Realizing that I am wrapping up my first month with Hurar Investment Group, I can’t believe how time has flown. I have been involved in a wide variety of activities around the office, getting glimpses of the design process and architectural elements of the hotels as well as getting some hands-on experience in finance and industry research. One of the most important stages of work here is the estimation of income and expenses for the hotel once it is up and running – this determines the return on investment that the investors will receive and predicts how profitable the property rehabilitation will be overall. I participated in this process for one of the company’s hotels. My supervisor created a cash flow statement predicting the profits of the first 10 years of operation, and the hotel manager also created a cash flow statement with similar predictions. However, there were significant disparities in their estimations. I was given the chance to compare the two statements and discover where the fundamental differences were in incomes and expenses. Once I found these, I presented them to my supervisor and created a cash flow statement that combined elements of both of their predictions. It was very interesting to see what huge effects certain numbers could have on the entire cash flow statement, such as occupancy rate for the hotel. If you increased the occupancy rate just a few percent each month, it wouldn’t appear to be a drastic increase, but it increased profits considerably. The goal is to be conservative, yet accurate with these predictions so that people understand the risks and potential rewards that come with their investment.
I am now working on industry research, looking at hostels and hotels in the Malaga area to compare prices based on the time of the year. It surprised me that there were so many hostels competing at similar prices in the area, but they sell out regularly so the demand for tourism here is clearly increasing. Hostels are popular in Europe for student travel and young adults because they offer cheap, centrally located accommodations and often have a very social atmosphere. There are fewer hostels in the United States, so there is less direct competition between hostels and hotels there. One interesting thing I have noticed is that due to the prevalence of hostels here, many hotels increase the amenities and free benefits of staying with them –as well as focusing on factors such as silence, cleanliness, and air conditioning- to draw in customers. So far I have learned a lot about this industry, and having a chance to improve my Excel skills, get hands-on experience with financial statements, and conduct bilingual research will serve me well in the future.Tags: LS Intern Summer 2014