EBAC 52 VENTURE MANAGEMENT, U OF S
THLC ltd
Proposed Health and Leisure Centre in Uganda
David Torr
12/5/2011
A look at the background, operational, marketing, human resources and financial components
of the project.
THLC
Health and Leisure Centre Ltd
Venture proposal
Table of contents:
Introduction and concept……………………………………………………………………..3
What will be offered…………………………………………………………………………..6
Overall layout……………………………………………………… ……………………......11
Background………………………………………………………………………………......12
Operational plan……………………………………………………………………………...13
Human resources…………………………………………………………………………….15
Marketing plan………………………………………………………………………..………16
Financial plan…………………………………………………………………………………19
Challenges…………………………………………………………………………………….21
Conclusion…………………………………………………………………………………….22
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Introduction and concept:
THLC Ltd is a proposed complex that is to be set up at on the shores of Lake Victoria in
Uganda. Lake Victoria is the third largest freshwater lake in the world and is shared by
the three East African countries of Uganda, Tanzania and Kenya. Of the three, only
Uganda is landlocked, but is at an altitude of 400 meters, straddles across the equator
and has one of the most unique ecosystems in the world due to comfortable
temperatures of 26 to 30 degrees Celsius with cool breezes.
Uganda has a population of 33 million people, a growing economy with recent oil and
mineral discoveries and exploitation on top of its renowned, coffee, tea, fish and
multitude of produce. There is a significant part of the population living in poverty, yet at
the same time a growing middle and upper-class, local and expatriate. The aim of THLC
will be to service the middle and upper-class and raise funds to help some of the
destitute especially orphans, widows and those who cannot normally access specialized
surgery and medical attention.
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THLC Ltd startup funding will be from funds that have been raised and pooled together
by specialist surgeons and physicians in the US, Canada and the UK who would like to
use their holiday time combining some relaxation with service to the disadvantaged.
Hence, the concept of THLC Ltd.
THLC Ltd will have two components. Initially is a proposed complex providing health
assessments and advice with rest, relaxation and leisure at a tranquil lakeside location
at Lake Victoria, near the capital city of Kampala in Uganda. Once this complex is
running and generating income, it will support the second component that will be a
charismatic unit helping orphans and the disadvantaged. This unit will set up an
orphanage, as well as training centers for widows and orphans. It will link in with
surrounding schools and technical institutions where possible instead of having to build
up its own. At the same time, it will also link in with the nearby missionary hospital as
part of THLC funding is from surgeons and physicians in US, Canada and the UK
interested in doing some charismatic work. Some of the accommodations at THLC will
act as time shares for these investors, so that when they come down they will combine
leisure with donated professional time for the disadvantaged.
The strategic elements of this centre are:
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Combining of health assessments with advice
Stress relief, relaxation and leisure
weekend or holiday getaway
Multiple facilities at one location: spa, gymnasium, health centre, lakeside beach
with mariner, and comfortable, affordable accommodation.
All this will be put together in an easily accessible, conducive and tranquil environment
at the lakeside. In a way it is almost a one-stop shop to leisure and relaxation.
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What THLC Ltd will offer:
The centre will have the following:Accommodation facilities, divided into:
(i)Main block, to be built in phases starting with 20 rooms, optimal 80 rooms.
(ii) Cottages, starting with 7, optimal 20
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A) Restaurant:
Slated to have a main kitchen and serving area inside, and a serving area and
barbeque outside.
A health assessment centre, focusing on stress assessment and counseling, healthy
weight, healthy eating and physical activity assessments and advice.
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B) Gym and aerobics centre
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C) Spa
with massage rooms, resting/ relaxation rooms, hot tub, swimming pool, sauna and
steam rooms.
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D) Gardens
for general relaxation including a children’s play area
E) Beach and waterfront
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F) Mariner
with paddle boats, jet skis and pontoons for rides.
G) Parking:
A very important factor is parking. In the initial layout plan (below) with 4 acres of
land, the parking was for 44 vehicles. From past experience and with the targeted
clientele especially on weekends a new parking that can accommodate at least 200
vehicles will be set up.
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Overall Layout:
The layout is going to be very crucial and design is still in process. The initial draft
layout was proposed on 4 acres to see what would fit on this size of land,( below). This
gives an idea as to the potential better layout with more land, ( 8 acres being targeted
expandable to 10 acres). As seen from the sketch, with 4 acres, there is not enough
parking space or a good corner for the cottages which ideally will have proximity to a
private beach as well as private parking for exclusivity.
