How to effectively avoid hotel risk management

1. Financial risk

Financial risk is closely related to financial leverage. Because the financial leverage of liabilities is based on the fact that the investment income is higher than the cost of capital, in actual business activities, it is likely that income will exceed expenditure or losses will occur. Therefore, under the condition of constant debt amount, the more losses, the lower the ability of hotel assets to repay debts, and the greater the financial risk. Excessive debt, not only needs to pay huge interest, but also reduces the safety and competitiveness of the hotel, endangering its survival and development, and will eventually go bankrupt because of its inability to repay the debt.

2. Stock market risk

When the hotel has no debt or the amount of debt is low, even if the economic environment in which it is located declines in a certain period of time, resulting in a decrease in the income before interest and tax of the enterprise, the stock income of the enterprise will not change much, but in the case of excessive debt of the enterprise, the stock income will drop a lot. Because after the huge interest payment, there is little left for shareholders. In this case, it is difficult to maintain a stable dividend payment.

3. Financing risk

During the period of debt operation, if the hotel continues to use debt financing, its difficulty will increase. On the one hand, when creditors decide whether to borrow money, the first consideration is the asset-liability ratio of the hotel. Due to debt management, the debt ratio of hotels will increase, and the degree of debt repayment protection for creditors will decrease. In this case, it is difficult for creditors to make a decision to continue borrowing. Therefore, it limits the hotel's ability to increase debt financing in the future and increases the cost of future financing; On the other hand, due to the uncertainty of debt management, it is likely that the principal and interest will not be repaid on time, which will affect the reputation of the hotel. For a hotel with a bad reputation, financial institutions or hotel peers are unwilling to provide funds, and the ability to refinance will be reduced.

4. Financing risk

After the hotel adopts debt management, shareholders are actually agents of creditors and can decide how the hotel uses the loan. Under this kind of agency relationship, the creditor, as the actual owner of the funds, can't control this part of the funds, and the risks it bears and the benefits it receives are not equal. Therefore, in order to protect their own interests, creditors will add some restrictions to the loan agreement with the borrowing hotel. The cost of bond issuance and the control cost of restrictive clauses constitute the cost of debt financing, and debt will increase this cost.

Second, measures to avoid risks.

1. Determine the appropriate debt scale.

The so-called "moderate debt scale" means not only giving full play to the role of debt management, but also avoiding the risks brought by debt management. This requires an appropriate "degree", which is called "moderate debt scale". When determining the appropriate debt scale, we should pay attention to the following factors.

(1) Any capital cost management mode wants to get the maximum profit at the lowest cost. Debt management is no exception, and the cost of debt management also includes the cost of capital. The capital cost of hotels is the weighted average of all kinds of capital costs in the capital structure, that is, the weighted average of debt capital cost and equity capital cost. The capital cost of hotels is determined by debt capital cost, equity capital cost and ratio. When the cost of debt capital and the cost of equity capital are determined, the cost of hotel capital changes with the change of debt ratio. When the capital cost is the lowest, it is the best capital structure, and the debt scale at this time is also moderate.

(2) The purpose of debt management based on earnings per share is to obtain maximum income. The greater the income, the more successful such debt management is, and the corresponding debt scale is reasonable. Generally speaking, the income of common shareholders is measured by net income after tax per share. So the greater the total income, the greater the income of common shareholders. Therefore, the implementation of earnings per share standard needs to analyze the size of earnings per share under different debt scales and find out the debt scale that maximizes earnings per share under a certain income level. At this time, the debt scale is moderate. ...