Asset Managing

The owners have decided to renovate the Hungerford Hotel, with the intention of selling the property when the marginal rate of return peaks two years after the renovation.

Before acting on this decision, consider two rumors about the local market. The first concerns a major new industry relocating its headquarters to the market. If true, this will spark a major boom in the local hotel market. The other rumor, however, suggests quite the opposite. According to this rumor, the major local employer is relocating overseas. If true, the second rumor means a difficult period ahead for the local hotel market.

Create a post that discusses the following:

If either of these rumors is true, do you think it would change the owner’s renovation decision? Provide a clear rationale for your answer.
What factors would you need to consider before going ahead on the renovation? Provide an explanation for each factor you list.
In addition to creating your own posts in this discussion, read through the other students’ posts. We encourage you to respond to at least one post: seek clarification, raise a question, or expand on the current topic.

Sample Solution