Internal Rate of Return (IRR) can be calculated using as the first cash flows the total investment volume the project represents. Alternatively, financial projections and the resultant cash flow can be used to ascertain the overall financial strength of an existing hotel asset in view of its past trading and potential integrating findings from a market analysis underpinned to that effect.