Business Plan Green Oasis Kuta [PDF]

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Business Plan Villa Hotel "Green Oasis Kuta" presented by Juan Manuel, January 2017



Management Summary This report aims to investigate the feasibility of a three star Villa hotel in Kuta, Bali. The Villa hotel "Green Oasis Kuta" will have a Phase A with 5 Villas with 2 rooms for Villa, total 10 rooms, and Phase B with 5 Villas with 2 bedroom every villa. Every room with private garden and private gazebo (chillout) and private swimming pool. The great location next to the beach, airport and highway make the project attractive. Another big hotels companies continue opening hotels around, that makes think they also know about the feasibility of more rooms in Kuta, but we have the difference in the originality of our project because is a little Villa hotel surrounded by Nature. The originality of the swimming pool also will make the difference and a marketing opportunity. Despite already established competitors there is an increase of tourist in Bali every year. Statistical market data was gathered and study at the page "Invest in Bali"



The financing



The purpose of this business plan is to achieve 270.000€; for build the Villa Hotel "Green Oasis Kuta", and pay back the credit after 3 years... have profits 85.000€/year. Also there is an option 2017 for start with low invest, renting the land and build only 25% of the hotel, Phase A Downstairs.



Possibility of credit, partner, business angel... it depends of the deal arrange between both parts.



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Table of Contents Management Summary 1 Introduction 1.1 Initial Position 2 Vision and Position 2.1 Facts and Figures 2.2 Definition of a 3 star Hotel 3 Utility 3.1 Customer Utility 3.1.1 Customer Segment 3.1.2 Customer Needs 3.2 Product and Service Utility 4 Industry and Competition 4.1 Analysis and Potential of the Market 4.1.1 Customers 4.1.2 Competitors 4.1.3 Suppliers 4.2 Competition Analysis 5 Strategy and SWOT-Analysis 5.1 Strengths 5.2 Weaknesses 5.3 Opportunities 5.4 Threats 6 Marketing business plan



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7 Personnel Plan and corporate Governance 8 Exit strategy



1 Introduction Before the causality of found a construction project without finished, make me think the possibility of finish in another way because the project was designed for build 10 residential Villas, 5 of them were finished and another 5 not finished, only with the structure. But for the strategic place makes more attractive the solution of Villa Hotel project. The experience of to be Project Manager consultant in 2016 in the opening of another hotel CalmaUbud.com and the rentability of it in the firsts months of establishment, I decided to create a business plan for the 10 Villas hotel, how it should be build. Furthermore, I define why potential clients will choose our “Green Oasis Kuta” and why our hotel is superior to its competitors. As the average customer already has a wide range of possibilities for hotel accommodation, we aim to focus on directness and limit our concept to the customer’s basic need with the singularity of an idea of traditional Villas in a green environment better than big buildings with hundreds of bedrooms and customers.



1.1 Initial Position Kuta is the most visited place in Bali, where there are the most quantity of hotels. Near the airport, with a highway which can connect easy with the rest of Bali island, with a beautiful beach and a lot of restaurants, cinemas, nightlife, malls...



"Green Oasis Kuta" will attract people who consider hotels in the 3 and 4 star segments. It will consist on:



-Phase A 3



5 Villas 2 story. Downstairs 1 room with bedroom, living room and private garden and private swimming pool Upstairs 1 rooms with bedroom, living room, terrace, private garden and private swimming pool. Total in Phase A will be 10 rooms.



-Phase B 5 Villas 3 story with 2 bedroom, living room, kitchen, private garden and private swimming pool.



-Main building One building with all service included: Hall, reception, restaurant, laundry, kitchen, toilet...



-Swimming pool Garden The Swimming pool will be an original and creative space, far away from typical pool will seems more a little lake with a waterfall surrounded by plants and big stones. There is the possibility of not build this public pool because every room has private plunge pool.



2 Vision and Position



"Green Oasis Kuta" is a place for tourist to relax and recharge their inner batteries. We offer to our guests individual care service, with silence, recovery, well-being and pleasure. The existing competition in the hotel industry with big hotels and a lot of customers make our individual care service the target for to be singular and originals, with a green surrounding, not like big hotels surrounded by cement and concrete, crowded by hundred of customers. "Green Oasis Kuta" will compete on an optimal price-performance ratio and attract numerous customers.



