Fat Jimmy's Resort Boracay

ALT-CFT Case Study:
FAT JIMMY'S RESORT BORACAY: A FAMILY BUSINESS IN AN ULTRA-COMPETITIVE SUN-SEA-SAND (3S) DESTINATION
LIAMZON, Ma. Andrea C.

 

Marie (Admin and Operations Manager of Hasikan Development Corporation) and her father, Jimmy (President of HDC), were discussing business matters at the dinner table again. In two weeks, they were scheduled for another biannual visit to Fat Jimmy’s Resort Boracay (FJRB)—one of two hotel properties that they owned and managed outside of Manila. This time, they were deliberating the expansion/renovation options given to them by a well-trusted contractor. Business hadn’t been so good in 2014. On top of this, about a fifth of their expenses went to maintaining their 12-year old building. They were hoping that expansion/renovation would not only reduce their maintenance expenses, but also increase their competitiveness. New businesses were always replacing ones that had folded up. It seemed that now was the perfect time to take a step back and evaluate the different facets of their business.

Marie knew they were doing okay for a budget hotel, but perhaps not well enough to stand out from the crowd. Together, father and daughter evaluate FJRB’s overall performance, the effectiveness of their “control” system, and their market standing. With expansion, they could even target a new ‘zero-frills’ market that might opt for shared dormitory-style rooms (with hammocks or bunk beds) instead of their pricier standard rooms. The challenge was to work with their uneven L-shaped structure; and take advantage of the revised Boracay Building Code that now allowed 4-story buildings (no longer 3).

To finance expansion/renovation, the Gomezes planned on using their savings (from earlier profitable years). They were also optimistic about the continuously increasing tourism influx to the island. As a family business, they were determined to spend their money wisely. What would be the best use of capital budget, and which would yield the highest ROI?  Was there anything else they could be doing to increase sales to sustain their business for the long haul?

 

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