3.
FEASIBILITY STUDY REPORT
(a)
Terms of Reference
Having been appointed by the Directors/Shareholders of Nature’s World Holdings (Pty) Ltd,
otherwise to trade under the Business Name of ‘KGOMOTSO LODGE’ to assess the economic,
operational and technical feasibilities of its intended operation of a lodge and some related
facilities in the northern outskirts of Gaborone, Interlands Botswana (Pty) Ltd hereby submits its
report.
(b)
Methods of Study
We followed a number of routes in our study that included the followings:
1.
Our constant meetings with the intended owner/Managing Director (Ms Kgomotso
Ntsatsi), who is the majority shareholder at 99%.
2.
Our joint visiting to the site of the project, just opposite the well-known Phakalane Estate
in Gaborone North.
3.
A visit to the nearest competitor, the Phakalane Golf Estate was carried out.
4.
“National Development Plan 9 (2003/4 –2008/9)” as published by the Ministry of
Finance and Development Planning in Gaborone was used for reference.
5.
“Tourism Statistics 2002” published by the Central Statistics Office (CSO) in Gaborone.
6.
“Statistical Bulletin” (June and September 2001, Vol. 2, Nos 2 & 3) also published by
CSO.
7.
“Bajanala: A Tourist Guide to Botswana”, Vol. 5, a Publication of the Department of
Tourism in Gaborone.
8.
“Discover Botswana”, a recent Publication by the same Department of Tourism.
9.
“Tourist Guide to Botswana”, a Shell Oil Company’s Publication as authored by
Veronica Roodt.
9.
“National Conservation Strategy (Co-ordinating) Agency”, a leaflet published by the
Ministry of Environment, Wildlife and Tourism in Gaborone.
(c)
Analysis and Development
This project relates to the promotion of tourism and the need for the provision of conferencing
facilities. Botswana, with Gaborone as a particular case still lacks behind in the provision of
conferencing facilities that could cater for a world class come together. Many lodges/guest
houses in at least Gaborone are composed of fewer rooms that could accommodate at least one
group of conference attendants at a go.
5
The result is that many high-class conferences earmarked for Botswana are shifted to such
neighbouring countries as South Africa, Namibia or Zimbabwe. The benefits of selling Botswana
internationally and the positive economic impacts are therefore also shifted. Past statistics,
although old, indicated that local hotels/motels/lodges/guest houses had 1 620 rooms in 1992; 1
709 (1993); 1 773 (1994); 1 724 (1995); 1 755 (1996); 1 959 (1997) and 1 815 (1998). The
rooms’ occupancy rates in the average were 54.6 (1992); 52.4 (1993); 51.4 (1994); 50.6 (1995);
51.6 (1996); 57.9 (1997) and 48.0 (1998).
The overall monthly hotel turnover, based on 73 of such facilities that responded to the Central
Statistics Office’s enquiry as touched above averaged P249 559 228.00 in 1998 covering such
amenities as accommodation, meals, bar sales and others. Many people topping the list of
arrivals were day visitors, holidaying, business and those in transit during 1994 to 2002.
In 2001 for instance, 560 054 visitors entered Botswana; those for holiday/tourists were 197219;
returning residents (296 680); in transit (265 697), while 146 437 arrived for business purposes.
There are other statistics for diplomats, students, employment seekers, etc, but we quoted the
above figures as they are synonymous with the project. All in all, 2001 registered 1 917 819
arrivals. We chose the entry points of Ramokgwebana, Tlokweng, Sikwane, Ramatlabama,
Pioneer Gate, Kazungula Ferry, Sir Seretse Khama Airport (SSKA), Maun Airport, Sowa
Airport, Ramotswa, Kasane, Tsabong and Francistown Airport as our tools of analysis.