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Additionally we will focus not only in the quality of stay in our “Green Oasis Kuta”, we will focus also in the experience of our customers in Bali. Several tourist option will be available to customers, like diving, boat trip, trips to temples, waterfall, beaches... this will make our customers to want como back to Bali and recommend to friends to come to Bali and our hotel for enjoy their experience. We will have a Restaurant with complete menu, from traditional Balinese dish (nasi goreng, babi guling…), fast food (burger, pizza… ideal for the pool as snack), and western dishes as spaghetti, fish...



2.1 Facts and Figures



The size of the land in "Green Oasis Kuta" accounts for 4.100 m2. In this land we plan to finish the Phase A construction of 5 villas with two floor building with 1 room downstairs and 1 room upstairs. With the difference with competitors than every room will have living room with sofa, private garden and private pool. Rooms downstairs will have a size of 35m2 including a bathroom and big garden of 70m2 with private pool and gazebo (chillout) and upstairs 56m2 including a bathroom, terrace and big garden of 70m2 with private pool and gazebo (chillout) . According to the comparative with competitors the price should be minimum 75€ per room/night. And Phase B consist in the remodeling of 5 Villas 3 story with private garden and pool. According to the comparative with competitors the price should be more than 100€ per room/night. Daily processors require additional facilities and a main building, with place for reception, restaurant and rooms in order to store the particular material. Additionally, laundry rooms and lingerie stores are needed and included in the planning as well as common toilet, all at the main building. The singular swimming pool garden and swimming pool plunge garden will make a big gap with competitors.



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2.2 Definition of a 3 star Hotel A 3 star hotel is a middle-class hotel with a Multilanguage and a fully functional reception. The rooms are comfortably equipped with a flat television and tv cable channels, Wiffi, fridge, sofa... The accommodation facilities need to be neat and visually appealing. The range of service offered according middle demand and covers the elementary requirements in the domain reception and service.The Villa Hotel will have multiple revenue streams, which will allow the business to achieve maximum profitability by providing all vocational service that a customer could want for one location.



3 Utility In this section the report describes the specific utilities the customer can expect, who the customers are and what their needs are.



3.1 Customer Utility We position "Green Oasis Kuta" as an original and unique for the traditional style buildings in the region of Kuta, Bali. Furthermore, the optimal use of the synergies of the region such as entertainment as well as nightlife and beaches will maximise our customer’s utility. This idea is linked to international tourism platforms. In order to improve cooperations with other parties we could provide our partners with special offers. We should focus on as many partners as possible. Nevertheless, it is crucial to choose specific partners who match to our customer segment as well as the idea of a modern three star hotel. A clear organizational structure will ensure that there is very little space for conflicts. Conflict free course of action is the most important aspect in regard to our long-term reputation. Additionally, customer utility should always remain on the same high level and therefore, quality fluctuations must be avoided and kept to a minimum. Customer demands or expectation is closely related to its utilities and as customer demands and needs change over time, the management should create an innovative environment in order to generate constantly new ideas. We could offer an anonymous form at the checkout for to have a feedback with customers for improve ourself and service.



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3.1.1 Customer Segment Our concept will attract mainly tourist people who demand good quality without any complications. The Villa hotel also offers accommodation to tourists who are on their way to other parts of Bali and want to stay overnight for the proximity to the airport. Due to our special focus on tourist travelers, the hotel "Green Oasis Kuta"will focus also on arrange many options for travelers can enjoy Bali, not only focus on the hotel as is common in others hotels. We will offer relaxing day with treatments as spa, massage... and daily activity trips as mountain trekking and rafting, cultural days as temples, etc



3.1.2 Customer Needs Our guests look primarily for passive regeneration or a possibility to disconnect after a western life into a peaceful and green landscape every day. The hotel will offer this in an exclusive ambient. Also offer massage and spa treatments.



3.2 Product and Service Utility "Green Oasis Kuta" offers 10 comfortable rooms and 5 Villas with breakfast included. Customers have the possibility to enjoy lunch or dinner in our restaurants. Breakfast buffet offer will be a tasty, healthy, enjoyable menu for all tastes.



4 Industry and Competition In order to gain an overview of the industry and the competition in the region of Kuta we used several booking sites to gain quick access to similar businesses. We decided to approach of an industry analysis. Additionally four business were chosen to conclude an in depth study of establishments which come the closest to our conception of the hotel and as a further support to create a benchmark.



4.1 Analysis and Potential of the Market The following analysis of the market is based on the 5 forces. The 5 forces model is a good way to assess the attractiveness of a market. The model breaks the market down in 5 categories or 7



forces such as customer power, supplier power, threat of substitutes, threat of new entrants and rivalry in the industry. We assess these forces whereas the main focus is on customer power and competitors (rivalry) due to the high importance of these two forces.



