Accommodation and Tourism Facility in Motherwell a business Plan



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Accommodation and Tourism Facility in

Motherwell – A Business Plan


November 2007

Contents


  1. Summary of Feasibility 2

  2. The Aim of this Business Plan 2




  1. Market Analysis 2




    1. Tourist Numbers and Growth Forecasts 2

    2. The Hotel and Backpacker Markets in Nelson Mandela Bay 3

    3. The Competitive Advantages of the Motherwell Eco-Lodge 4




  1. Product Description 6




    1. The Motherwell Eco-Lodge and Chalets 6

    2. Sustainable and Eco-Friendly Characteristics 6

    3. Staffing Requirements 7

    4. Set-up Timeframes 8

    5. Marketing and Sales Strategy 8




      1. Marketing Campaign up to and Including Opening 9

      2. Marketing Campaign aimed at 4 Target Markets 11

      3. Conclusion 12




  1. Risk Analysis 12


    1. Cost of Construction and Setup 12

    2. Department of Trade and Industries Subsidy 13

    3. Will Income Targets be met by the Eco-Lodge and Chalets? 13

    4. Can Expenditure be kept at Budget Levels? 13

6. Conclusions 13



ACCOMMODATION AND TOURISM FACILITY IN MOTHERWELL
Business Plan
1. SUMMARY OF FEASIBILITY
The Feasibility Study for the Motherwell Eco-Lodge and Chalets development suggests that this development is feasible under certain conditions:


  • The Eco-Lodge must include a conference facility which could seat possibly 280 guests per day: a 20% usage here is anticipated (20,440 guest days per year) at R100 per day = minimum conferencing income of R2,044,000.00 per annum

  • Catering income to the Eco-Lodge would be R102,200.00 per year, which is a rental of 10% of turnover on an estimated turnover of R1,022,000.00 which would accrue from the restaurant, the bar and teas, to the catering concessionaire.

  • Accommodation income of a 70% occupancy of 20 chalets at R500 per chalet per day which gives an accommodation income of R2, 555, 000.00 per annum.

The above would result in an annual income of R4, 701, 220.00. Operating expenses are calculated at R1, 696,000.00, which would leave a surplus before debt servicing of R3,005,000.00.

2. THE AIM OF THIS BUSINESS PLAN

The aim of this Business Plan is to establish the process whereby the Motherwell Eco-Lodge and Chalets will become established and achieve the following:



    • 20,440 guest-days of conference delegates at a billable cost of R100.00 each, per year.

    • R102, 200.00 income from catering, which is a 10% turnover rental on a catering, bar and tea income of R1, 022, 000.00 per annum.

    • A 70% occupancy rate on 20 chalets at an average of R500.00 per chalet per night.

    • Expenses held at R1, 695, 000.00 per annum.

3. MARKET ANALYSIS




    1. TOURIST NUMBERS AND GROWTH FORECASTS

From Annexure A we can draw the following figures:




  • Nelson Mandela Bay played host to 405,600 foreign tourists in 2006, and 2,015,710 domestic tourists. These groups spent R2, 3 billion each, giving a total value to the NM Bay economy of around R4,6 billion (pg 25).

  • It is estimated that these numbers will have increased to the following figures by 2010: foreign tourists, 488,000 spending R5, 3 bilionl; domestic tourists, 2,270,000 spending R3, 8 billion. Total tourism spending: R9, 1 billion (pg 25).

  • These figures suggest a rapidly growing tourism market, particularly in numbers and spend of foreign tourists.

  • It has been estimated that an additional 233 hotel / resort rooms are needed in the NM Bay area by 2010, and a further 487 by 2015 (these numbers are over and above new building projects underway).

  • These growth forecasts suggest a healthy and growing industry, requiring new entries into the market in the short term. Plainly, new entries have to satisfy the requirements of their target market in order to be successful.

    1. THE HOTEL AND BACKPACKER MARKETS IN NELSON MANDELA BAY

Page 24 of Annexure A lists the main large accommodation establishments in Nelson Mandela Bay, and supplies their 2004 room rates and average occupancies. We have brought this up to date with research done for this report, and the results of this research are in the following table:





Hotel

Price per night for single room

Breakfast included

Phone

Significant Facts

Number of Rooms

Beach Hotel

Sea-facing: R995

Not s-f: R810



No – R90 extra

041 583 2161

En-suite rooms

58

Brookes Hill

R595

Yes

041 584 0444

Suites – 2 bed, 1 bed, bachelor

Incl bathroom,

Kitchenette / kitchen


68

Chapman Manor

R520

Yes

041 584 0678

En-suite rooms

24

City Lodge

R630

No – R65

041 584 0322

En-suite rooms

147

Courtyard

Room: R870

Suite: R995



No – R78 extra

041 583 4655

Suites / rooms.

