Business Plan for a Resort
EXECUTIVE SUMMARY The exotica resort will be a five star property which will be set on 5 acres of lush beach front gardens. The resort will be located in one of the most idyllic locales of south Goa. Each year
over 200000 nature lovers’ party animals and skiers visit Goa. On an average every individual spend at least Rs.25000 for a week on lodging, food, recreational activities.
OBJECTIVES
Maintaining 95% occupancy rate during the peak periods Assembling an experienced and effective staff Exceeding customer expectation Setting standards with different services offered
MISSION Exotica resort’s mission is to become a recognized leader on a national level for its expansive and luxurious resort facility.
Company summary The exotica resort will be a five star property which will be set on 20 acres of lush beach front gardens. The resort will be located in one of the most idyllic locales of south Goa. The business will have multiple revenue streams, which will allow the bu siness to achieve maximum profitability by providing all vacation services that a customer could want from one location.
COMPANY OWNERSHIP Anchal and Anuradha are the co-owners of exotica resort.
START-UP SUMMARY Anchal and Anuradha are seeking to raise $20000(Rs.1120000) from investors and expects to sell 50% of the equity interest in the business in exchange for requisite capital. PROJECTED START – UP COST Initial lease payments and $25000
deposits Working capital Furniture & fixtures Leasehold improvements Security deposits Opening supplies Company vehicle and lease deposits Marketing budget Miscellaneous and unforeseen cost Total start- up cost
$65000 $25000 $10000 $2500 $10000 $20000 $10000 $7500 $175000
Use of funds Initial leasepayment and deposit Working capital Furniture and Fixtures Leasehold improvements Security deposits Opening supplies company vehicle and lease deposits Marketing budget Miscellaneous and unforeseen cost
PRODUCT AND SERVICES
Rental of Hotel Rooms - The Hotel and Resort facility intends to operate as a four or five star rated facility that will feature a number of amenities commonly found in comparably priced resorts. The Company expects that the final facility will feature 200
suite style rooms. Each room will have a king or two full sized beds, access to high speed internet, a luxurious bathroom, full cable access, a desk, and other quality amenities. Spa-The resort will also provide spa facility to its customer. The product used will all be natural product which will refresh not only the body but mind and soul also. Food store- The resort will have all kind cuisine be it Indian, Thai food, Italian ,Chinese etc Ski rental -Ski diving facility will also be available.
FINANCIAL PLAN
Underlying Assumptions
Hotel and Resort will have an annual revenue growth rate of 16% per year. The Founder will acquire $20,000 of equity funds to develop the facility. The resort property will have an annual appreciation rate of 6% per annum.
Sensitivity Analysis
In the event of an economic downturn, the business may have a decline in its revenues. Traveling is a luxury and during times of deleterious economic conditions, the business may have issues with its top line income. However, the Company is targeting its services towards high end travelers who are less swayed by difficult economic climates. Additionally, the high margins generated by the business will ensure its continued profitability despite moderate decreases in revenue. Sources of funds Financing Equity contributions Management investments Total equity financing Banks and lenders
$25000 $25000
Banks and lenders Total debt financing Total financing
$100000 $100000 $125000
General Assumptions Year Short term interest rate Long term interest rate State tax rate Federal tax rate Personnel taxes
1 9.5% 10% 5% 33% 15%
2 9.5% 10% 5% 33% 15%
3 9.5% 10% 5% 33% 15%
Profit and Loss statements
