Defining the hotel products

Business plan

Executive Summary

Business Description

This is the wooden big cottage now. Wooden house240 m² located on small peninsula, shallow and deep shore, hard sand bottom, own boat. House, kitchen, living room 12 extra beds, living room 14 beds, bedroom 2 beds, 2 bedrooms, both with double 2 beds, sauna, washroom, dressing room/utility room. Central heating in house is electric.

Cottage has 2 fireplaces. Equipment: Electric light, electric stove, electric fridge-freezer, central heating, baking oven, hot/cold water, shower, toilet, microwave oven, television, dishwasher, (outside grill).

But in the nearest future it will be amazing resort «Pines and snow»for skiing, fishing, hunting and sample for relax all around the year.

Resort is situated on the lake Viipusjärven near the popular place Ruka.

Ownership and Management

«Pines and snow» will be a hotel, owned and managed by Nikolay Andreev and his family.

Key Initiatives and Objectives

Our primary objectives over the next year are to:

1. Obtain a bank loan of 5 billion euros to cover selected renovations, cottages construction, start-up and initial operating costs for «Pines and snow».

2. Implement a cost-effective promotional strategy that will maximize awareness and trial for the resort.

3. Achieve 70% occupancy to the 3-rd year after reconstruction.

4. Attain 700,000 euro in profit in Year 5

Marketing Opportunities

In light of market research, our target market are travelers between the ages of 25 and 55, married with moderate to high income. In addition, there is potential in this area for business travelers as well as small conferences.

Summary of Financial Projections

Loan of 5 billion euros will be used to finance renovations to the existing property and cottages construction. Direct cost of sales is projected to be 15%. We project that our net income will increase from 20000 euro in 2015 to a profit of 700000 in 2020.

Business overview

Situational analyses

Now this is a wooden house 3-stars, 240 m² located on small peninsula, shallow and deep shore, hard sand bottom, own boat. House, kitchen, living room 10 extra beds, living room 12 beds, bedroom 2 beds, 2 bedrooms, both with double 2 beds, sauna, washroom, dressing room/utility room. Central heating in house is electric. Cottage has 2 fireplaces. Equipment: Electric light, electric stove, electric fridge-freezer, central heating, baking oven, hot/cold water, shower, toilet, microwave oven, television, dishwasher, (outside grill).

Hotel is producing profits so in that point of view it is a well working company. It has its competitors but none that are directly competing with it. For example all the hotels in Lapland could be thought of as its competitors but there are no hotels in the same area where the hotel is located. The hotel has a couple of distribution channels that are bringing customers in regularly, most of them through the internet. For example booking.com has been proven to be a good channel for the hotel at the moment.

Objectives

Our primary objectives over the next year are to:

1. Obtain a bank loan of 5 billion euros to cover selected renovations, start-up and initial operating costs for Resort.

2. Implement a cost-effective promotional strategy that will maximize awareness and trial for the Resort.

3. Achieve 20% occupancy in first year of operation and 15% return or referral visits.

Location and Facilities

After the reconstructions there will be 50-rooms in the hotel and 4 cottages, each is for two families.

All of the rooms will have air conditioning, minibar, telephone, TV and a shower. The hotel services also will include a bar, buffet breakfast and lunch and á la carte restaurant in the evenings. Additionally there will be also a sauna and a meeting room available.

Tennis courts for the summer time and skating-rink for the winter time are planning.

The nearest place to ski is the Ruka.

- Ruka in Lapland is one of the largest ski resorts in Finland comparing sales: almost 8 million euros per year (2014-2015).

-Ski season 2014-2015: 360.000 skiing days, appr. 127.000 unique skiers

-34 groomed runs, biggest vertical 201 m and longest run 1300 m. The top of Ruka is 492 meters above sea level.

-Groomed runs altogether 20 km: 41 % blue/beginner, 43 % red/intermediate and 16 % black/advanced.

- Effective snow making on all runs (with almost 100 snow guns), 27 illuminated runs (87%).

