i) Disposal of Hotels in City A:

According to IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations), a discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale, and that represents a separate major line of business or geographical area of operations.

In this case, Rivoli Hotel Ltd has disposed of all its hotels in City A, which represents the closure of a significant geographical area of its operations. Since the disposal involves a significant portion of the company’s hotel business in a specific region, it can be classified as a discontinued operation. The results of the operations in City A, along with any gains or losses from the sale, should be reported separately in the financial statements under discontinued operations.

Thus, the disposal of the hotels in City A meets the criteria for classification as a discontinued operation under IFRS 5.

ii) Refurbishment of Hotels in City B:

The refurbishment of hotels in City B and the shift from targeting business clients to holiday and tourism clients does not represent the disposal of a separate major line of business or geographical area. While the target market has changed, the core business activity (operating hotels) continues in the same geographical region.

Therefore, this decision does not meet the criteria for classification as a discontinued operation under IFRS 5. The changes in market focus and the related refurbishment would be treated as part of the ongoing operations of Rivoli Hotel Ltd and should be reflected in the financial statements accordingly, without classification as discontinued operations.

Conclusion:

• The disposal of hotels in City A qualifies as a discontinued operation under IFRS 5.
• The refurbishment and market repositioning of hotels in City B do not qualify as a discontinued operation.