4.1.1 Customers 4.1.1.1 Price Sensitivity Based on the conducted on-site visits, we conclude that most customers are looking for not long time stay for to have a look to the rest of the Island. Therefore, we believe that there is certain flexibility in the price sensitivity for this customer segment due to the fact that most customers stay two or three nights, usually a couple. On the other side, we think that the average tourist group could choose one full villa with 3 story, maximum capacity for 6 person, who makes more dynamic our “Green Oasis Kuta”, because customers don't have the possibility in a normal Hotel. Therefore, the average tourist is rather price sensitive. 4.1.1.2 Customer Power The relative high supply of hotels in the region of Kuta implies a high customer power. This results in tense competition and price pressure in normal hotel, nevertheless, not in a original and different Villas Hotel, not common around. Conclusively, the customer power in the hotel depends to a certain extend on seasonal holidays. Though the customer power for tourists is relatively high, since they are not bound to a certain location and do not mind driving a few miles further. 4.1.2 Competitors The threat of entry of new competitors is low since the entry barriers as well as the exit barriers are relatively high. Capital requirements is high, it is very costly to build a new hotel. Meaning the facility itself as well as the establishment of a brand and creating a customer loyalty. It is hard to create brand equity due to the opportunistic nature of the business where customers do not attach big importance to loyalty to a certain brand. The intensity of competition is high in this region and numerous hotels of a different type can be found along Kuta. It is not hard to create a competitive advantage since the concept of a Villa hotel leave room for innovation. The requirements of the customer are clear and simple and that is exactly what this projects intends to offer, relax, green zone, beach and individual attention. 8



4.1.3 Suppliers We assume that due to the high availability of suppliers for almost all respects, the power of suppliers is believed to be relatively high.



4.2 Competition Analysis In order to gain an impression of the current market situation in terms of competitors and rivalry for hotels,I decided to collect information about hotels around Kuta. Around eight hotels were detected in the area with similar characteristic. I decided to focus on four establishments which are most comparable with our conception of the Villa hotel. The project considers Bintang Bali Villa, Suite Villa loft at Kuta, Budhi Hotel and Primebiz Kuta Hotel as the key players in the area and they correspond mostly to the client’s tendency. Hence, an in depth analysis should reveal valuable information for the project. Were not considered: -Villa Puri Taryn. Old Villa for 8 people. -de Cinta Villa. Old Villa for 12 people. -Kuta holidays Villas. 3 villas; 8 people, 8 people and 12 people -Villa Tiah. 1 Villa for 14 people -KARLAMANDA VILLAS. 3 Villas: 3 bedroom, 5 bedroom and 5 bedroom



4.2.1 Bintang Bali Villas 2 Villas, 1 for 6 people and 1 for 2 people. Villa for 2 people. Villa near the Beach with private pool. Price 300€ night.



4.2.2 Budhi Hotel Very simple Hotel, no Villas, classified as 2 stars. Has 15 Bedrooms and price starts at 40€/night Old Hotel with old furniture in bedrooms. Makes this price minimum for our bedrooms because 9



we have new style, new furniture, living room inside the bedroom... Budhi Hotel more near of the beach than Green Oasis Kuta.



4.2.3 Suite Villa Loft at Kuta 18 2 storey Villas with private pool classified as 4 stars. Price starts at 130€/night Very similar to Green Oasis Kuta in decoration and utilities inside the room, with a living room. Rooms seems also similar size and distance to beach is a little more near than Green Oasis Kuta. The big difference with us is the private pool. But is not very nice the pool in a very close place with walls around, not as our "Swimming pool Garden". The price seems to be maximum for our rooms in Phase A, 130€/night



4.2.4 Primebiz Kuta Hotel Is a normal big hotel with 143 bedroom. Selected for the proximity to our Villa Hotel. Only 22m2 room with no living room. Price starts for 40€/night Rooms news and the style of the hotel and rooms very typical around the world, nothing special. Big building with roof pool, restaurant and gym. Not individual treat. Makes think this is the minimum price for our rooms.



5 Strategy and SWOT-Analysis The project is build and operate a three star hotel in Kuta. As a part of the business plan we provide a SWOT analysis in order to have a better understanding of the whole project. The idea is to create a singular hotel with reasonable prices. The main target audience is the tourist traveler which travel around Bali as first or last stay near the airport, or tourist looking 10



for party and/or beach as longer stay.



