Section 1. Incremental Revenues and Cost Savings Craig Jones, the owner of Jones' Hotels (20 mid-size properties) is considering to replace the property management system (PMS) used in his hotels. IT department has been in search for a while for a cost-effective and efficient PMS to increase sales revenue and reduce labor cost. Recently, they have recommended Craig Jones a new sytem, Ultra PMS. Craig and his management team must evaluate the feasibility of this project. Consistent with all previous technology investments, no salvage value is presumed from the disposition of the proposed PMS at the end of its economic life of 10 years. Below is a cost break down of the new PMS rollover accross 20 properties of the company, if the company management decides to invest in this project: One Time Costs Initial Investment Cost $ 3,425,450 Annual Recurring Costs (Incremental) Annual system maintenance and updates 78,296 Annual training and technical support 58,722Total Annual Recurring Costs 137,018The sales and reservation team predicts that annual room sales revenue can be increased by 6% (incremental revenue) if the Ultra PMS is acqui They predict that labor cost in the sales and reservations office can be reduced by 7.5% each year (labor cost savings). Below is the most recent forecasts for room sales revenue and labor cost in the sales and reseravations office:The sales and reservation team predicts that annual room sales revenue can be increased by 6% (incremental revenue) if the Ultra PMS is acquired. They predict that labor cost in the sales and reservations office can be reduced by 7.5% each year (labor cost savings). Below is the most recent forecasts for room sales revenue and labor cost in the sales and reseravations office: Year Forecasted Room Forecasted Labor Sales Revenue Cost in S&R Office2021 19,574,000.00 978,700.00 2022 19,965,480.00 998,274.00 2023 20,364,789.60 1,018,239.48 2024 20,772,085.39 1,038,604.27 2025 21,187,527.10 1,059,376.35 2026 21,611,277.64 1,080,563.88 2027 22,043,503.19 1,102,175.16 2028 22,484,373.26 1,124,218.66 2029 22,934,060.72 1,146,703.04 2030 23,392,741.94 1,169,637.10The goal of this analysis is to help Craig Jones decide whether the proposed PMS project is financially sound or not. To analyze whether the project is sound, you are required to complete a set of tasks provided below. You need to use the information provided and use Excel to complete all tasks. Please use the templates and space provided for your answers. Below are the required tasks to be completed: Required Tasks 1 Using the sales revenue and labor cost forecasts in the S&R office, calculate the incremental annual revenues and labor cost savings from the proposed PMS project. Please use the columns provided for your calculations. Current Sales Revneue and Labor Costs in the Sales and Reservations (S&R) Office Labor Cost Savings ? Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Forecasted Room Sales Revenue 19,574,000.00 19,965,480.00 20,364,789.60 20,772,085.39 21,187,527.10 21,611,277.64 22,043,503.19 22,484,373.26 22,934,060.72 23,392,741.94 Incremental Forecasted Labor Cost in S&R Office Project Revenue ? 978,700.00 ? 998,274.00 ? 1,018,239.48 ? 1,038,604.27 ? 1,059,376.35 ? 1,080,563.88 ? 1,102,175.16 ? 1,124,218.66 ? 1,146,703.04 ? 1,169,637.10 ? ? ? ? ? ? ? ? ?

A property management system (PMS) is a software platform used by hotels, resorts, and other hospitality businesses to manage and coordinate various aspects of their operations, including reservations, room assignments, guest check-ins and check-outs, billing and payment, and maintenance.

The steps are as follows:

Determine the forecasted room sales revenue for each year. This information is provided in the table.
Calculate the incremental room sales revenue for each year by multiplying the forecasted room sales revenue by 6%. For example, for the year 2021, the incremental room sales revenue would be calculated as follows: 19,574,000 * 6% = 1,174,44.
Determine the forecasted labor cost in the sales and reservations office for each year. This information is provided in the table.
Calculate the labor cost savings for each year by multiplying the forecasted labor cost by 7.5%. For example, for the year 2021, the labor cost savings would be calculated as follows: 978,700 * 7.5% = 73,402.50

You can use these calculations to complete the table as follows:

Year Forecasted Room Sales Revenue Incremental Forecasted Room Sales Revenue Forecasted Labor Cost in S&R Office Labor Cost Savings

2021 19,574,000 1,174,440 978,700 73,402.50

2022 19,965,480 1,197,723 998,274 74,621.05

2023 20,364,789 1,221,895 1,018,239 75,868.93

2024 20,772,085 1,246,926 1,038,604 77,145.30

2025 21,187,527 1,272,816 1,059,376 78,451.20

2026 21,611,277 1,299,577 1,080,563 79,794.72

2027 22,043,503 1,327,210 1,102,175 81,166.78

2028 22,484,373 1,355,726 1,124,218 82,566.36

2029 22,934,060 1,385,143 1,146,703 83,995.73

2030 23,392,741 1,415,465 1,169,637 85,457.78

Hence, by using the above calculations the incremental annual revenues and labor cost savings from the proposed PMS project can be estimated.

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