Business plan
THHGLE19B
Student name: xiaoying CUI
Student ID: C61163
Business profile
1. Business activity
Business activity is best described in terms of the generic products and
services sold and the nature of the selling activity.
The hotel offers a variety of services to their guests. The most traditional are
laundry service (clothes washing) and valet service (shoe shining and clothes
dry-cleaning and pressing), although some hotels run them on the
do-it-yourself basis. A big hotel will also have a restaurant, a bar and a coffee
shop, a bookstore or a newsstand, a gift shop selling a variety of souvenirs, and
a drug store providing the guests with medicine and cosmetics. At a luxury hotel
one can often find a barbershop and a beauty salon. The guests might also
need the services of a car rental agency, to be able to rent a car through the
hotel. Local phone calls are usually free, long distance calls are added to the
room bills, and are 2 to 3 times more expensive than from a pay phone down in
the lobby. You can also order various services from the front desk by dialing “0”.
A number of hotel staff relies on tips to raise their wages. The bellman expects
up to $1 per bag for taking your baggage to your room. The hotel doorman gets
at least 50 cents if he summons a taxi (and of course your taxi driver should be
given 15 percent of fare!). Maids usually receive a few dollars if you stay at a
hotel for several days, or else you may leave a dollar note under an ashtray as
you leave the room every morning. In restaurants and nightclubs you are
expected to tip 15 to 20 percent of the bill (before taxes are added). No tipping
is required for elevator operators or hotel desk clerks.
2. Ownership structure
As a 4.5 star hotel I would like to choose the proprietary structure. Proprietary
companies are often referred to as private companies since the shares in the
company are normally only available for persons known to existing share
holders – unlike public companies who sell shares to members of the public. A
proprietary company is formed when a group of people or husband and wife
combine as share holders and incorporate under the provisions of the
companies act. As share holders they own the company that is a legal
separate entity. A proprietary limited company can have up to 50 shareholders
and is not able to be listed on the stock exchange. It must include the
abbreviation ‘Pty’ in its name. The liability of the company is limited. This
means that the share holders risk only their respective contributions of capital
(equity) and not their personal assets, unlike sole traders and partnerships
(unless they have given personal guarantees as directors of the company to a
bank or other financial institution). Many people going into business believe
that by incorporating, they will be able to protect their family home and other
assets in the event of the business failing. This protection is often destroyed by
giving a director’s guarantee, which allows creditors to have access to their
assets should the business fail.
3. The business name
Whatever ownership structure is chosen, the business needs a name under
which to trade. The benefits of a business name:
 Helping the business to project the desired image to its customers
 Making it easier to remember than a person’s name
 Avoiding conflict between several owners
 Describing the business activity
 Giving the business a professional appearance
 Being associated with the goodwill of the business
A business name should be brief, descriptive of the business activity, catchy,
easy to remember and project the desired image. So the hotel name is
Sunshine hotel.
4. Business location
Consider the convenience for customers I would like the hotel locate at CBD
(Central Business District). It is very easy to shopping centre from the hotel.
Most large towns and cities have a commercial area known as the CBD. The
CBD is often the original centre of the town and will usually possess many
older buildings often of historical interest. While in older times the centre of the
town may have been designed as both a residential and commercial/retail
centre, today most CBD areas are used exclusively as a commercial/retail
centre. As commercial/retail areas have developed so has the demand for
hospitality enterprises frown. It is common today to find hotels, restaurants,
cafes, coffee shops, fast-food takeaways, bars and nightclubs in the CBD.
5. Business history/Entry strategy
The completion of this section will depend on whether your intention is to
purchase an existing business or whether you intend to start the business from
scratch. If you intend to purchase an existing business you need to provide a
brief history of the development of the business from its start-up to the present
time. A demonstrated history of business growth will provide a lender with
evidence that the business is a good risk and there fore a viable proposition.
However, if the business peaked in year 3 and declined in revenues since,
there could be an opportunity to recapture the year 3 revenue and improve on
the annual net profits – which may have historically been below industry
standers from day one of trading. New management with new strategies and
work ethics could very well improve on a business’s recent trading history and
create increased trading profits and possible capital gains.
However, financiers such as banks and venture capitalists can be skeptical at
the best of times when it comes to lending large sums of money to new
business operators. They need to be convinced that the people to whom they
are lending have considered and addressed the trading history of the new
business venture and are capable and confident of generating sufficient profits
to fund the financial commitments they are about to take on.
6. Business objectives
Business objectives should be designed to achieve business goals. Business
objectives are targets for the business to work towards. They set a direction for
the business to follow. Once the business objectives are defined, you will be
able to plan strategies to achieve them.