In addition, Aside of the anticipated weekend crowds, as well as the regular attendance
to the spa, gym, health assessment and accommodation centers, locally it is becoming
more and more popular with many organizations to hold retreats, strategic planning
sessions and conferences in facilities away from the city and office hustle and bustle.
Thus if conference rooms can be built along with the accommodations, this could then
further expand the target population
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Background:
Currently there are a number of factors that make this project feasible:
Uganda is growing economically and is starting to pump out oil that was recently
discovered.
There is a growing middle to upper class individuals and families that have limited
outlets to comprehensive leisure facilities short of flying out, (a 3 to 4 hour flights to
the nearest good resorts)
With the speed of development, the middle and upper class work very hard and build
up significant stress. The only place to assess stress is at a doctor’s office and this
usually ends out with a medical prescription or “improve you exercise” without really
providing the place or guidelines for this, something THLC will do. With limited stress
assessment and relief center availability, this is a good niche.
There are an increasing numbers of tourists every year and they want more than just
a place to stay. They want access to the many beautiful landscapes and national
parks that house many animals including the big five! THLC is already networking
with local touring companies to provide packages for those tourists that will stay at,
or use its facilities.
A blue ocean at the moment in that many supposed resorts are very makeshift and
do not have the comprehensive set of services that THLC will be providing.
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Operational plan:
General overview:
Key in operations is the philosophy of providing a different type of service, via variety
and good service.
As head of the project , I bring with me previous experience setting up and running
of a leisure complex that he ran for ten years (1998 to 2008), and three health
facilities set up in the same radius as proposed, that were run from 1984 to date.
The difference then was that the health facilities were initially run on separate sites
from the leisure and in 2002 a joint project was trial run with some success but with
the obvious missing out of lakeside and water leisure activities noted.
With the new proposed project the combination of health, leisure, and the
accentuated ambience and tranquility of lakeside along with increased water related
activities, (jet skis, paddle boats, pontoon boat rides, fishing, waterskiing,
paragliding, etc), should give the project a lot more potential complement and profit.
The health side will also have a more focused section on stress assessment and
management, healthy weight, nutrition and physical activity, in addition to general
health consultations.
The experiences from the initial leisure centre, which was within Kampala City at the
border between the middle class residential area and downtown core, and the
previous health facilities, will be very useful in guiding the operations and
management of the new facility.
In the initium, there will be one lakeside site, but once this is running, a second site
has already been identified that is even more tranquil and easily linked to the first by
a 15 - 45 minute boat ride, speedboat vs. cruise, (phase 3?).
Incorporation and governance
First and foremost, THLC is to be incorporated and will be run as a corporation. As it
is an investment that qualifies for an investment license, this will also be applied for,
the biggest advantage of this being a 5 year tax breaks to enable the investment to
take off and establish itself.
There will be an advisory board that will include the chairperson, co-chair, legal and
financial experts.
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Capital:
So far capital of $500,000 is available and will be used as start up, essentially to set
up the spa, mariner and initial accommodations and 5 to 7 of the proposed 20
cottages. There are more funds promised and if these mature, then the pace and
capacity of the project will be enhanced. It is anticipated that another $300,000 can
be raised but if not, the financial plans that have been proposed are based on a
starting capital of $500,000.
Bank loans from the local banks are being avoided as their lending rates are at
around 20% plus.
There is a big advantage of the lakeside in that water and good quality building lake
sand are readily available directly from the site.
The initial site was a four acre lakeside plot but the available extra adjoining four
acres (also lakeside)are being secured. The land is almost rectangular with the long
edge along the lake having almost 200 meters of beach.
About 120 meters of this on one side will be a more private beach for the cottages
and accommodation block, with a 170 meter section on the other end for the public
beach. The two will be separated by a mariner, and snack and barbeque facility in
the middle.
There is an option of leasing the land or outright purchase and negotiations are in
progress.
.
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Human Resources:
Under the board will be a CEO with a team of financial manager, overall operations
manager, human resources manager, and security manager. Under the operations
manager will be the managers of the following units:
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Building and development
health assessment unit
spa and health club (gym, steam, sauna, hot tub and swimming pool)
restaurant
accommodations, (including accessory services like laundry)
Building, gardens and equipment maintenance and repairs.
There will be some professionals under the units, including dietitians, nutritionists,
and clinical officers, visiting consultants, physiotherapists, lifesavers, massage
therapists, chefs, electricians, plumbers and mechanics. Some of these may be on
contract or retainer basis e.g. plumbers, electricians and mechanics.
Most staff will be local and paid at local rates which are much lower than expatriate
rates. An investment license also stipulates and encourages employment of locals.