-21 lifts: 5 chairs with one super fast RukaExpress detachable chair with bubble cover, hourly capacity of 25.400.

-FIS rated Vuosseli Super Pipe, Snow Park & Street,Ski/Boarder Cross course and a moguls run, Battery Run, suitable for international competitions (length 225 m, vertical 106 m, steepness 52 % i.e 29 degrees) and FIS rated slalom run.

-2 rental shops: 2100 sets of alpine ski equipment, 400 sets of snowboards and 200 sets of cross-country skis.

-5 groomers and over 90 snow guns: snow making capacity of 1250 cubic meters of snow per hour.

-The biggest and oldest ski school in Finland, Ski School Ruka, 180 instructors (mostly part-time).

-Ski season from October to May (over 200 days). 2013-2014 season expectation is 17.10.2013 -11.5.2014, 207 days.

- Slopes are open every day 9.30 a.m

-7 p.m. according to weather conditions. Ski lift opening hours by lift can be found at ski.ruka.fi website.

- Night skiing on Fridays 7-11 p.m (December -mid-April)

Market research

A hotel is a place that offers its facilities and services for sale. The services can vary from just one to various combinations that can all be thought of as a part of the total market concept of the hotel. The basic total market concept consists of five elements as shown in figure.

Market concept of a hotel

Location is usually the main element, thus being in the center of the market concept circle, that the visitor takes into account when choosing a hotel. Facilities of a hotel include the bedrooms, restaurants, bars, function and meeting rooms and recreation facilities such as a gym, tennis court and swimming pool.

The hotel services comprise the availability as well as the quality in which they are provided to the customers in the hotel facilities. A hotel can have services such as 24-hour front desk, concierge and room service. Depending on what kind of hotel is in question the services can vary on how formal or informal they are, the degree of personal attention and speed and efficiency.

The image of the hotel can be defined as how the hotel portrays itself to people and how the people perceive the hotel. The image is a mixture of location, facilities and services the hotel offers and how they market those elements but there are also such factors as the hotel’s name and appearance included.

The price comprises the values that are given to the hotel through its location, facilities and image. The price has to indicate all those elements for if they do not or the price is some other way determined wrong it will only result in unhappy customers who feel like they did not get their money’s worth.

Defining the hotel products

The intangible elements add value, differentiate hotels form each others and are meant to provide the customer with additional benefits. The extended product includes elements such as the people; how well the staff is trained and how well they do their job, accessibility including opening hours and after sales service meaning for example how well the hotel handles a complaint. Also nowadays more and more important has become elements such as atmosphere, brand image and corporate ethics.

Market analysis

International tourist arrivals grew by 5% in 2014, reaching a record 1,087 million arrivals, according to the latest UNWTO World Tourism Barometer. Despite global economic challenges, international tourism results were well above expectations, with an additional 52 million international tourists travelling the world in 2014. For 2015, UNWTO forecasts 4% to 4.5% growth -again, above the long term projections.

Demand for international tourism was strongest for destinations in Asia and the Pacific (+6%), Africa (+6%) and Europe (+5%). The leading sub-regions were South-East Asia (+10%), Central and Eastern Europe (+7%), Southern and Mediterranean Europe (+6%) and North Africa (+6%).

Europe led growth in absolute terms, welcoming an additional 29 million international tourist arrivals in 2014, raising the total to 563 million. Growth (+5%) exceeded the forecast for 2014 and is double the region’s average for the period 2005-2012 (+2.5% a year). This is particularly remarkable in view of the regional economic situation and as it follows an already robust 2012 and 2013. By sub-region, Central and Eastern Europe (+7%) and Southern Mediterranean Europe (+6%) experienced the best results.

Among the ten most important source markets in the world, Russia and China clearly stand out. China, which became the largest outbound market in 2013 with an expenditure of US$ 102 billion, saw an increase in expenditure of 28% in the first three quarters of 2014. The Russian Federation, the 5th largest outbound market, reported 26% growth through September.