5.1 Strengths The new Villas Hotel "Green Oasis Kuta" offers various possibilities to differentiate the hotel from its competitors and create a competitive advantage, as the building itself is also a competitive advantage for to be dynamic in Phase A and has the possibility or join rooms for a groups of people. Customers tend to prefer traditional Villas new buildings over big buildings with massive customers. Since the target customers are tourist people a traditional Villa hotel might be more appealing for the average tourist customer. Also tourists will look for a comfortable place next to the airport. The Villa hotel will be located in Kuta, in a tourist area surrounded by beaches, touristic areas, restaurants, malls... which definitely belong to the target customers. The closeness to the highway facilitates the movement of tourist around Bali, which offers quick access to customers and suppliers. The facility is rather big compared to main competitors in this area which offers a higher occupancy and thus a higher turnover but on the other hand a low occupancy is costly. Hotel "Green Oasis Kuta" appears as a new hotel with a traditional style, and very good priceperformance ratio which is a definite strength in an area where are rather scarce, meaning that people would seize the opportunity if they could not find a hotel room within a community. The green of the trees and garden that the Villa hotel is surrounded increase the comfort for travellers compared to normal big building hotels.



5.2 Weaknesses Has to compete with other private Villas in the area, not hotels, only private Villas rented diary. Green Oasis Kuta is near the beach, only 1.5km, but there are hotels more near of the Beach. New hotel without the background of a big company behind. Another weaknesses is the parking is not enough for park a few cars, could be solved with external parking partners.



5.3 Opportunities 11



The surrounding tourist zone offers a big opportunity to attain customers. International tourist might be interested in a nearby hotel for their short term stay for to be near of the airport. Also long term stay for to be near of the beach and the biggest tourist area of Bali. Tourist can choose our option for to be as near of airport as for to be as near of highway, easy for go for a trip around Bali. Additionally the current rise of tourism last years makes this project more attractive.



5.4 Threats The biggest threat is a stagnating or decreasing demand for hotel rooms. Since the competition is already well established and other hotels are known and well frequented it might become tough for such a big hotel to get foothold in the industry. Additionally, through the size in combination with relatively high cost of capital (salary, infrastructure etc.) in Kuta it takes a few years to gain a profit. If due to an economic condition the hotel manages only to establish slowly. These circumstances can endanger the whole project. In general, costs can threaten the business and the industry. Further increasing costs in planes tickets prices could cause diminishing numbers in tourist and people might switch to nearest tourist place near their countries or in their own countries. Such an effect would harm all hotels because less possible customers fly to Bali. The change of currency is a dangerous effect, sometimes is easy to rise or down for international changes.



6 Marketing Business Plan Due to the experience in another hotel just open in Bali at the 2016 I notice almost all the reservations come from specialized online webs as Booking, Agora, tripadvisor... This represent we won't have expenses in Marketing, only our web page, but we will have to pay comision to this webs page sellers from where come the reservation. Usually this commision are between 12% to 15%. We have a plan for fidelization customers so every time some guess do the checkout we will provide them a code for 10% discount which could be used by them or friends without limits so 12



the customer and friends will have the happy opportunity of a 10% discount than for us will provide better commission than we pay to specialized webs. Best marketing plan is to have customers very happy and they latter will rate us in the specialized reservation webs, and their commentaries are very important. The originality of our "Garden swimming pool" could be also a great marketing opportunity if customers share pictures online.



7. Personnel Plan and corporate Governance



1 Manager 2 Receptionist 3 Cheff 6 Housekeeping and room service 1 Maintenance, clean pool and gardener 3 Segurity



We consider an alignment of the basic thought of simplicity, elegance and modern spirit of the hotel with the design of the facility as adequate. Leading and latest technologies are underpinning the features to commune modernity. The hotel design therefore would be a mixture of traditional and simple elegance communicating warmness and style to potential customers.



It is important to establish clear and direct ways of communication. It should reflect the simplicity and modern style of the hotel. Clear structures must be established to reduce room for conflicts. In order to stimulate innovation a creative workplace will be established. Space for the staff own initiative should increase identification with the company. Each member has to feel valued on a daily routine. Big importance has to be attached to team 13



spirit and to create and warm and helpful atmosphere. The well trained staff adds additional value to the price-performance ratio for our guests. Internal formation will deepen the knowledge of the employees and motivate them to ensure the quality demand of the guest as well as attract employees. The Head Office is directly placed in the hotel. It allows the clients and the management to collaborate effectively. Therefore every workday is closely followed by the staff. Current issues can be solved immediately. It is highly required to establish a close relationship between all the employees, from the director to the cleaning staff. The know-how of the staff should contribute to the overall development which creates synergies and finally results in best service for our guests.