The wages and benefits will be competitive with the local rates but with added
incentive benefits like lunch and transport allowances as well as medical treatment
coverage, (i.e. private medical insurance; the government funded hospitals available
to all do not really have good facilities and the private health centre fees are not
covered by government). There is also a requirement for all employees to be
registered into the National Social Security Fund to which employer and employee
contribute.
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Marketing Plan:
A good marketing plan will be needed targeting the middle and upper class, locals and
expatriates, as well as tourists who are the key clientele targeted.
Of course this has to be in synchrony with the developments on site. Timing and
coordination are of essence as if one advertises too early before enough is on the
ground, customers will be disappointed, at the same time waiting too long is potential
revenue lost. This is why the building plan is to have the less costly but good revenue
generators in place first. Included in this to start with are the health assessment unit,
spa, restaurant, mariner, grounds, beach, and some initial accommodations.
The product will be more than just the separate entities but a unique combination of
quality services, a one stop shop for health and leisure, rest and rest, relaxation and
recreation.
The price has to be well laid so as not to discourage the target population but at the
same time set such that not every Tom Dick and harry frequents the place just to sit at
the beach and not utilize the facilities optimally. For this purpose there will be an entry
fee that gives a discount to services accessed, the more services accessed, the more
the discount. The aim is selectivity. There will also be memberships for the facility at
individual, family and corporate levels for 1 month, 3 month, 6 months and one year.
The price will be reviewed regularly especially if closely competitive similar
establishments arise.
Promotion and branding will focus on a unique, exquisite combination of services for
the target group. Emphasis will be on the unique combination and a “happier, healthier
and more relaxed you”.
Once the charismatic side of orphanage and helping of the less fortunate kicks in, then
there will be an added component for example “….making a happier, healthier and
more relaxed you, and through you helping those less fortunate” .
The crux of the marketing strategy will focus on “a unique, different complex and service
that stands apart and gives you that well deserved rest, relaxation and recreation you
deserve, whilst getting you on the road to a healthier you”.
There will be additional advantages marketed, especially, the close access, lakeside
and cheaper than flying out components. An example of a possible slogan: “need that
well deserved R and R? Why fly out when you could save time and money and just
cruise in? THLC, the place to be!”
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Marketing avenues will include
Media
Website
Word of mouth –a very powerful tool in this environment, peers always ask other
peers where they are going to hang out.
Posters especially on the highway between the capital and the airport
Flyers pocket book and large
Face book
twitter
Positioning and placement in the niche is key. One recurrent theme is the relaxation,
de-stressing and improving how you feel and optimizing your health. In addition, as
mentioned above, there will also be the organizational retreat market targeted.
With the first establishment, it was found that local media is very effective and a unique
angle used then was to use comedians and comedy to bring in the R and R component.
This will be utilized here too with the emphasis on the new combinations and
enhancements like gardens, accommodations, lakeside and added facilities making
“THLC the ideal one stop relaxation spot”.
Competition is anticipated to kick in, but much as THLC will have a head start, in its
running, there will be a very strong emphasis on quality of service such that if a
competitor comes in with the same combinations, the level of service will enable
retention and continued building of a strong clientele base. Right now most of what
would look like competition does not have as much for combination services, and there
is a big fluctuation in quality of service.
Thus, the two key strategies against the competition are variety and good service. We
already have experience from the previous project and have a good idea as to what the
customer base tends to like and want, and we have a good idea also as to how best to
give it to them.
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Another advantage THLC will have over the competition is that many of the competitors
utilize high interest local bank loans as they don’t always have capital available.
On top of that, something very important that realtors always emphasize, is location.
THLC has taken time looking for an ideal location and found it, halfway between the
airport and the capital city, (15 to 20 minutes drive from either one), with a good access
road to the site from the main highway of only 3 kilometers.
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Financial plan:
There is still a lot of analysis being done financially, adjusting the variables and
observing the sensitivity, potential impact and implications.
The added annex financials show one version with three main sections,
accommodation, restaurant, spa and mariner. Looking at more conservative figures at
this stage is encouraging as it still leaves space for other variables being investigated to
be incorporated and still likely give a profit by the second year and payback of initial
investment of $500,000 by the third year. Though there will be a tax break of 5 years,
taxes have been included and more accurately to test out the model proposed. Two
examples are marketing and security.
The good news is that though the expenses listed are liberal to account for the as yet
unseen, there is still profit after the first year, and payback by the third year. Thus there
is a good five year outlook for sure and depending on the pace and interest and
turnover, the project may move faster and generate more revenue and profits too.
