Maybank Economics Project 4 Shangri-La Asia Limited Done By: Leader :Liu Jou Hsuan Members : Felicia Lee, Janna Tan, Valarie Tam, Mandy Ho, Amelia Yee.
Shangri-La’s main business Shangri-La Asia Limited is in charge of four main hotels which are Shangri-La Hotels, Shangri-La resorts, Kerry hotels and Traders hotels and is an investment holding company. It provides hotel management, marketing, consultancy, reservation, and related services. -Involved in real estate investment, development, and operation activities. -It also operates a staff training academy and leases office properties, commercial properties, and serviced apartments. -Furthermore, it also owns a golf club and licenses intellectual property rights, as well as in office management activities. .
The outstanding shares and paid up capital of the firm? Shangri La Asia limited
Total revenues and operating cost for the last 2 years Shangri La Asia limited
Shangri-La’s Competitors 1) The HongKong and Shanghai Hotels, Limited. The Hongkong and Shanghai Hotels (HSH) deals in luxury. The group owns and operates about two dozen deluxe hotels and commercial and residential properties in Asia, Australia, and North America. 2) New World Development Company Limited. This hotel is focused on residential projects, complemented by a sizeable investment property portfolio comprising shopping malls, offices, hotels and service apartments. 3) Mandarin Oriental International Limited. The company, which is incorporated in Bermuda and operates as Mandarin Oriental Hotel Group, owns, manages, or has under development about 40 upscale hotels in more than two dozen countries in Asia, the Americas, Europe, the Middle East, and North Africa.
2012 2011 Names Of Hotels Earnings Dividends Revenue Names Of Hotels Earning Dividends Revenue per per share s per per share share share Shangri-La Asia Limited 0.63 20.00 14829.4 Shangri-La Asia 0.89 20.00 15955.1 Limited HK$ Hk cents HK$m HK$ HK cents HK$m The HongKong and 1.40 14 5178 The HongKong and 1.52 14.00 5009 Shanghai Hotels, HK$ HK cents HK$m Shanghai Hotels, HK$ HK cents HK$m Limited. (HK dollar) Limited. (HK dollar) New World 1.88 38.0 3995.9 New World 2.10 38.00 2767.5 Development HK$ HK cents HK$m Development Company Hk$ HK cents HK$m Company Limited. Limited. (HK Dollar) (HK Dollar) Mandarin Oriental 0.55 54 5027.3 Mandarin Oriental 0.46 47 4763.5 International Limited. International Limited. HK$ HK$m HK$ HK cents HK$m HK cents (US dollar) (US dollar)
Oligopoly -Shangri-La is an oligopoly as only large firms are able to spend money on non- price methods to inform more consumers of its existence. -It is one of the few hotels which has built up a world known reputation. Substantial barriers to entry -Economies of scale. (Large capital required) Large capital is needed to improve services. Therefore, it needs to purchase resources in bulk. -Mutual dependence and price rigidity Firms depend on each other and consider responses of rival firms before setting prices. -Financial economics of scale. Banks may not be willing to borrow money to smaller firms due to high risks involved.
How does it compete against its competitors? -Demand for services from Shangri-La limited hotels are inelastic. Therefore firms are discouraged to compete with its rival firms by price competition. -Non-price methods Shangri-La uses many advertising and charity methods to inculcate the idea on consumers that they are caring and will help any strangers in need. How does oligopoly (Shangri-La Limited ) works? Collusion between firms -A collusion involves non-competitive agreement between rivals that attempts to disrupt the market's equilibrium. -Sharing of private information -In order to maximise the amount of profit, Shangri-La will have to collude with other large firms in order to attract more consumers.
Graph after advertising -Demand curve moves to the right -Creates imaginary/ real difference between products from different firms In conclusion, Shangri-la uses non-price competitions to attract consumers into their services as price competition is too risky and waste a large amount of resources.
Market Advantage (Shangri-La) -Programmes. -Facilities. -Privileges. -Superior Staffs. -Consistence. -Accommodation. -Standard. -Distributions. -Management. Shangri-La is one -Promotions. of the few hotel companies that owns most of its properties.
PES of Shangri La Asia Limited is inelastic Graph for PES Reasons Leading To Price Inelastic of Supply - Fixed number of rooms in a hotel - Fewer number of substitutions - High income earner as the target audience -Small workforce
Good Profit Shangri-La Limited Profit margin: profit $382,196000(USD, as of 2012) / revenue $2,057,249000(USD, as of 2012) X 100 = 18.58% (4 sig.fig.) The HongKong and Shanghai Hotels, Limited Profit margin: $817 (HK m, as of 2012) / revenue $5178 (HK m, as of 2012) X100 = 15.78% (4 sig.fig)
New World Development Company Limited Profit margin: profit $609.6(HK m , as of 2012)/ revenue $3559.5(HK m , as of 2012) X 100 = 17.14% (4sig.fig) Mandarin Oriental International Limited Profit margin: profit $84.4 (US m , as of 2012)/ revenue $648.3 (US m, as of 2012) X 100 = 13.02% (4sig.fig)
Tabulation Of Profit Margin in 2012 Hotels Profit Margin (As of 2012, HK m) 4 sig fig Shangri-La Limited 18.58% HongKong and Shanghai hotels, 15.78% Limited New World Development Company 17.14% Limited Mandarin Oriental International Limited 13.02%
Legal Framework If there is a problem in returning the loan, Shangri-La may: - Issue more shares and sell their existing shares to earn money to repay loan. - Sign an investment bank loan.These kinds of bank loans need credit checks which are precise because large amounts of money are involved - Signing a term loan, which is repaid in regular payments over a set period of time. It involves an unfixed interest rate that will add additional balance to be repaid. -Mortgage assets such as buildings, equipments to our bank and to sell assets like their chain of Shangri-La hotels to people which are able to afford them. -As Shangri-La owns properties and serviced apartments/residences, they would be able to sell them to raise money. -We will also be confident in lending loan to Shangri-La as it undergoes economic diversification
Short term Long term Short term (Commercial loan): Long term loan (Mortgage) -A commercial loan is used to fund - A long term loan, often up to 25 years large capital expenditures and/or used by people or firms to buy property. operations that a business may Loan is secured against the property. otherwise be unable to afford. It allows firms to purchase -Why? Shangri-La is constantly machineries for better operations. expanding their market and establishing existing hotels -Why? For operating costs and the purchase of furnitures. -With mortgage, we provide them sufficient capital. -With commercial loan, there will be sufficient capital. -Many assets and high profit margin (Less Risk) -Beneficial for both parties in overall.
Decision: Short term loan for 3 years -Commercial loan and mortgage Why 3 years as timeframe? -Enforced legal network -Lower Risk Why not long term loan? -Economic Collapse may occur
Conclusion In conclusion, Shangri-La is a big and stable company which is efficient in operation and provides good services to consumers. The company makes a huge amount of profit annually and has built a worldwide reputation. The are limited risks in loaning money to Shangri-La as they target high income earners. The company is also competitive and manages the business well with such superior quality.
Recommend
More recommend