Suites: bathroom + living room



80

Edward Hotel

R530

Yes

041 586 2056

En-suite rooms

97

Formula One

R229




041 585 6380

Bathroom in the room


88

Holiday Inn

R699

No – R83 extra

041 582 3720

En-suite rooms

280

Humewood Hotel

R479.10

Yes

041 585 8961

En-suite rooms

67

Kelway

4 star R820,

3 star R660



Yes

041 584 0638/9

En-suite rooms

65

Kings Tide Boutique B&B

R500, R735, R1135

Yes

041 583 6023

En-suite rooms

12

Paxton Hotel

R699

No – R78 extra

041 585 9655

En-suite rooms


83

Pine Lodge

R555

No – R69 extra

041 583 4004

Chalets

70

Protea Hotel Marine

R895

No – R120 extra

041 583 2101

En-suite rooms, some suites

98

Road Lodge

R338.35

No – R34 extra

041 583 4404

Bathroom in the room

92

Summerstrand Hotel

R650

No – R80 extra

041 583 3131

En-suite rooms

237

Windermere Hotel

R1300

Yes

041 582 2245

En-suite rooms


15

Willows

Chalets: R270 – R730

Cottages: R495 – R850

Rondawels: R205 – R850








Chalets, Cottages, Rondawels

50

Total

Average Occupancy















1630

70%


Backpackers Accommodation




Lungile Lodge

(Humewood)



Dorm – R70 pp

Double – R250



No

041 582 2042







PE Backpackers

(Central)



Dorm – R55

Double – R150

Twin – R150


Yes

041 586 0697





Jikeleza Lodge (Humewood)

Camp – R40pp

Dorm – R65 – 70pp

Double – R180-200 p/rm





041 582 2597







1 Cora Terrace

(Central)



Dorm – R75

Private:


Single – R180

PP sharing – R90



Yes – cereal










Tanaqua Lodge

(Humewood)



Camp – R45pp

Dorms – R75pp

Double from R200 p/rm

Twin from R200 p/rm






041 582 4304







Rooftops

From R150pp

Self-catering

041 585 1655





Willows

Dorm (own bedding) R40-R60 per person.












The above is a reasonably thorough analysis of the hotel and backpacker market. The Secondary Market (see Pg 24 of Annexure A) has not been included, as they are not, with respect, competitive establishments.




    1. THE COMPETITIVE ADVANTAGES OF THE MOTHERWELL ECO-LODGE

As we have noted (see Feasibility Study, section 5), almost all of the successful hotel and B&B establishments in Nelson Mandela Bay are clustered in the Humewood / Summerstrand beachfront strip. The attraction of this area is obvious (again, see FS Section 5).


What do we have to do to get to a 60% room occupancy of 20 rooms for the Motherwell Eco-Lodge, and to meet our goals of convention numbers and catering usage?


      1. The Four Key Markets for the Motherwell Eco-Lodge


A. The Motherwell Community
The Eco-Lodge will have to advertise itself to the following markets here:


  • Accommodation – it must inform, and regularly remind, Motherwell Business and the Motherwell middle class, of its services – direct mail, email, phone calls, etc. Another possible customer is the NM Bay Municipality.
  • Backpackers – an 8 bedroomed unit, rental at R500.00 for the night, is a very competitive backpackers product (R62.50 per person). And each unit has two bathrooms, a kitchen and linen – a backpackers heaven! Regular mailings, calls, etc to Schools, Churches, Sports Clubs etc.


  • Catering. Special Sunday lunches and Wednesday evenings will draw support, and Friday evening happy hours will do likewise. Possibly a kiddy playpack will be an added attraction.

  • Conferencing. The Municipality, and local business etc, will be a potential base of support.

The support from the Motherwell Community will be encouraged if the Eco-Lodge runs a publicised and efficient “Creative Tourism” programme, in which guests are encouraged to stay at the Lodge, and to involve themselves in creative tourism programmes co-designed by the Lodge, the Municipality’s department of Economic Development and the local community (see next section).