8. Exit Strategy The report has planned for three possible exit strategies. The first strategy would be to sell the Company to a larger entity at a significant premium. Since, the hotel and resort industry maintains a moderate risk profile once the business is established; the Management feels that the Company could be sold for 5 to 10 times cost of construction The second exit scenario would entail selling a portion of the Company via Operator who could manage the operativity by their experience in Hotel companies. The third and last exit scenario would involve a little renovation of the Villa to convert them to Residential Villas for monthly or yearly rental, also are demanded in this area with a lot of business like shops, restaurants.... and so near of the airport and highway



FINANCE 1 Investment Costs



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1.1 Cost Estimation 1.2 Cost Estimation with Construction Cost Figures 1.3 Depreciation on Investment. 2 Case Scenario of Revenue Calculations 3 Finance Operating. 4 Finance Conclusion



1 Investment Costs 1.1 Cost Estimation On the basis of our benchmark we decided to have similar room equipment as the Villas Hotel around Bali. This includes a four to five square meter bathroom with shower, sink and toilet. In Phase A the room will contain a king-size bed with mosquito net (or two normal size beds), a colour television set, 2 couch and table, 1 closet, 2 table side, 1 airconditioner, 1 mini fridge. In Phase B similar equipment for every bedroom and kitchen. The equipment meets the requirements for standard rooms of a three star hotel.



1.2 Cost Estimation with Construction Cost Figures In order to have a comparison of the benchmark estimation and as a second tool, I engaged in a detailed construction cost allocation where various figures were collected and used. The new 5 buildings for the 5 villas in Phase A were built 10 years ago. That's why we will have as low cost in the construction of the buildings, because all the foundation is done, pillars, second floor, etc., only we need to focus in finishing as the design is done, building walls, installations, inventory, etc The 5 Villas with pool were built 10 years ago and only needs remodeling.



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Green Oasis Kuta Basic Data Land Land size 4.100m2 Common area 2.100 m2 Phase A 5 New Villas área = 1.000m2 Phase B 5 Old Villas area = 1.000m2 Main Building 300m2 Reception incl. lobby, offices, toilet, laundry, kitchen... Parking and access road 450m2 Swimming pool 200m2 (maybe not necessary because every room has private plonge pool)



Phase A with 5 Standard room Downstairs 35 m2, 70m2 private garden with pool Phase A with 5 Suite room Upstairs 56 m2, 70m2 private garden with pool and terrace Phase B with 5 Villa of 120m2 3 story, 130m2 private garden with pool and 2 bedroom



1.2.1 Land price Total price rent land; 250 million rupiah year, 4.100m2 Included 5 villas 3 story with private garden and pool and 5 structure new building (foundation, pillars and second floor)



1.2.2 Costs Construction



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1.3 Depreciation on Investment The 4% depreciation (digressive) on company buildings. For the inventory the maximum percentage is 15% year applied on a time axis The land didn't have Depreciation therefore increase of the price of the land every year, more in kuta where there aren't more land available for buildings, all the area has buildings. Buildings need to have a continue maintenance for not became old the hotel and depreciate the value of the cost of the stay.



2 Case Scenario of Revenue Calculations The following figures show a simple calculation of the estimated revenues in order to gain an overview of possible profits depending on the capacity utilization. “Green Oasis Kuta” will be build with 10 rooms in a 5 Villas (2 rooms for villa) and 5 Villas (2 bedroom/villa) available to potential customers. Bed rates value are taken after investigate competitors in the part 4.2. Competition Analysis.



The following margins are indicators for potential buyers and represent the range for negotiation.



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The price of only 1 room than actually are in hotels around without living room, garden and private pool are more than 500.000rp, 35eur, and Villas with some bedrooms approximately 150eur.



3 Finance Operating, Cash flow



-Not included at the cash flow income from Restaurant, room service, transport, trips... -Maintenance refers to water and electricity, calculated approximately 20eur room, same than my experience make me pay in a individual villa. -Taxes 10% refers to Government -Commission web 10% refers to web page as booking, agoda, tripadvisor....



4 Finance Conclusion Conclusively, the report reveals a great rentability on the feasibility and costs, due to low price 18



for rental land (17.500eur) and low cost of construction/inventory; 120.000eur Phase A and 80.000eur Phase B. As it is considered at the point 1.2.2 cost construction, revenue will provide us to pay back the credit in 3 years.



Possibility of credit, partner, business angel... it depends of the dear arrange between both parts.



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