Competition on net profit

Competition on creativity

In the game, there are two types of competition:

• Competition on net profit: based on added-up net profit
• Competition on creativity: based on how your creativity is assessed by your coach. You will get a higher rank in this competition by being innovative and creative.

Every team will always automatically participate in both game competitions: but of course only if you are really into competing.

Do we have to compete?

A competition is fun, but some teams choose to run their hotel in a proper way without caring too much about the competition, which is just fine! You can end the management game and earn your study points (ECTS) without winning any competition as long as you meet the requirements we have set for the project. And you can do very well in the game and have a beautiful hotel, a good strategy and a lovely logo etc. and still be number last in your competition and city. So a good ranking contributes to your marks, but a bad ranking doesn't have to be bad news for your evaluation at all. Your evaluation of the total of the game depends on much more than just the ranking: the most important thing is consistency and living up to your strategy.

But if you are really into competing on net profit, you can do this be trying to make the most net profit or by concentrating on others aspects of the hotel. As stated, your task is to keep (make) the hotel financially healthy and to keep it independent.

Competition on net profit

The competition on profit means that a ranking is made every operational year in all of the cities. Of course, you are not alone! If all teams are very creative, you have to be even more creative to be outstanding and to attract the customer in this way (see the page on competition)! The competition on net profit is based on net profit added up profit over all the years that have been played (cumulative). This realised net profit is stated in your Key metrics, only visible to you.

This means that you can have a very good operating year in year 1, but if your year two was less successful but still acceptable. This could mean that your overall position in the ranking on net profit might not benefit that much because of the second year result. Of course, this also goes the other way around: with just one year with a high net profit, a hotel can climb several places in the total ranking.

Tips on how to win this competition

The quality of your decisions and explanations has a big influence on the number of guests you get allocated that year. The more guests you get, the more turnover, the more possibilities to make a profit and get a high ranking. And so good explanations supporting your decisions contribute approx. for 30 - 50% of the number of customers attracted to your hotel. So having a good strategy and good explanations are the first two steps to success.
When you look at the operating review, private to your own company, you can on the financial management-side basically do two things to get a higher net profit;

• reducing the costs
  
• or trying to get more revenues by
  • selling more
  • selling at higher prices
    

Of course, there are all kinds of financial and economic logic in this. You can sell more by - selling more to new customers or
- selling more to 'old' customers
- upgrade the sales of existing customers
- less costs

You can try to reduce costs, but this will have its effect on the hotel and on its customers. So, the question is: will the savings you make on the costs outweigh the loss of revenues? And how about your customers, staff and general image? You can calculate a bit to try to find this out. Remember that most of the decisions you take lead to extra costs.

And spending more has to be earned back by its additional revenues: do additional costs bring enough extra revenues to take this risk and does it eventually add up to your profit? Try to calculate this.

But you are not alone out there; there are a lot of competitors (see the page on competition)! So the basic idea is that you don't go over their top with your costs. The best thing would be to spend just that little bit more than the competitor on well-chosen decisions at the right moment. But then again, you do not know in advance what the other hotels will do: a prisoners dilemma. So nobody can exactly predict this. So the total of things that are happening in your city will have big effects on the results of your decisions.

Overall winners on net profit of this game

When all of the hotels have finished their competition there will be one winner

• on net profit: the team with the highest profits reserve after all of the years
• on creativity: the most creative team after all of the years.

All results on both competitions will be announced by your coaches in a presentation and will be, after releasing the results, be visible via your Team file: see the result-tab in your team file for this.

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Emerald Forest Hotel offering an emerald hotel experience! | Run your own hotel in this management simulation.