B. Coega Industrial Development Zone

The Coega IDZ is undoubtedly the potential market for the services of the Motherwell Eco-Lodge. As we have already noted, the Coega Development Corporation is about to occupy its newly-constructed office block in the IDZ – this will be the first major grouping of permanent workers to be domiciled in the IDZ, and this will happen in December 2007.

Should the NM Bay Municipality agree to build the Eco-Lodge, or to commission a process that allows a developer to build such a facility, it would probably only come on-stream in late 2009 or in mid 2010 (see Gantt Charts in next section). By then a number of major factories will be in construction, and other office buildings and commercial businesses will be on-stream. This will create a large reservoir of senior and middle managers working on construction or in factories or office buildings in the IDZ by early 2010. Plainly, they will need conference and recreation facilities; restaurants and bars and accommodation opportunities. The proposed site of the Motherwell Eco-Lodge is closer to the IDZ than is any part of the NM Bay Metro except Bluewater Bay, and will thus be in an excellent position to get some of this business.



  • Conferencing Business

The Coega IDZ will create considerable opportunities for conferencing, training, board meetings, breakaways, retreats, etc, etc. This will be core-business for the proposed Eco-Lodge, and as such a strategy must be developed to “catch our share” of this business (see next section).




  • Catering and Beverages

As with the previous note on conferencing, the executives domiciled in the Coega IDZ will be making use of restaurants, bars and recreation facilities generally – the Eco-Lodge must promote itself to get a significant section of this business (see next section).





  • Accommodation

The ongoing development of the IDZ should see a steady stream of highly skilled workers (engineers, machinists, finance people, etc.) coming to the IDZ for short and long stays while establishing production, financial and general business systems in the plants that will be built. The small chalet, which has a lounge, a bedroom, a kitchenette, a workstation with an ADSL connection, and a private bathroom (all of this with a view and with access to a restaurant, a bar, a river-front and conference facilities) will be the ideal unit to accommodate such executives. The suggested rate of R500.00 per night, is very reasonable by hotel standards, and there is no reason why a good chunk of this business should not be available to the Eco-Lodge. This should be the main target market for the accommodation services of the Eco-Lodge.


[While the IDZ is the obvious target market, it must be remembered that nearby Markman Township is also a thriving industrial zone, with considerable requirements for conferencing, catering and accommodation, and must be worked intensively in this regard also].

C. The General Growth in the Tourism Market
As we have noted in the Feasibility Study, a shortfall in tourist-based accommodation is anticipated in the NM Bay area (between 230 and 480 rooms by 2015). Should the Eco-Lodge market and advertise itself appropriately, some of this will be available.
Further, intensive marketing with governmental and parastatal organisations (the NM Bay Municipality; Government generally; Telkom and Transnet and Eskom, etc.) could see conference usage develop in this market for the Eco-Lodge, with attached catering and accommodation takeup.
D. Eco-Tourism and Cultural Tourism
The NM Bay area has a very limited number of tourism accommodation establishments that cater for eco and cultural tourists. Most local hotels are just that – traditional concrete hotels, set on the urban strip of Summerstrand / Humewood. The game-parks of the hinterland do offer eco-tourism opportunities, which are very successfully promoted and much used, but in the Metro environment the Eco-Lodge will be a unique development – a township based eco-lodge, with sustainable technologies (solar panels, etc) and links into cultural activities that would be encouraged to start in adjacent Motherwell (see section 4.5.2.1).
The design of the Eco-Lodge is possibly the only such institution in the Metro, with many small buildings (rather than one or two big, environmentally overwhelming ones) spaced widely around a big site to make them as unobtrusive as possible.
Annexure D notes how the Eco and Cultural Tourism markets are growing, and what opportunities they now provide. Plainly, the Motherwell Eco-Lodge is tailor-made to catch a section of this growing market.

E. Market Scan – Conclusions

The four market opportunities outlined in this market scan are, we believe, surely enough to support a small-scale Eco-Lodge as envisaged in this Feasibility Study and Business Plan – a 20 chalet resort, in a beautiful environment, with carefully controlled costs and a reasonable marketing and advertising budget.

