A guesthouse in Maun is considering a large expansion, adding twelve rooms, to be built during the low season. Evaluate whether the owner should go ahead.
Show the mark scheme and the examiner note
Answer: Self-mark against the levels below: a decision is required, and the best answers make the decision conditional on something specific (for example, a signed contract with a tour operator for the shoulder months).
- Case for — twelve rooms at high season prices increases revenue; building in the low season avoids lost bookings
- Case against — a loan must be serviced through the low season, when the guesthouse is only half full, and the owner has no other income
- The specific risk — demand in the shoulder months is assumed, not evidenced
- Decision — proceed only if off-season demand is confirmed in advance (contract with an operator, or a smaller first phase), otherwise the loan is the danger rather than the building
Examiner technique: Write the decision in the first line of your final paragraph, then justify it. Markers look for the judgement, and a judgement buried at the end of a long sentence can be missed.