Objectives need to be set for each function of the business operation. In
addition, there should be objectives for each year of the plan period. The
objectives need to be coordinated and consistent with each other.
Business objectives should also take into account that survival for a small
business operator depends on due care in planning, start up and running.
While no single formula can guarantee that a small business will survive,
success comes from doing the basics well.
Marketing plan
A marketing plan for a hospitality business will form part of the business plan –
marketing plan section. The marketing plan is the centerpiece of the business
plan. Its purpose is to provide the overall analysis of the market in which the
business will operate. It also provides direction with regard to products, prices,
promotion necessary to ensure that the business is successful. This report has
been developing by 6 major components.
1. Situation analysis
Two sides of the hospitality business analysis will be discussed in this
report, one is internal environment, and the other is external environment.
The external analysis will discuss changes taking place in the state and the
country.
 Changes in political positions and legislation that may affect the business.
Smokefree dining is now in effect in New South Wales, the ACT, Western
Australia, and South Australia. Victoria's smokefree dining legislation came
into effect on 1 July 2001. In Victoria, the smokefree dining laws apply to
indoor restaurants and the indoor dining areas of hotels and clubs.
Smokefree dining was implemented in Tasmania from 5 September 2001,
and in Queensland from 31 May 2002. Legislation restricting smoking in
hospitality venues varies between states and territories regarding where
smoking is permitted. In Australia, smokefree dining was first introduced in
the ACT, where restaurants went smokefree in 1995 and licensed
premises in 1998.Non smokers are a much larger group than smokers are
– more than three quarters of the Australian population are non-smokers.
An Australian study released in May 2001 to evaluate the implementation
of the ban on smoking in News South Wales restaurants concluded
smokefree restaurants present few on-going difficulties to staff; attract
much more favorable than unfavorable comments from patrons; and do not
adversely affect trade. The study found not one instance of smoking was
observed in 78 Sydney restaurants involving 156 hours of observation of
2646 diners. 71% of Sydney restaurants have experienced favourable
comments from patrons about the smokefree law. 78% of restaurant staff
interviewed either strongly supported or supported the law. 76% of
restaurants report normal trade and 14% report more trade, with only 9%
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2.
reporting less business.
Going smokefree is savings for the hospitality industry, with possible
savings in the areas of air conditioning costs and refurbishment costs.
Research has found that the respiratory health of bar staff improves soon
after venues go smokefree, which may result in reduced absenteeism.
Venues also lower the likelihood of passive smoking litigation by staff and
patrons, and of cigarette-related fires.
Trends in society’s values and habits.
The earth become more and smaller, after airplane, telephone, internet
and others come up. The variety of human societies or cultures in a
specific region, or in the world as a whole. It is cultural diversity. As this
situation the consumers of the hospitality business can come from
everywhere of the world. We would better service them as different culture.
Identify competitors and list their characteristics.
The market of the hospitality business is the people who travel to
Melbourne from the whole word. No matter the reason and where they
come. So the competitors of the hospitality business are the other
international hotels. Most international hotels are franchised and familial
businesses, which gives such kinds of hotels some kinds of certain limits.
And they have the same model of management styles, same quality
services, so a lack of new and fresh services would be expected in these
kinds of franchised hotels.
Current and potential customers
The current customers of the hotel are tourist from the other place. We can
also have the potential customers are business men.
Trends in consumer buying habits
Nowadays more and more people focus their health, so they prefer the
organic food to instead of the normal food. Follow overseas trends and
grow significantly in Australia, organic produce is a $200m-plus market
with an annual growth of 20%. But there also have some people do not
purchase this products. Because the organic food is expensive, they may
be able to not offer it.
Strategic assessment
In this section I will examine the organization’s SWOT analysis.
Strengths provide the platform for key marketing messages and sales
strategies. The hotel‘s strengths include: property location, brand
recognition, global positioning, loyalty program membership, support of
national sales force, suit style accommodation, new property status,
standard of fit – out, conference and catering facilities, restaurant and bar,
health and fitness facilities, business centre, environs and landscaping ,
secure on – site parking.
Weaknesses allow strategies to be prepared in advance to overcome
objections. The hotel‘s weaknesses include: functionality of food and
beverage operation.
Opportunities highlight areas sales and marketing campaigns can target.
The hotel‘s opportunities include: positioning as market leader in
destination, cement preferred position with conference/visitors bureau,
participation in events calendar for region, leverage co – branded property
relationships, access to corporate accounts via sales tender process.
Threats enable the preparation of contingency plans. The hotel‘s threats
include: negative perception of destination, increased room supply placing
downward pressure on rate, economic recession, reduced number of
air-line flights into destination.