Year 1 Sales $655290 Cost of goods sold $65.529 Gross margin 90% Operating Income $589761 Expenses Payroll $243000 General and $14400 administrative Marketing expenses $13761 Professional fees $25000 Insurance costs $7500 Travel and vehicle $15000 costs Rent and utilities $17500 Miscellaneous costs $4915 Payroll taxes $36450 Total Operating $377526 Costs EBITDA $212235 Federal income tax $70038 State income tax $10612 Interest expenses $13107 Depreciation expenses $5893
2 $714266 $71.427 90% $642839
3 $778550 $77.855 90% $700695
$250290 $14976
$273712 $15575
$15000 $25750 $7875 $16500
$16350 $26523 $8269 $18150
$18375 $5357 $37544 $391666
$19294 $5839 $41057 $424768
$251173 $78862 $11949 $12197 $5893
$275927 $87359 $13236 $11202 $5893
Net Profit Profit Margin
$112586 17.18
$148165 20.74
$164129 21.08
900000 800000 700000 600000 500000
Sales
400000
EBITDA Net Profit
300000 200000 100000 0 Year 1
Year 2
Year 3
Cash-Flow analysis Particulars Cash from operations Cash from receivables Operating cash inflow Other cash inflows Equity investments Increased borrowings Sales of business assets A/P increases Total other cash inflows Total cash inflow Cash outflows Repayment of principals A/P decreases A/R increases
Year 1 $152225 $0 $152225
Year 2 $222217 $0 $222217
Year 3 $289262 $0 $289262
$25000 $125000 $0
$0 $0 $0
$0 $0 $0
$37902 $187902
$43187 $43187
$50125 $50125
$340127
$265804
$339388
$8079
$8837
$9666
$24897 $0
$29876 $0
$35852 $0
Asset purchases Dividends Total cash outflows Net cash flow Cash balance
$112500 $106558 $252034 $88093 $88093
$55554 $155552 $249820 $15985 $104078
$72316 $202484 $320317 $19071 $123149
400000 350000 300000 250000 Total cash inflows 200000
Total cash outflows
150000
Cash balance
100000 50000 0 Year 1
Year 2
Year 3
BALANCE SHEET Year Assets Cash Expansion cost Inventory FF& E Accumulated depreciation Total assets Liabilities and equity Accounts payable Long term liabilities Other liabilities Total liabilities Net worth Total liabilities and equity
1
2
3
$88093 $52500 $35000 $25000 $(8036)
$104078 $58055 $62777 $47222 $(16071)
$123149 $65287 $98935 $76148 $(24107)
$1922558
$256061
$339411
$13005 $116921 $0 $129926 $62632 $192558
$26716 $108084 $0 $134800 $121261 $256061
$40990 $99247 $0 $140236 $199175 $339411
400000 350000 300000 250000 Total assets
200000
Total liabilities and equity
150000 100000 50000 0 Year 1
Year 2
Year 3
Business Ratios Year Sales Sales growth Sales margin Financials Profit margin Asset to Liabilities Equity to Liabilities Asset to equity Liquidity Acid test Cash to assets
1
2
3
0% 70%
20% 70%
17% 70%
16.68% 1.48 0.48 3.07
20.65% 1.90 0.90 2.11
23.18% 2.42 1.42 1.70
0.68 0.46
0.77 0.41
0.88 0.36
Personnel Plan The personnel needed for the Resort are the following :
Manager. Assistant manager. Resort staff (7). Food store staff (3). Ski rental/clothing store (3). Maintenance staff (3). Cleaning staff Personnel Plan Year 1
Year 2
Year 3
Manager
$36,000
$39,000
$42,000
Assistant Manager
$42,000
$45,000
$48,000
$110,000
$120,000
$126,000
Food Store Staff
$39,000
$43,000
$46,000
Ski Rental/Clothing Store Staff
$35,000
$39,000
$42,000
Maintenance Staff
$48,000
$52,000
$55,000
Cleaning Staff
$72,000
$76,000
$79,000
Total People
9
22
22
Total Payroll
$382,000
$414,000
$438,000
Lodge Staff
Marketing Plan Small Resort Market Analysis- Market Analysis Components
· Industry Trends · Location and Facility · Area Characteristics · Competition · Knowing Your Customer · Projecting Sales Conducting Your Analysis I. Industry Trends Industry trends are important because they signal a change in customer needs and behaviors. Studying these trends will help you identify opportunities and threats that may influence your operations profitability. Sources of trends include: · Other resort operators · State lodging and resort associations · Industry Periodicals such as Resort Management, Hotel & Motel Man agement and Lodging (AHMA) · Travel Periodicals such as Midwest Living and Country Inns Magazine · Research reports produced by the U.S. Travel Data Center · Local Extension and State Tourism Offices The industry trend checklist provides a sample of topics you might want to study as part of your market analysis. Use the following checklist to complete this part of your market analysis.