Even though the figures tell us more about the entries into Botswana through the stated points of
entry, it is difficult to trace their exact lodgings either for night or day throughout their stay
within Botswana. We thus chose a compromise approach by assuming that those who chose a
particular point of entry would likewise lodge in the nearest facility or within that region or
district. With this project planned for Gaborone, we consequently assumed that it would have a
share from those entrants at Tlokweng, SSKA, Pioneer Gate, Ramotswa, Ramatlabama,
Sikwane, etc.
This project’s only immediate competitor is the affluent Phakalane Golf Estate Hotel Resort, just
5 kilometres away located in the affluent Phakalane Estate. It has eight (8)Chalets of three (3)
bedrooms each. They have two (2) bathrooms, Satellite Television, communal swimming pool,
self-catering facilities, laundry service and braai facilities. Their charges are as thus:
Persons
4-6 Occupants
2-3 Occupants
1 Occupant
Children under 14 years
Group Rate
Midweek
P385.00 p/p per night sharing
P440.00 p/p per night sharing
P825.00 p/p per night single
P145.00 p/child per night sharing
P300.00 p/p per night sharing
Weekends
P1 100.00 per Chalet/night
P1 100.00 per Chalet/night
P1 100.00 per Chalet/night
It also has twelve (12) villas of either three (3) or four (4) bedrooms. The three (3) bedroomed
ones are made up of one (1) Executive Suite (master-en-suite) and two (2) Standard rooms, while
the four (4) bedroomed ones are made up of one (1) Executive Suite (master-en-suite) and three
(3) Executive rooms (en-suites). It further on has six (6) budget rooms. Other facilities as a
satellite TV, communal swimming pool, self-catering, laundry service and braai are also
available. Their charges are as thus:
6
Persons
Standard Room (sharing bath & shower)
Executive Room (en-suite)
Charges
P 350.00 per room per night
P 450.00 per room per night
Executive Suite (master en-suite)
Single Occupancy (3 bedroom Villa)
Single Occupancy (4 bedroom Villa)
Children under 14 years
Budget Room (day use, 08h00 – 18h00
Budget Room (night use)
Group Rate
P 615.00 per room per night
P1 100.00/villa/night single
P1 200.00/villa/night single
P 175.00 per room per night
P 120.00 per room per day
P 145.00 per room per night
P 300.00/person/night sharing
Weekend Rate (3 bedroom Villa)
Weekend Rate (4 bedroom Villa)
P1 100.00 per villa per night
P1 500.00 per villa per night
(d)
Conclusions and Recommendations
1.
To experience maximum benefit to Botswana of the hospitality industry’s impact, we
suggest that more citizens be accorded entry into this industry. That would go a long way
in “localising” the associated benefits of dividends, profits, expertise, etc, that are shipped
out of the country by foreign shareholders.
2.
We recommend that this project should carry out services and provide such facilities as
categorised under the Explanatory Notes of the Income Statement (Revenue
Computation) for it to be viable. The labour force is depicted under the Organisational
Structure chapter.
3.
For optimum achievement, this project would need seeding funding to an estimated tune
of P3 650 500.00 as computed under the Explanatory Notes of the Cash Flow Statement
(Loan Computation). Should a Grant be awarded either fully or partially secured, the
better.
4.
Having assessed this project’s economic feasibility as derived from the projected Cash
Flow Statement, Income Statement, Balance Sheet and Trial Balance; the Operational
Feasibility as touched under the covered Organisational Structure, Succession
Arrangement and SWOT Analysis as well as the Technical Feasibility as learned
normally from other existing similar projects in Botswana, we give this project thumbs
up.
7
4.
OPERATIONAL METHODOLOGY, ENVIRONMENTAL IMPACT STUDY
AND MARKETING APPROACH
The intended project herein is to be for the provision of medium to high class lodging and its
related facilities like Conferencing, Restaurant/Bar, Hair/Beauty Salon, Laundry services for
clients in residence, Secretarial services, Swimming, etc. Meals of various cultures as per the
clients’ tastes would also be in the offering.
Clients would book in through the reception and then allocated rooms’ usages for whatever time
frame. The same procedure would be applied in the case of booking for the conference facilities.