Key strengths highlighted in the SWOT include the property’s location,
branding and new status. These strengths will be translated into the
primary communication messages required to effectively market the hotel.
Identified as an opportunity, part of thee sales strategy will be to focus on
the local conference bureau to ensure the sales team are briefed on all key
events, are familiar with the complex and endeavour to create asynergy
between their goals and the hotels. A component of this strategy will be to
co-host familiarization visits and regional trade shows.
The SWOT highlighted the hotel’s room type mix as a weakness and a
negative perception of the destination as a potential threat. To overcome
sales objections in relation to the perception of the destination, collateral
will be created highlighting the benefits of the region and illustration the
locality’s unique advantages, the lack of variance in room type will be
countered in part by a proactive approach from the sales force in targeting
larger conferences and events where delegates need to be accommodate
in a similar standard of room at the same rate.
3. Product analysis
Having determined the unique competitive advantages of a product or
service, the next step is to convert thee features of the product of service
into benefits.
A product feature is a characteristic or property of a product or service. So I
will choose the location of the hotel in the central business district and free
car parking for guests.
A product benefit is the relationship between a product feature and the
need the feature is designed to satisfy. It means that the hotel located in the
central business district is convenience for business travelers; also the site
car parking is safety and security.
Product differentiation features can be used to differentiate your product
from your competitor’s product. There are a number of product
differentiation features that could be translated into benefits such as:
 Conformance quality. This deals with the degree to which your product
delivers on its promises you have made for it (in comparison with the
competition).
 Performance quality. This is the level by which your product either falls
short of or exceeds your customer’s expectations. So the hotel standard of
cooking, presentation, service, chick-in, check-out, reservation, room
service.
 Durability. This is thee useful life of the product (again compared to your
promises and the customer’s expectations). This is obviously only of use of
durability is a benefit sought by the customer. This could be standards and
quality of the establishment’s physical assets, décor, fixtures and fittings,
etc.
 Reliability. This refers to the promise that the product/service will continue
to deliver its benefits consistently over a period of time expected by the
customer,(note that this time period is determined by the customer not by
the marketer). In terms of a restaurant this could be the consistency of
service and food quality, portion size and control.
 Design. This is the inherent structure of the product that either determines
its degree of functionality or drives its look and hence style. In terms of a
hospitality product, it could be high speed internet access, or design of en
suite bathroom, or design of guestroom, or lobby/foyer.
 Style. This is the look of the product as perceived by the customer; this
element of a product is often critical for customers, in fact for some it is the
only thing that matters.
Product differentiation is based on a tangible as where service differentiation is
based on an intangible. In many cases if not all, the product differentiation can
be based on the quality of performance, design and style of service. There are
times when the service (intangible) aspect is more important than the product
(tangible) aspect; this is why service differentiation is so important. Service
differentiation features include:
 Delivery. Differentiation by delivery can be the speed of the service. And
service accuracy is another aspect delivery that can be a point of
differentiation. Such as, time waiting for meal, no matter at the restaurant
department or room service; delivering the right meals to the right people.
 Customer training. The existence of customer training and its extent and
quality can be vital to differentiation for the marketers of business
equipment such as computer systems and communication systems.
 Maintenance and repair. This is a point of difference that is commonly used
by marketers of cars and service providers whose product is the promise
to keep the hotel air conditioning, lifts etc operation.
4. Competitor analysis
To ensure effective marketing strategies, all business must consider the
balance of customer and competitor considerations, degrees of competition
and discretionary spending of customers. It seems that a vat majority of
businesses focus on customers sometimes to the exclusion of competition
which inevitably leads to the development of ineffective marketing
strategies. The basic concept in competitor analysis is deciding who is a
competitor and whether that competitor is direct or indirect competitor.
There are a number of tools that can be employed to assist in the
development of a competitor analysis. One such toll (competitive
intelligence) is to identify the competition’s strategies and objectives.
Information about competitors is something that businesses spend
considerable time effort and money accumulation. A competitive
intelligence system helps management to capture analysis and factor
competitor information into their decision-making.
When a competitor lowers all room tariffs for a set period, reduces their
charges on guestroom telephone calls and mini bar stock, or prepares to
launch their Christmas and new year festive program. To be forewarned of
these types of changes and promotions planned by competitors is
invaluable to future success and the effectiveness of your organization’s
overall marketing strategy. Apart from this type of knowledge, it is also
important to have personal knowledge of the competitions’ products and
services and to experience them yourself.
