Paul is a fine arts graduate, who has several years' experience working on games graphics. Recently...
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Paul is a fine arts graduate, who has several years' experience working on games graphics. Recently he has been made redundant, mainly due to the financial difficulty facing his company in the current pandemic situation. He has now turned back to his main love, which is painting and printing, but is finding freelance work financially unproductive at the moment. While Paul is not someone who needs a huge amount of money to be content, he has realised that he needs a certain amount of regular income to enable him to survive, and also to be able to purchase materials needed for his preferred activities. Recently an opportunity has arisen which looks as though it might enable him to achieve what he wants, which is essentially a base level of income, but with enough time to devote to his main interest. There is a small motel available for sale in a small country town, which has a reputation for being something of an 'arty' town. There is already an art gallery there, together with a choir and a hall which is used for visiting performers. The location is close to a very popular national park, with a good prospect of high occupancy rates. As against this, occupation rates are likely to be low in the non-school holiday times and the national park is close to the bush fire areas. The motel is offered as a 'walk in, walk out' (WIWO) facility, and is fully equipped. The owner decides to sell because of the low number of occupancy due to the travelling restriction imposed by the Australian government recently. To show the average occupancy in the past during the same period, the owner has provided a record of room occupancy in attachment 1. The purchase price for the business is $50,000 which Paul considers to be a bargain. However, the buildings are not owned, but leased. The current lease expires in three years, but there are options for at least two further five-year terms in place. The current lease costs $40,000 per annum in rent. The motel has 15 rooms, 10 of which are double or twin rooms. There are a further three rooms with a third single bed, and the remaining two rooms are family rooms that will take four to five people. There is a two- bedded residence for the manager as well. The motel is graded as a three-star facility, the rates per night for the rooms are listed in the table below. Rate per room per day Double/Twin room $80 Three-bed room (Double+Single) $100 Family room (4-5 people) $120 Morning tea is provided at an extra cost of $10 per room per day as part of the motel service. A secured parking spot is also allocated to each room, which costs an additional $5 per day. The cost of toiletries and towels is $3 on average per day for each room. Although the customers want to enjoy the country lifestyle, the internet service (i.e. Wi-Fi) is still a necessity. The cost for internet service is estimated to be $2 per day per room. Paul wants to keep these services and believes that the costs will remain the same in the future. Paul is a fine arts graduate, who has several years' experience working on games graphics. Recently he has been made redundant, mainly due to the financial difficulty facing his company in the current pandemic situation. He has now turned back to his main love, which is painting and printing, but is finding freelance work financially unproductive at the moment. While Paul is not someone who needs a huge amount of money to be content, he has realised that he needs a certain amount of regular income to enable him to survive, and also to be able to purchase materials needed for his preferred activities. Recently an opportunity has arisen which looks as though it might enable him to achieve what he wants, which is essentially a base level of income, but with enough time to devote to his main interest. There is a small motel available for sale in a small country town, which has a reputation for being something of an 'arty' town. There is already an art gallery there, together with a choir and a hall which is used for visiting performers. The location is close to a very popular national park, with a good prospect of high occupancy rates. As against this, occupation rates are likely to be low in the non-school holiday times and the national park is close to the bush fire areas. The motel is offered as a 'walk in, walk out' (WIWO) facility, and is fully equipped. The owner decides to sell because of the low number of occupancy due to the travelling restriction imposed by the Australian government recently. To show the average occupancy in the past during the same period, the owner has provided a record of room occupancy in attachment 1. The purchase price for the business is $50,000 which Paul considers to be a bargain. However, the buildings are not owned, but leased. The current lease expires in three years, but there are options for at least two further five-year terms in place. The current lease costs $40,000 per annum in rent. The motel has 15 rooms, 10 of which are double or twin rooms. There are a further three rooms with a third single bed, and the remaining two rooms are family rooms that will take four to five people. There is a two- bedded residence for the manager as well. The motel is graded as a three-star facility, the rates per night for the rooms are listed in the table below. Rate per room per day Double/Twin room $80 Three-bed room (Double+Single) $100 Family room (4-5 people) $120 Morning tea is provided at an extra cost of $10 per room per day as part of the motel service. A secured parking spot is also allocated to each room, which costs an additional $5 per day. The cost of toiletries and towels is $3 on average per day for each room. Although the customers want to enjoy the country lifestyle, the internet service (i.e. Wi-Fi) is still a necessity. The cost for internet service is estimated to be $2 per day per room. Paul wants to keep these services and believes that the costs will remain the same in the future.
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