The restaurant, it is most sensitive to price with number of customers secondary. Price
many a time also dictates the number of customers. One added variable that is
important is price of food commodities. This has increased in the last little while, being
particularly sensitive and linked to fuel prices,(hence transportation costs).
The accommodation price has been set on the lower side firstly to test the feasibility and
secondly to potentially initially attract more clients. There is however a high likelihood
that the starting room price may be $50 or more. There is also the issue of single rooms
versus doubles and also family rooms. The current advisory is that doubles are the
most popular rooms, and designed in such a way that there can be adjoining doors for
combining two doubles to make a family room. There is also the potential for top level
(fourth floor ) executive suites that would have a more luxurious design as below.
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The spa and mariner have tremendous potential but require stringent management to
ensure good maintenance of equipment especially for the mariner. The spa will require
mostly initial investment but maintenance thereafter will be quite low and so a potentially
high profit margin will follow and potentially increase after the initial investment period.
This plan has not gone into details for the health assessments section of the entry fees
at the gate as these are currently being considered as supplementary income even
though they have the potential to be significant revenue generators.
In summary though, with the attached conservative model, there is still a healthy rate of
return and there is room for added expenses without bringing the rate of return to a level
that would not make the project feasible. Of course the financials will be changing
regularly as more accurate information is gathered.
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Main Project challenges:
Promising though the project looks right now, it is not without challenges, some of which
past experience has illustrated.
Political stability. The country is a developing nation, has a history of two civil wars and
a president who has been in power for the last almost 30 years. However, the last
elections were this year in 2011, and there is projected relative political stability for the
next 5 years at least until the next elections. Judging from the amount of increasing
foreign investment, there must be a feeling of stability for so many big foreign projects to
be in place. At the same time, more of these investments are a positive to the THLC
project in that it means more of the targeted clientele.
Management. Many a good project can be failed by poor management and this is
something that will be continually monitored. Along with this are strict guidelines and
parameters to ensure good standards are maintained of the services provided.
Coordination, most especially building, what is built concurrently, where enough
capacity to start is set, how it is synchronized with advertising, are all factors that
require as good coordination as that of an orchestra conductor. This is a crucial
component that can determine the level of success. Setting up too little capacity whilst
highly advertising could lead to an overload and hence dissatisfied and lost customers.
Power,(electricity): there have been challenges with the electricity supply with load
shedding whereby you have 24 hours of power followed by 24 hours without.
Investment in inverters is crucial and a backup generator for busy hours when more
power than the inverters can give is needed. The fuel costs for the generator can be a
significant factor. However, for many of the outside lights, solar and wind powered lights
are a solution and easily available at reasonable prices from China and Dubai.
All this however is temporary as there is a new hydro dam nearing completion that will
greatly supplement the current one supplying the country since 1958! It is anticipated
that the new dam will start generating power in the first quarter of 2012. Business and
tourist premises are on the priority list for the new power supplies as are hospitals and
other health facilities.
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Conclusion:
In conclusion, though there are still many variables to look more into at the stage that
this business plan has been written, this project still looks very viable, even with more
conservative figures used that indicate that more expenses can still be accommodated.
The concept is a good one, unique and a welcome piece in the middle and upper
income target that is still a blue ocean with most of the competition doing only parts at
low level. For example, most accommodations just have a makeshift gym but not a
stress relief oriented health assessment, spa and physical activity centre. As for eating,
just like in the western world, eating out is becoming an increasing activity and aside of
daily and especially weekend customers for the restaurant, the accommodation facilities
provide for an added catchment market. A stress relief and relaxation centre is certainly
a feasible concept in this day and age, particularly for the targeted market.
All in all, the combinations of services that will be provided complement each other.
Another plus is that the target market is increasing, but there is no significant
competition at this stage, a good blue ocean. The income potential and profitability are
certainly significant and at this stage seemingly worthwhile. There is also an advantage
that the target population consists of three sectors, local middle and upper class,
expatriate working class and tourists, all of whom have an interest in the type of facilities
and have disposable income.
Given the investment that is occurring both by local and foreign investors gives some
direction that political stability is still anticipated and business will still be viable for a
number of years.
What will be a crucial factor will be good management.
Finally, there is potential for expansion but targets are being set to buffer against
reaching an over manageable facility with resulting diminishing returns, or on the other
hand risking redundancy with high fixed costs. As an example for accommodation the
initial target is 80 rooms and 20 cottages. Once the first phase is rolling and running
well, then expansion can be looked at.
Not much has been said on the charismatic side as this will flow easily so long as the
first phase of the project namely the income generating part is well done.
Financials spreadsheets. These are available in the hard copy as appendix
attachments, and electronically as separate excel files.
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