The Bar/Restaurant would be open to both in-house clients and members of the public. The
conference room would, like the rooms be equipped with certain facilities like telephones,
televisions, air conditioners, chairs and tables, etc where relevant. The rooms would also
encompass such basics as beds, beddings and cutlery for self service. The recreational side would
be occupied by an already available swimming pool, which would be operated on a pay-as-youuse basis for outside clients, but would be free for in-house clients.
The Hair/Beauty Salon is aimed at being rented out to professionals on monthly rentals, the same
procedure that is planned for the Curio shop. Kgomotso Lodge would only take over their
operations should there be no potential tenant fitting the requirement.
The entire complex is to generate various forms of waste. There would be plastics, papers, food
and beverages’ waste to be considered. There would also be issues of internal landscapes and
used water from both the swimming pool and other mentioned business operations. For all such
and sub-such eventualities, adequate measures are already planned for. The swimming pool
water would be re-used after being rejuvenated up to a certain accepted health condition and then
would be diverted to a drainage system. All the water from the toilets, water basins and
baths/showers would be diverted to a drainage system enroad to the Gaborone system as well.
In marketing itself, the project is to institute a host of promotional gestures like Billboards, Street
poles’ adverts, Brochures, Magazines, Television, Radio, Internet, Newspapers, Sign boards and
Telephone Directory, especially the Yellow pages.
Te project is intending to participate in community development projects and charities in the
form of donations - giving in one way or the other to the level of its ability as part of its social
responsibility. It will also find ways of being a tourist promotion venture through its intended
Curio shop that would market traditional products made by the rural communities.
That would supplement the Government’s concerted NDP 9 efforts of developing and
implementing the National Eco-Tourism Strategy that stands to diversify tourism products, thus
leading to the improvement of every local community’s lives. That participation would build
loyalty to this project in the minds of the selling community and other beneficiaries as well as
announcing its entry in the minds of its clientele.
This venture is further on intending to stress on positive customer relations attitude from the part
of its staff. There would also be strategically placed suggestion boxes closer to the customers for
their convenience rather than to the staff as that would indirectly be threatening
to both staff concerned and the customers.
8
ORGANISATIONAL STRUCTURE, SUCCESSION ARRANGEMENT AND SWOT
ANALYSIS
Board of Directors
Managing Director
Sales/Marketing
Manager
Supervisors
(X2)
Chefs
(X2)
Gardner
Receptionists/
Bookkeepers
(X2)
Security
Service
Driver
Assistant
Driver
Cooks
(X2)
Waiters/
Waitresses
(X6)
To be manned by a staff component of 19 including the Managing Director Ms Kgomotso
Ntsatsi, this project’s daily grassroots operations are to fall under two supervisors, one per shift,
who would report directly to her. Ms Ntsatsi would in turn report to the two-member Board of
directors made up of herself (99%) and Tefo Ntsatsi (1%).
We suggest that the supervisors be in possession of at least certificates in any course related to
the Hospitality Industry. Five years experience is suggested. Any further qualifications in
especially Human Resources or Customer Relations will be added advantages.
There will also be a need for a professional and energetic Sales and Marketing Manager with at
least a Diploma in either Sales or Marketing, a combination of both of which will be an added
advantage. A minimum of 3 years post-qualifications experience in the Hospitality Industry are
preferred. His/Her job description would include events managements, customer/public
relations, indoor/outdoor advertising, etc.
9
Ordinary Level qualification in which Accountancy and Mathematics were subjects as well as
Computer Literacy and Reception/Secretarial course are suggested for each of the two
Receptionists/Bookkeepers, who will work on shift basis. Three years experience in any
industry is preferred. We suggest 2 Chefs (one per shift), 2 Cooks and 2 Waiters/Waitresses, all
apportioned one per shift as well. While we do not stress professional qualifications here, any
relevant one will be added advantages. The most important criterion will be uppermost practical
experiences in the industry including in restaurants. Knowledge of Setswana food would be
favoured.