The competitor analysis component is written in such as a manner to
facilitate key executives skimming the material and qquickly grasping the
overall state of the market. Competitor information can be gained from a
number of sources including:
 Industry associations (e.g. visitors bureau, conference bureau,
chamber of commerce).
 Sales and marketing personnel.
 Commercial organizations (e.g. tourism forecast council, trade
associations).
 Government bodies (e.g. Australian bureau of statistics).
 Annual reports.
 Press and magazine articles.
 Brochures and advertisements.
Hotel
Competitor Hotel Competitor Hotel
A
B
Location
CBD
CBD
Suburban
Star rating
4.5
4.5
4
No. rooms
160
110
90
Food
beverage
facilities
Recreation
facilities
and 6 Restaurant and 2 Restaurant and 1 Restaurant
3 bar
1 bar
Gymnasium,
in
door swim pools
for kid and adult,
spa, sauna
Conference and 6 function areas
business facilities catering to 280
theatre
style;
Gymnasium, out Gymnasium
swim pool
3 function areas 1 function area
catering to 150 catering to 80
theatre style
theatre style
business centre
Parking
Weaknesses
Strengths
Year built
Secure off street
and valet service
Limited variance
in
room
configuration
Location,
branding,
quality-product
and
service,
number of rooms
2006
Standard
room $260
rates
Ranked competitive threat
Available
Off street
Dated
product, Number of rooms
lake of branding
lack of facilities
Location,
room Location,
configuration
branding
2004
2005
$230
$200
4
1
5. Marketing strategies
In this section I will discuss the various target markets and their purchasing
characteristics. This will be followed by the marketing mix which will entail:
 Product/service
a. The hotel can offer the customers good service
b. We have got professional chef to cook different types food
c. The room service department will clean the room in time
d. Separate lounge and dining area
e. Children's pool and whirlpool
f. Balconies off all apartments
g. Air Conditioning
h. In room safes
i. Private bar
j. 24 hour reception
k. Resident Manager
l. Swimming pool
m. Spa and sauna
n. Gymnasium
o. Dry cleaning and laundry services
p. Undercover Parking
q. Easy Access
 Price
a. VIP of the hotel can have discount
b. Have different price level to choose
c. Free breakfast
 Promotion
a. Traveling magazine
b. Newspaper
c. Direct mail
d. Consumer award card and vouches
e. TV show
f. Website
g. Outdoor advertising
h. E-mail advertising
6. Marketing budget
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Operational plan
1. Production plan
Setting up a restaurant from a shell, ie a new building with no fixtures, fittings,
equipment or furnishings, is a complicated project and for the inexperienced
can be somewhat daunting. The first recommendation is to hire professional
advisors who have had some experience in this field. The list of advisors could
include professionals and trades people such as: architects, interior designers,
kitchen planners, electrical and mechanical engineers, refrigeration
contractors, general trades people. In order for these advisors to be able to
make the correct recommendations, they will need to have details of your
proposed menus, forecast numbers, seat turnover and the staffing levels
which you intend to maintain. It is no good having a fast food outlet equipped
like a fine dining restaurant! If you can not afford to have these advisors
working for you then much of the design is going to come down to you – the
owner. Most kitchen equipment suppliers will have a design team, but
remember their job is to sell you equipment, not to design an efficient kitchen
for you.
In setting out the kitchen design it is suggested that you consider the demands
on the equipment at peak time, e.g. Saturday night, mother’s day, etc. How
many meals will you be hoping to prepare at those times? Will the flow work,
where will the wash-up be located, etc? As you can see, the intricacies of
kitchen design are beyond the scope of the business plan – that is why you will
prepare an overview only for the production plan. In the event that you are
purchasing an existing restaurant, you should appraise the condition of the
equipment at the time that you are negotiating to lease the premises. The
landlord may have put a price on the fixtures, fittings & equipment (FF&E) far
in excess of a realistic estimate of their value.
The personnel analysis describes your proposed personnel structure and
staffing strategies for the operation. Its objective is to outline a strategy for
managing the human resources of the business in order to maximize profits.
If you are trying to persuade a financier to fund the project, this part of the plan
will include details about you. This is where you will have to sell your skills and
expertise. Be honest and evaluate your strengths and weaknesses. You also
need to evaluate the strengths and weaknesses of other members of
management. Remember, in a management team the strong should support
the weaknesses of others and this balance can be shown in the plan.
Undertaking this personal and management personnel analysis will help you to
design a workable management structure that will enable the business to grow
and prosper. At this stage you should also mention the drawings or salary that
you intend to draw when the project takes fruition.
