FINANCING STRATEGY FOR HOTEL DEVELOPMENT IN BANDUNG Case Study: PT. LIGAR JAYA

• Main Author: THINGKER (NIM: 29110059) Pembimbing : Bapak Erman Sumirat, SE., M.Buss., Ak., KINNO
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/18799
• Institution: Institut Teknologi Bandung

The growth of the property industry in Indonesia has been very attractive in recent year. High economic growth, low interest rate, growth of consumption and political stability give a significant contribution towards Indonesian property development. Besides that, the improvement of Indonesian middle class significantly improve the buying power in property. Also, the growth <br /> <br /> <br /> country creates an awareness of investment, which one of the instruments is property The development in property industry influencing the property related business. One of the kind properties is developing vertical living as apartment and hotel. Hotel Industry especially in Bandung, is a growing business, specially more traveler and visitor coming to Bandung, either from domestic or international. Husein Sastranegara Airport’s visitor has grown significantly form 12.597 in May 2012 to 17.596 in May 2013. PT Ligar Jaya has a piece of land in North Bandung that is ideal for relaxing and leisure, therefore company decided to design the apartment and hotel in Awiligar area, with concept of green living and facilitated with outdoor activity, meeting and wedding places. In term of operating hotel company has appointed hotel operator, that responsible to manage day to day operation and generate profit. Even though Company has owned the land, it has the challenge on how to finance the building construction. Three alternatives have been considered, which are financing by the bank, finding strategic investor and sell the unit of hotel as time sharing ownership. Finance trough bank loan become an option, BI rate has reached the point of historical low of 5.75%, before it gradually increased to 6.5% in month of July 2013 due higher inflation rate and to stabilize foreign outflow from financial market. The rate is still considered acceptable, however it exposed to market risk that might affect the bottom line. Second alternative is by finding the <br /> <br /> <br /> strategic investor, that willing to inject the amount of money to finance the operational and the construction and given back the profit sharing of 60% to investor. The last alternative is by time sharing ownership scheme that the developer sells the hotel unit to later called owner unit, and owners unit through developer make agreement to hotel operator to run the hotel and give 10% fixed return to owner unit through developer. Capital budgeting technique, NPV, IRR and Payback Period is used to analyze the three <br /> <br /> <br /> alternatives with 3 different scenario, pessimist, most likely and optimist. Base on the calculation <br /> <br /> <br /> all alternatives gave positive NPV and IRR that bigger that WACC, that means all alternative acceptable. However, third alternative, selling the time sharing ownership units is chosen, because it has the best result, with NPV of 82,125,348,000.-, IRR of 139.1% and the payback period 5 year 7 month in most likely scenario. In addition, the tornado chart used to check the sensitivity in different range of circumstances such as occupancy, average room rate and percentage room sold compare to others. The result, even in the lowest extreme, NPV and IRR are still acceptable.