What factors motivate a guest’s selection of small resorts? How are seasonal travel patterns changing? What types of guests are attracted during different seasons? How long do guest want to stay? What are the different market segments available to a small resort operation? What services and amenities are most important to guests? What types of recreational activities are most important to guests? What other types of lodging operations compete with small resorts? Is the number of small resort operations in the region increasing or decrea sing? Why? What types of small resorts are growing (i.e. rustic cabins vs. luxurious vacation homes)? Will financing opportunities decrease or increase the supply of resort accommodations? How do resorts establish a unique and appealing atmosphere?
What pricing practices are most profitable (European, Full American or Modified American Plan)? Who else competes for leisure time and dollars? What are the trends in timesharing and condominium sales? How is tourism activity in the region performing relative to other tourist destinations?
II. Location and Facilities The location and facilities of your small resort are critical considerations because they affect your ability to draw customers. It is important that your location be attractive, accessible and offer unspoiled natural features including lakes, streams, forest, etc. Surrounding land uses that affect area aesthetics, noise, safety and accessibility to local attractions and businesses are important factors as well. You may want to highlight on a map other lodging accommodations as well as relevant landmarks to better judge the surrounding area. Facilities will greatly influence the market image of your resort and the amount visitors are willing to pay for accommodation and services. Some important facility aspects are charm, appearance, condition, age and types of units. Local tourism leaders can help you evaluate your resort’s location and facilities. Consider speaking to the local chamber of commerce or visitor’s bureau representatives, real estate dealers and bankers, tourist attraction operators and existing resort operators in the area. Use the following checklist to complete this part of your market analysis. Description of Location
Lake quality (water quality, fishing reputation, aesthetic and size o f lake) Weather conditions (rainfall, temperatures and snow conditions) Aesthetics of property (trees, privacy, grass, water front) Adjacent land uses Proposed developments in area Services available nearby (food, fuel, shopping) Tourist attractions (museums, historical sites, recreation...) Zoning restrictions Local events (sports tournaments, festivals, conventions...) Accessibility of resort Quality of roads leading to the resort
Description of facilities
Age of facilities Charm and character of facilities Exterior appearance and condition Interior appearance and condition Types of units Cleanliness
ADA requirements
Services/Amenities Offered
Swimming pools/beach Quality of service and hospitality Other recreational amenities (i.e. fitness room) Food and beverage service Boat and motor rental Groceries, gasoline and oil, bait and fishing equipment sale Recreational activities, programs and equipments Nature programs and outdoor skills teaching Children’s programs and childcare Evening entertainment Game rooms/video arcade
General Information
Ratings in travel guides Local reputation
III. Local Area Characteristics Local attractions provide experiences, entertainment and services for your guests, enhancing their stay. Attractions can include both natural and man-made places of interest. Attraction operators may be able to provide you with their estimates of attendance and data describing seasonality trends and place of customer origin. Local economic and demographic trends are also important. Information such as local population size and growth will help you identify potential demand from local residents and their friends and families who come to visit the area and need a place to stay. Local sales tax collection can also help you understand business trends in the area. se the following checklist to complete this part of your market analysis. Area Tourism and Recreational Activities
Park visitation Museum visitation Amusement and attraction visitation Casino visitation Festivals and events visitation Snowmobile trail usage (weather forecasts) Boating activity Hunting and fishing activity Golf course usage
Biking/biking trail usage Antique shop patronage Shopping activities Restaurants in the area
Local Economic and Demographic Characteristics
Local sales tax collections Room tax collections Local population Household income distribution