Future markets

Size and outlook UNWTO's Tourism 2020 Vision forecasts that international arrivals are expected to reach nearly 1.6 billion by the year 2020. Of these worldwide arrivals in 2020, 1.2 billion will be intraregional and 378 million will be long-haul travelers.

The total tourist arrivals by region shows that by 2020 the top three receiving regions will be Europe (717 million tourists), East Asia and the Pacific (397 million) and the Americas (282 million), followed by Africa, the Middle East and South Asia.

East Asia and the Pacific, Asia, the Middle East and Africa are forecasted to record growth at rates of over 5% year, compared to the world average of 4.1%. The more mature regions Europe and Americas are anticipated to show lower than average growth rates. Europe will maintain the highest share of world arrivals, although there will be a decline from 60 per cent in 1995 to 46 per cent in 2020.

Target market

The target market is sports and business tourism (MICE).

Ski tourism

Ski sports constitute quite an important segment in today’s highly lucrative domestic and international tourism market. Relevant data indicates that around 2000 ski resorts which are operated in around 80 countries worldwide accommodate approximately 6 million beds for those who practice winter sports.

Ski resorts concentrate on recreational use, permitting tremendous numbers of people to enjoy and learn about delicate mountain environments in a safe manner. When undertaken in an environmentally sensitive manner, ski resorts can minimize their impacts on the land, while maintaining or improving business.

Due to some environmental, structural and market oriented challenges, the consumer for winter resorts is looking for new destinations and innovative products.

MICE tourism

The meeting, incentive, convention, and exhibition (MICE) industry—a service industry combining trade, transportation, finance, and travel—has been active in Europe and America for over a century. The MICE industry is characterized by the “Three Highs—high growth potential, high added-values, and highly beneficial innovations”; the “Three Larges—large output, large opportunities for employment, and large industry associations”; and the “Three Advantages—advantage over other industries in human resources, technological know-how, and the efficient utilization of assets.” Today, countries all over the world are putting their best foot forward to develop the MICE industry as a means to enliven national economic development.

Marketing Strategy

Pricing Strategy

Pricing strategy has been consistent with the differentiation objective, to provide added value for a reasonable rate as opposed to discounting and de valuing our products and services.

Room rates quoted are net of tax and service, are per night, per room with continental breakfast included:

Single -85.00 euro

Double -115.00 euro

Double deluxe -150.00 euro.

Conference room rates are net of tax and service, quoted per day use with tea and coffee breaks (2) included:

The Boardroom -260.00 euro;

The Conference Hall -320.00 euro;

The Ballroom -875.00 euro.

Marketing Objectives

1. To continue to communicate our strategic objectives to our target markets effectively.

2. To provide a positive hotel experience to all our guests.

3. To accomplish our growth targets within the given time and budget.

4. Expand our markets and identify new markets for our product and services.

Distribution Strategy

Our rooms can be booked by telephone, in person, through agents, via our homepage, or over the telephone. We will provide a commission to travel agents that is comparable to that provided by other accommodation facilities in the province.

Implementation Plan

Within the first years we will meet the following goals:

2016–Develop website

2017–Four cottages construction, landscaping

2018–Hotel renovation, landscaping, advertise the new conception for sport tourism and MICE

2019–Achieve more than 50% occupancy

Management and staffing

-Board of directors

-General manager

-Accounting Auditor

-Chief Engineer

-Rooms Assistant Manager

-Security

-Food&Beverage

-Houskeeping

-Director of Marketing and Services

Financial plan and Risks

Profit and loss forecast

“Pines and snow” revenues are projected to grow significantly in the second year. Monthly revenue will increase to 2,5 bln euros to the fifth year and this will yield the EBITDA of 1,5 bln euros and a net profit of 730,000 euros.


Sales revenue
Direct costs	-36	-101	-220	-285	-345	-368	-368
Gross profit
Fixed costs	-300	-550	-578	-582	-579	-579	-577
EBITDA	-93
Depreciation
EBIT	-93
Tax on profit
Net profit after tax	-94
Total	-94	-75