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Strengths Luzern Townhouse Hotel is strategically located in the proximity of a theater and the railway station in Hirshchengraben. The strategic location makes it easily accessible to a large number of customers from the surrounding locations including nearby business centers, shopping malls, and government offices. The hotel is financially stable regarding capital structure. The newly acquired property is funded 50% by equity and 50% of the debt. The property is expected to result in rapid growth of the hotel’s sales revenue and profitability. The property has the potential to grow into a four-star hotel within a very short time. The rooms are furnished with necessary amenities to meet the needs of customers, both local and international. The hotel’s operating profit for the rooms is 78.23%. This ratio is healthy and shows that the rooms business is not vulnerable to adverse market changes. The high rate also implies that the hotel has enough resources to fund substantial growth in the long-term. The hotel has an excellent service mix to keep its customers entertained and safe during their stay. This factor will lead to the hotel’s rapid growth in the short-term. Weaknesses The hotel’s quick ratio indicates that it has a liquidity of less than 1. Although this rate is projected to increase in 2017, it is clear that the hotel is not doing well regarding liquidity. The low ratio indicates that the hotel is heavily reliant on inventory to sustain its business operations. In effect, the hotel is weak financially in the sense that it is not able to repay most short-term debts due to the low quick ratio. The hotel’s return on capital invested is negative (-0.54%),
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