Case Studies

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Lease vs Purchase 113 Room Hotel in Johannesburg


Introduction

Ascot Rentals undertook a study to ascertain the real costs behind leasing equipment vs outright purchase and which option offers clients the best value for money.

We chose a site that is most similar to the average client in the South African market. The Hotel in the study is part of a larger group and consists of 113 Rooms in Johannesburg. The Laundry operates 16 hours a day and is run by experienced staff, with sufficient training on all equipment. The site has extremely high productivity and downtime is not an option.

The equipment supplied is of an excellent quality and installation was done by trained professionals.

List of equipment

2 X 10Kg Washer - 2 X 18Kg Washer - 1 X 34Kg Dryer - 1 X 1750 Roller Iron - 1 X Hood Type Dishwasher

Equipment Purchase Price

R411 835.52

Monthly Rental Price

R14 116.25

Repairs & Spares / Year 1-3

R45 399.80 R73 811.70 R169 166.88

Rental inc 10% escalation / Year 1-3

R179 786.40 R197 765.04 R217 541.54

Total Spent - 3 Years

R700 213.90

Total Spent - 3 Years

R595 092.98

The cost saving using the rental option would have been R105 102.92.


Aims

Our main aim was to accurately assess the costs of purchasing equipment outright vs the costs incurred if the same equipment had been rented from Ascot rental Solutions.


Results

The below table shows the actual cost of purchasing new equipment and the associated cost of repairs for labour and spares over a 3 year period (July 2016 – July 2019), all relevant information has been captured correctly.

The second column shows the cost had the client rented the exact same equipment with included maintenance servicing and repair costs.


Table

The cost saving using the rental option would have been R105 102.92.


Recommendations

From the table above it is very clear that without regular maintenance, high use equipment does have a drastic increase in repairs and spares related costs. It is suggested that all capital equipment is serviced every three months, this is to keep it operating at 100% productivity and provide an early warning of any impending equipment failures.

Equipment that is regularly maintained also has the benefit of an extended useful life and minimizing downtime.

Ascot’s rental offers have the benefit of including regular maintenance and the ownership of the equipment after the rental period and would have saved the client in the study R105 102.92 over the three-year period, this figure excludes the cost of downtime and having to send linen out to be washed.

The small monthly payments would also have reduced the burden on the customer to raise large sums of capital to pay for the equipment in advance. In essence the equipment is paying for itself monthly as it works. The customers capital could have been used on alternative projects or kept in reserve.

The above case study can be accurately across industries and locations. We have found that the solution is most effective in remote areas where access to service and maintenance is more difficult than in metropolitan areas, specifically Game Lodges etc.

We strongly recommend any future equipment owner consider Ascot Rental Solutions as an alternative to outright purchase.

Game Lodges
Hotels
Laundromats
Restaurants
Facility Management
Healthcare