We further suggest one Gardener to handle the two plots as envisaged. A minimum of a Primary
School Leaving Certificate and physical fitness are suggested with a minimum of 2 years
relevant experience in any industry. A Driver with at least a light duty driver’s license to cater
for the project’s multi-dimensional needs is suggested. At least 3 years are preferred in any
industry. We suggest that the project better engage the service of a hired security guard who
would be from local security companies including their alarm system.
With this span in mind, we foresee no mission impediments. This is the project’s potential
strength. On the other hand, the project is to be directed by its owner, who is new in the industry,
at least to this magnitude. Still we foresee light at the end of the tunnel, as a host of relevantly
qualified and experienced team would surround her.
Ms Kgomotso Ntsatsi as the Head of the project on the other hand possesses a Masters degree in
Accounting and Finance from the University of Birmingham in the United Kingdom which
followed her attainment of Postgraduate Diploma in Finance from the same university. She
previously obtained a Bachelor of Arts degree majoring in Accounting and Economics from the
University of Botswana. She is a Banker working for Bank of Botswana having held various
portfolios whose current one being that of Manager in the Department of Payments and
Settlement. She attended various seminars and traveled widely, an experience that would go a
long way in running a hospitality venture of this nature.
There are opportunities for this project in recognition that it has just one competitor in the
vicinity. Should this project intensify advertising and promotion aspects to the planned optimum
level, we foresee it reaping fruits even from the seemingly distant Gaborone city centre due to
the privacy and quietness of the Gaborone North and Phakalane areas. Should future
competition emerge, at least the business would have passed its teething stage earlier, thus fit
enough to challenge any newcomer.
10
6.
PROJECTED 5-YEAR INCOME STATEMENT
(ANNUAL TOTALS IN PULA)
2008/9
REVENUE
2009/10
2010/11
2011/12
2012/13
TOTAL
2 327 980
2 490 939
2 665 305
2 851 876
3 015 507
13 387 607
120 000
402 000
70 000
60 000
15 000
5 000
20 000
35 000
10 000
15 000
10 000
6 000
768 000
1 559 980
127 200
426 120
72 100
61 800
15 300
5 100
20 400
36 400
5 000
4 000
7 725
6 180
787 325
1 703 614
134 832
451 687
74 263
63 654
15 606
5 202
20 808
37 856
5 200
4 900
7 957
6 365
828 330
1 836 975
142 922
478 788
76 491
65 564
15 918
5 306
21 224
39 370
5 408
17 000
8 196
6 556
882 743
1 969 133
151 497
507 515
78 786
67 531
16 236
5 412
21 648
40 945
5 624
5 200
8 442
6 753
915 589
2 135 918
676 451
2 266 110
371 640
318 549
78 060
26 020
104 080
189 571
31 232
46 100
42 320
31 854
4 181 987
9 205 620
10 000
1 549 980
748 353
801 627
208 198
593 429
148 357
445 072
0
445 072
0
445 072
10 000
1 693 614
673 517
1 020 293
225 693
749 404
198 601
595 803
445 072
1 040 875
5 000
1 035 875
10 000
1 826 975
598 682
1 228 293
242 350
985 943
246 486
739 457
1 035 875
1 775 332
7 500
1 767 83
10 000
1 959 133
523 847
1 435 286
259 085
1 176 201
294 050
882 151
1 767 832
2 649 983
10 000
2 639 983
10 000
2 125 918
449 012
1 676 906
279 493
1 397 413
349 353
1 048 060
2 639 983
3 688 043
12 500
3 675 543
50 000
9 155 620
2 993 411
6 162 209
1 214 819
4 947 390
1 236 847
3 710 543
0
3 710 543
35 000
3 675 543
Less Operating Expenses
MD’s Salary
Other Salaries
Food and Beverages
Electricity and Water
Stationery, Telephone and Fax
Repairs and Maintenance
Insurance
Transport
Advertising and Promotion
Cleaning Materials/Uniforms
Auditing and Consultancy
Other Expenses (including Security)
Total Operating Expenses
Profit Before Depreciation, Interest and
Taxes
Less Depreciation
Profit Before Interest and Taxes
Less Interest (20.5%)
Profit Before Taxes
Less VAT (10%)
Profit Before Corporate Tax
Less Corporate Tax (25%)
Profit After Corporate Tax
Balance Brought Down
Funds Available to Shareholders
Less Dividends
Balance Carried Down
11
7.
