Competition on net profit

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Competitions

In the game we do have two types of competition:

• the commercial competition in the market of your hotel trying to make profit and beating the competitors. More on this in the file market competition
• the competition in the game. You are playing this game with a build in ranking, a competition as well!. There are two rankings on which you can focus in this game.
  • Competition on creativity
  • Competition on net profit (more information down here)

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 project 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 then just the ranking: the most important thing is consistency and living up to your strategy.

But if you are really in to 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 net profit means that we make a ranking every year of the top three in all of the cities on net profit. This realized net profit is stated in your Key metrics, only visible to you. All of these rankings only reflect the situation in that city, as the markets in different cities are not connected. So if you compete in the city of Amstelburg, and there are 10 teams playing, ther can only be three teams in the top three. This ranking will be made for
- any year based on net profits made by all of the teams
- based on the added up profit over all the years that have been played (cumulative).

This means that you can have a very good operating year in year one, 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 clime several places in the total ranking.

After each year this top three will be announced by the coaches and will be stated on your teamsheet in the secure section under the tab results in the Key metrics. The final winner of the competition on net profit in any city is the team with the highest profit after all years have been played.

Tips on how to win this competition

When you look at the operating review - private to you - of you own company you can (financial management) do basically two things to get a higher net profit;

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

Of course there are all kinds of financial and economical logics 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 ad up to your profit? Try to calculate this.

But you are not alone out there, there are a lot of competitors (see 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 then the competitor on well-chosen decisions at the right moment. But then again, you do not know in advance what the other teams 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.

But your explanations (in the Explanations form) lead to a mark per year, which has big influence on the number of guests you get allocated.

Overall winners on net profit of this game

We have told you before that there is no interaction between the cities: that much is true. But when all of the hotels have finished there competition in there city there will still be one overall winner

• on net profit: the team with the highest profits reserve after all of the years
• on creativity: the team with the highest number of points for creativity 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 on your teamsheet. See All results for explanation.

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