IV. Competition Probably the most important part of a lodging market analysis is the study of current and proposed competitors. It is sometimes helpful to conduct interviews with the operators of other small resorts to learn about their operations and performance. Visiting a resort as a vacationer is also very helpful to view a property from a guest’s perspective. Competitors are divided primarily into two categories, depending on the degree to which they affect your operation: · Primary competitors are other small resorts or other lodging operations that may also target your clientele. · Secondary competitors are other operations that provide overnight accommodation but generally do not attract your clientele. Examples of this group might be campgrounds, hotels and motels. When studying other operations, pay close attention to your primary competitors. It is important to keep in mind that there are both advantages and disadvantages resulting from competition. While it is possible that you might lose some customers to your competitors, there are numerous advantages such as: · Referrals · More lodging alternatives for tourists that result in a stronger destination a rea image and greater market exposure · Networking, ideas and advice from fellow resort operators. Essentially, the more you know about your competitors, the better are your chances of success. Try to obtain their occupancy percent (number of units sold divided by number of units available) and weekly and daily unit rate, by month if possible. Also, analyze services they offer and the general condition of their resort. This information can help you learn from their strengths and weaknesses. Use the following checklist to complete this part of your market analysis. Description of Competitive Locations
Lake quality (water quality, fishing reputation, aesthetic and size of lake) Aesthetics of property (trees, grass, privacy and water front) Adjacent land uses Proposed developments in area Services available nearby (food, fuel, shopping) Tourist attractions nearby (museums, historical sites, recreation...) Local events (sports tournaments, festivals conventions...) Accessibility of resort
V. Knowing Your Customer Your resort’s image, size, location, prices, services and amenities should be tailored to fit the type of customer you want to attract. It is important to analyze the type of travelers that frequent your area and how you might serve these visitors. Leisure travelers are by far the largest segment of visitors to small resorts. Leisure traveler demand is often seasonal. Some resorts are winterized and can provide service year round. It is important to recognize that different seasons tend to draw different customers.
To learn about the significance of leisure demand in your market area, interview representatives of the local visitor bureau, Chamber of Commerce and local event and attraction operators. Also, study variations in room rates by the week and time of year. Higher rates usually indicate periods of higher occupancy. Finally, inspect other local lodging facilities to determine if they have been designed to serve leisure travelers. Analyzing visitor origin can be a complicated process. As these visitors may be traveling great distances, it can be more difficult to acquire customer information than with a traditional analysis of local residents.
Strategy and Implementation Summary Exotica will aggressively market to both winter and summer visitors of the Exotica Resort area. The Resort has activities occuring year round. During the winter there is skiing but in the
summer months, the resort has hot-air balloon trips, white water adventures, day hikes into Bear Valley, and other recreational activities that take a dvantage of valley's spectacular beauty. There are lodges and inns in the Resort. The majority of room units in the area are condos. Our customers are looking for a different lodging experience that cannot be found in any of the area's condo complexes or hotels. We will offer our customers a comfortable, congenial environment that will assure return visits to the Exotica. The lodge will cost a little more but we will offer our customers all the services they need to make their stay memorable. We will offer a food shop that will be able to take special orders daily. There will be a ski rental shop where customers can outfit themselves and purchase ski passes. Each evening, guests can gather in the lodge's main room where there is a large fireplace, drinks and light music.
Marketing Strategy The Exotica Resort area has its own website and advertising/promotion program that promotes the area's lodging. Currently, 70% of the area's visitors use the website to identify lodging and service options. The Lodge is positioned as a new upscale facility that is focused on the high-income visitors to Resort. The area's lodges and inns receive approximately 80% of their guests from the Resort booking system. Since the total number of room units are few with the area's lodges and inns, these lodging units fill up quickly.