PROJECTED 5-YEAR CASH FLOW STATEMENT
(ANNUAL TOTALS IN PULA)
2008/9
Loan
Revenue
Total Inflows
Less Outflows:
Land and Buildings
Furniture/Air cons/TVs
Bedding/Cutlery
Walls/Gates
Telephones/Fax
MD’s Salary
Other Salaries
Electricity/Water
Food and Beverages
Stationery, Telephone and Fax
Repairs and Maintenance
Insurance
Transport
Advertising and Promotion
Cleaning Materials/Uniforms
Auditing and Consultancy
Other Expenses
Interest on Loan
Loan Repayment
Value Added Tax
Corporate Tax
Dividends
Total Outflows
Surplus (Deficit)
Balance Brought Down
Balance Carried Down
2009/10
3 650 500
2 327 980
5 978 480
3 100 000
200 000
100 000
100 000
10 000
120 000
402 000
60 000
70 000
15 000
5 000
20 000
35 000
10 000
15 000
10 000
6 000
748 353
365 050
208 198
0
0
5 599 601
378 879
100
378 979
2010/11
2 490 939
2 490 939
2 665 305
2 665 305
2011/12
2 851 876
2 851 876
2012/13
TOTAL
3 650 500
3 051 507
13 387 607
3 051 507
17 038 107
3 100 000
200 000
100 000
100 000
127 200
426 120
61 800
72 100
15 300
5 100
20 400
36 400
5 000
4 000
7 725
6 180
673 517
365 050
225 693
148 357
0
2 199 942
290 997
378 979
669 976
12
134 832
451 687
63 654
74 263
15 606
5 202
20 808
37 856
5 200
4 900
7957
6 365
598 682
365 050
242 350
198 601
5 000
2 238 013
427 292
669 976
1 097 268
142 922
478 788
65 564
76 491
15 918
5 306
21 224
39 370
5 408
17 000
8 196
6 556
523 847
365 050
259 085
246 486
7 500
2 284 711
567 165
1 097 268
1 664 433
151 497
507 514
67 531
78 786
16 236
5 412
21 648
40 945
5 624
5 200
8 442
6 753
449 012
365 050
279 493
294 050
10 000
2 313 194
738 313
1 664 433
2 402 746
676 451
2 266 110
318 640
371 640
78 060
26 020
104 080
189 571
31 232
46 100
42 320
31 854
2 993 411
1825 250
1 214 819
887 494
22 500
14 635 459
2 402 647
100
2 402 746
8.