2. People plan
After food and liquor costs, the largest cost that a restaurant is likely to
experience is the labor cost. Within the hospitality industry the expense that
can turn a profitable restaurant into a loss making enterprise is the labor cost.
Generally with food and liquor costs, the less you sell the less food you use.
This is because the food and liquor costs are generally a percentage of food
and liquor sales. Labour costs can spiral out of control by simply not managing
the rostering of staff correctly. The aim of most businesses is to maximize
labour productivity in a given period of time. Labour productivity is the
relationship between sales and revenue and the units of labour to achieve
those sales. Business quantify productivity in financial terms, usually as a
percentage of sales. Another way is to calculate the volume of sales per
employee per period. Your business will prosper and grow if you have the right
staff working for you. The strategies you employ are designed to fine the right
staff. Some of the strategies you need to consider are listed below:
a. Recruitment
This is the key to finding the right staff. If you fail to recruit the right staff
then the onus will lie with management – you. You should never accept
second best, though in practice finding Mr. or Miss perfect can be difficult.
Possible sources for recruiting staff include:
 Newspaper advertising. You run the potential problem of your
advertisement being lost amongst all the clutter. How much you pay
will determine the size of advert. You must be very careful in the way
you draw up the advertisement as this is your first call in finding the
right person.
 Internet advertising. Internet advertising is now being used more and
more. In terms of price it is probably cheaper than newspaper
advertising and applicants are applicants are able to respond using
email.
 Referrals via a government agency. The perception is that many of
these applicants may be long-term unemployed. However that is not
always the case, and if you are prepared to take the time in your
b.
c.
d.
e.
f.
training this can be a useful source.
 Using a recruitment agency. This is probably the most expensive way
of recruiting staff. However in times of tight job markets this is
sometimes the only way to find the high caliber of staff that you
require.
 Referrals from existing employees. Be careful about employing friends
and family and friends of employees. While this method is cheap it will
not always be the most effective method.
Probation periods
Decide what period of probation you intend to give your new employees
and ensure that at the end of the probation period you interview the
employee in order to obtain two-way feedback on how they are working out.
If you are convinced that they will not work out, now is the time to make a
decision on their future.
Remuneration
You must know the award rates and how they apply in your particular
business. Also maintain a datasheet on what your competitors are paying
key staff. It appears that at the present time there is a shortage of good
quality chefs. If you have one and you want to keep him/her then you may
well have to pay him/her more than the award rate. Remember, market
forces dictate.
Incentive schemes
Incentive schemes can be very effective in motivating staff. However they
do need to be well structured and management must not be tempted to
“keep moving the goalposts”. As the company grows you may consider
such schemes as share options. These will have to be worded correctly (in
this case you should take specialist advice).
Work environment
As well as carefully considering legislation pertaining to employees’
welfare and safety, at the time of planning your establishment you must
give consideration to thee needs of your employees. The difference
between retaining your employees and having to go through the whole
expensive procedure of recruiting again can be as simple as having
shower facilities for kitchen staff.
Training and development
To remain competitive you need to engage in an ongoing training and
development program for all your employees. By providing this training you
will ensure that your employees are working at their best. In addition, you
will find that staff retention is likely to be increased as training is a good
staff motivator.
Financial plan
Table 1
SETUP COST TABLE
Start-up Items
Furniture and fittings
Equipment
Office machines
Motor vehicles
Repairs to premises
Renovations
Changes to the kitchen
Lease Costs
Registration, permits, etc
Insurance
Estimated cost in $
50,000
80,000
90,000
80,000
40,000
100,000
30,000
50,000
40,000
30,000
Table 2
SALES TABLE FOR THE YEAR
AREAS
AMOUNT (,000)
Cost (%)
Food
Beverage
Guest Room
Meeting Room
Wedding Function
Bar
Laundry
Total
30,000
10,000
500,000
40,000
10,000
50,000
50,000
690,000
40
10
30
20
10
30
10
Table 3
INCOME STATAMENT
Revenue: (000)
Food:
Beverage
Guest Room
Meeting Room
Wedding Function
Bar
Amount (000)
30,000
10,000
500,000
40,000
10,000
50,000
Cost amount
(,000)
12,000
1,000
150,000
8,000
1,000
15,000
5,000
192,000
Laundry
Total
less
COS:
Gross Profit
50,000
690,000
(192,000)
498,000
Expense
Furniture and fittings
Equipment
Office machines
Motor vehicles
Repairs to premises
Renovations
Changes to the kitchen
Lease Costs
Registration, permits, etc
Insurance
50,000
80,000
90,000
80,000
40,000
100,000
30,000
50,000
40,000
30,000
Total Expense
430,000
Net profit
68,000