4. PRODUCT DESCRIPTION



    1. THE MOTHERWELL ECO-LODGE AND CHALETS

The proposed establishment is adequately described in section 10 of the Feasibility Study, and in the architectural drawings in Annexure E hereto. It is again noted that these drawings are preliminary, primarily for concept and costing purposes. They show an establishment that is:




    • An Eco-Lodge main building, with conference facilities, restaurant, bar, deck with sweeping views, and boma and entertainment areas.

    • 20 chalets, 10 of which are two bedroom (max 8 sleepers) and 10 one bedroom (max 4 sleepers). They are approximately 70 m² and 45m² in size.

    • A Boardwalk down the steep cliff to a boathouse and recreation facilities on the river.

    • Parking, Guardhouses, etc., as required.

The estimated cost of building this is R42, 560, 000.00 (see Annexure F).

However, the Feasibility Study suggests that considerable savings will have to be made, and a maximum spend of R20 million is recommended.


    1. SUSTAINABLE AND ECO-FRIENDLY CHARACTERISTICS

To optimize the ecological sustainability of the Lodge the following resource–saving technologies the following can be considered:





  • Energy Supply

Identify the range of different forms of energy for various needs and consider the viability of environmentally sustainable off-grid options: solar and wind. Explore means to conserve energy by insulating the facility, using of low energy appliances (energy efficient lights)




  • Water Supply

Alternative water supply methods like rainwater harvesting and ways of conserving water can be considered



  • Sanitation

Different sanitation options and the recycling of sewage for other uses and environmental benefits can be considered. Examples: Enviro-loo that uses little water and which can convert sewage into a substance that can be composted and used to improve the quality of soil and in vegetable gardens. Biogas systems that produce gas that can be used for domestic cooking, heating and lighting.




  • Wastewater management

Wastewater management is concerned with channeling, treating and even storing used household water in a way that does not damage services, facilities and the environment. Ways in which to recycle wastewater, how treated wastewater can be used for irrigation, fertilizer for gardens and even agriculture can be considered




  • Storm water management

Assess storm water management system with particular emphasis on storage such retention ponds. Consider ways to manage drainage of sites in case of local flooding, maximizing natural paths and flow into vegetated areas and vegetable areas




  • Solid waste management

Explore practical, affordable and acceptable solid waste management systems to prevent unsightly appearance of waste that is often dumped in an unregulated way


Explore community-based waste management and the employment creating opportunities associated with recycling and the benefits of re-use of products.



    1. STAFFING REQUIREMENTS

It is estimated that the following would be the staffing requirements of the Eco-Lodge:


1 General Manager

1 Marketing Officer

2 Front Office Personnel

1 Back Office Person (Bookkeeper)

1 Driver / Gardener

6 Housekeepers



1 Maintenance Officer

Catering staff, and security staff, are not included as these services will be contracted out.




    1. SET-UP TIMEFRAMES



Motherwell Eco-Lodge and Chalets: Set up Timeframe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Activity

2008

2009

2010

J


F

M

A

M

J

J

A

S

O

N

D

J

F

M

A

M

J

J

A

S

O

N

D

J

F

M

A

Feasibility Report and Business Plan

- to committee

 






























 


 































 

 







 

- to council

 

 




























 

 






























 


 







 

Consolidation of Erf and Rezoning

 




 

 

 

 

 

 

 







 

 































 

 







 

Decision on Lease or Sale of Site

 










 

















 

 































 

 







 

Proposal Call for Developers

 













 

 

 










 

 































 

 







 

Developer Appointed


 

 






















 

 

 

 

 































 

 







 

Contract

Drafted

 




























 

 

 





























 

 







 

 

Agreed

 































 

 

 




























 

 







 

Architect Briefed

 

 





























 

 




 

























 

 







 

Plans Drafted

 

 































 

 







 

 

 














 

 







 

Professional Team Assembled

 































 

 







 

 



















 

 







 

Bill of Quantities

 

 





























 

 













 

 













 

 







 

Building Tender

 

 































 

 



















 










 

 







 

Builder Appointed


 

 































 

 






















 







 

 







 

Contractual Period

 

 































 

 























 

 

 

 

 

 

 

Building Complete

 

 































 

 































 

 




 

 

Furnishings, Pavings, Plantings, etc.

 





























 

 































 

 

 

 

 

Hotel Opens

 

 































 

 





























 

 







 

Key Staff Appointed

 

 































 

 




























 

 

 







 

Balance of Staff Appointed

 





























 

 































 

 

 

 

 

Staff Training

 

 































 

 































 

 




 

 

Marketing Programme


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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