YEAR 0
PROJECTED 5-YEAR BALANCE SHEET
(ANNUAL TOTALS IN PULA)
2008/9
2009/10
2010/11
2011/12
2012/13
FIXED ASSETS
Land and Buildings
Furniture/Air cons/TVs
Bedding/ Cutlery
Walls/ Gates
Telephones/ Fax
Total Gross Fixed Assets
Less Accumulated Depreciation
Total Net Fixed Assets
3 100 000
200 000
100 000
100 000
10 000
3 510 000
0
3 510 000
3 100 000
200 000
100 000
100 000
10 000
3 510 000
10 000
3 500 000
3 100 000
200 000
100 000
100 000
10 000
3 510 000
20 000
3 490 000
3 100 000
200 000
100 000
100 000
10 000
3 510 000
30 000
3 480 000
3 100 000
200 000
100 000
100 000
10 000
3 510 000
40 000
3 470 000
3 100 000
200 000
100 000
100 000
10 000
3 510 000
50 000
3 460 000
140 600
378 979
669 976
1 097 268
1 664 433
2 402 746
0
0
0
140 600
3 650 600
148 357
0
148 357
230 622
3 730 622
198 601
5 000
203 601
466 375
3 956 375
246 486
7 500
253 986
843 282
4 323 282
294 050
10 000
304 050
1 360 383
4 830 383
349 353
12 500
361 853
2 040 893
5 500 893
3 000
100
0
100
3 000
100
445 072
445 172
3 000
100
1 035 875
1 035 975
3 000
100
1 767 832
1 767 932
3 000
100
2 639 983
2 640 083
3 000
100
3 675 543
3 675 643
3 650 500
3 285 450
2 920 400
2 555 350
2 190 300
1 825 250
CURRENT ASSETS
Cash/ Bank
CURRENT LIABILITIES
Provision For Taxation
Provision for Dividends
Total Current Liabilities
Net Current Assets
Total Net Assets
OWNERS’ EQUITY
Authorized Share Capital
Issued Shared Capital
Retained Earnings
Total Owners’ Equity
LOAN-TERM LIABILITY
Loan (20.5%)
13
9.
PROJECTED 5-YEAR TRIAL BALANCE
( ANNUAL TOTALS IN PULA)
2008/9
Land and Buildings
Furniture/Air cons/TVs
Bedding/Cutlery
Walls/Gates
Telephones/Fax
Cash/Bank
Capital
Loan
Retained Earnings
Depreciation
Provision for Taxation
Provision for dividends
Totals
Dr
3100000
200000
100000
100000
10000
378979
2009/10
Cr
Dr
3100000
200000
100000
100000
10000
669976
100
3285450
445072
10000
148357
3888979
3888979
2010/11
4179976
Cr
100
2920400
1035875
20000
198601
5000
4179976
14
Dr
3100000
200000
100000
100000
10000
1097268
4607268
2011/12
Cr
100
2555350
1767832
30000
246486
7500
4607268
Dr
3100000
200000
100000
100000
10000
1664433
5174433
2012/13
Cr
100
2190300
2639983
40000
294050
10000
5174433
Dr
3100000
200000
100000
100000
10000
2402746
5912746
Cr
100
1825250
3675543
50000
349353
35000
5912746
10.
CONCLUSIONS
We did our best to draw a picture objectively appropriate of this project in our quest to assess
its economic, operational and technical feasibilities given the conditions and research
submissions at hand. Although this Business Plan is primarily meant for a total grant
financing to the envisaged tune of P3 650 500.00, we found it better to also be assessed on a
most pessimistic position – that of test-driving it on a situation where the entire amount is
sourced from a private lender at about 20.5% Rate of Interest annually. In that way, we feel
we would be test-driving the strength of its pillars.
We also prepared this plan with a tourism licensing application in mind as a Business Plan
would be necessary in that aspect. We also found it better to come up with a plan that would
practically guide the owners on the situation on the ground. That aspect ranged from
pointing out potential competitor(s) operating in the area and their strengths, the magnitude
of this project’s role in the shaping of the tourist industry in line with Botswana as a country
economically, socially and culturally. We do not claim to have touched all these aspects
mentioned in details herein as this Business Plan was not specifically meant for that. We are
satisfied with our findings; otherwise we would not have produced this Business Plan and
handed it over for financial sourcing/licensing in detriment to our client’s financial
obligations and the financiers’ risk investment. But business is not necessarily a product of
academic and mathematical computations. Most professors are not millionaires out of
business. Business is a component of the society in which we live with others being the
employees, competitors, the government, technology, changing clients’ preferences, natural
overturns, etc. That can change the terrain forever for either the worst or best either in
combination or intoto.
In this Business Plan, we cracked our heads to produce an all in one prescription should the
worst hit. While others are seemingly explicit herein, others have their doors unlocked and
only to open in cases of emergencies. Staff composition for example, could be shrunk or
expanded in response to circumstances.
With all these in mind, we thank you in appreciation!
15