Holiday Inn Express Business Plan / Executive Summary
Prepared for: Jaspal Sidhu
Confidential
CONTENTS
Summary Project Cost Funding Sources Start-Up Expenses Projections Hours of Operations Cost of Sales Pricing Personnel and Staff Management Proposed Location Franchise Agreement Projections
3 4-5 5 6-7 8 8 8 8 9 9-10 11 11 11
HOlIday INN ExPrESS - BakEr, Ca
Summary Project The subject property is a 3.2 acre vacant parcel situated on Baker Boulevard south of the intersection with Park avenue. The property is situated between Baker Boulevard and Interstate 15, and has excellent visibility from the interstate. The immediate neighborhood of the subject property is dominated by vacant parcels of land, a Baker municipal services building, a senior activities building, and the new San Bernardino Fire department building. The proposed hotel construction site is on the west end of Baker's primary commercial district. The Baker Boulevard commercial corridor functions as an Interstate 15 travelers oasis, offering seven fuel stops with convenience stores, numerous full service and fast-food restaurants, and three motels. These comprise the principle concentration of travel services between Barstow, Ca, 65 miles to the west, and las Vegas, NV, 95 miles to the east. This section of interstate is one of the heaviest traveled in the country, particularly on weekends, with travelers between those two major cities. The combined population of los angeles and las Vegas is estimated at 12 million people. Interstate 15 is the primary connector between these two cities, with an average daily traffic count at Baker, Ca being 37,500. Baker is a town of approximately 600 residents located at the intersection of Interstate 15 and State route 127 in eastern San Bernardino County. Baker is also strategically located between the famous death Valley and Mojave deserts. These National Parks have few services except for camping, therefore peripheral services are a necessity. The town is located on the north end of the Mojave National Preserve and 20 miles south of death Valley National Park. Baker is at the south end of Sr-127, which is the primary access to death Valley and into Nevada. Sr-127 also connects to US-95, the main route between las Vegas and reno, NV.
HOlIday INN ExPrESS - BakEr, Ca
Please find below the estimated total project cost for the Baker, Ca Holiday Inn Express, to be owned by Baker Hotel llC.
Land Cost 139392 Sq. Ft. @ $8.00 / sq. ft. Total Land Cost Construction Cost Total Construction Cost Total Construction Cost Construction Soft Cost Soil Test / EPA Phase 2 / Site Work Traffic Study Appraisal Market Study Architect, Structural, Civil, Plumbing, Mechanical, and Electrical Engineering Legal and Accounting Plans and Printing Survey / Topographical Maps / Recoding Traffic Impact Fees Plan Check Fee Permits Total Construction Soft Cost Construction / Other Cost Construction Interest Construction Insurance Construction Contingencies Total Contingencies / Other Cost FF&E, Franchise and Loan Fees Signs FF&E Construction Fee
1,115,136 1,115,136
3,348,597 3,348,597
9,480 11,000 4,740 2,370 135,000 10,665 5,925 7,500 67,655 14,013 16,932 285,280
311,026 19,750 334,860 665,636
35,550 533,556 38,000
HOlIday INN ExPrESS - BakEr, Ca
Bank Fee Closing Cost Total FF&E / Franchise / Loan Fees Total Project Cost
24,000 30,000 661,106 6,075,755
Start up expenses will be financed through the Small Business association development loan. For those expenses such as working capital and other non-building or non-equipment purchases, Baker Hotel llC will use personal funds and funds that have obtained privately.
Source SBA (30%) Bank (50%) Owners Equity (20%) Franchise Fee Other Closing Costs Working Capital Total
1,315,829 (Actual) 50,000 15,800 75,050
Amount 1,798,682 2,997,803 1,199,121 (Required)
6,112,314
as you can see, Baker Hotel llC has already invested and committed significant capital to this project, including over $140,000 in funds already.
INVENTOry Inventory for Baker Hotel llC will represent a significantly one time purchase, with a very low turnover rate, with the only major inventory expense being cleaning products and spare furniture should it become damaged during a guests stay. Please see below for a detailed breakdown of inventory, and its purchase price:
HOlIday INN ExPrESS - BakEr, Ca
Start-Expenses Item Box Springs Head Boards Mattresses Bedding Pillows Case Goods Chairs Couches and Sofas Desks Fitness Equipment Laundry Machines Plants and Planter Ice Machines Breakfast Counter Equipment Pantry Refrigerator / Freezer Juice Machine Meeting Rm Furniture Mirrors Bathroom / Hallway Wall Visconce Lobby Chandeliers Sleeper Sofas Public Area Furniture Breakfast Furniture Window Treatments Public Area Draperies Smoking Stands Luggage Carts Building Sign Monument Sign Art Work Interior Signs Clocks
Quantity 110 110 110 110 500 71 150 71 71 1 1 10 3 1 2 1 1 145 115 3 30 1 1 71 1 3 2 2 1 225 1 75
Amount $11,000 $2,530 $38,500 $3,300 $3,500 $31,950 $10,500 $15,975 $8,875 $4,000 $15,000 $1,500 $1,950 $1,500 $2,500 $400 $2,500 $19,575 $4,025 $975 $15,000 $3,000 $3,000 $14,200 $2,500 $375 $400 $40,000 $40,000 $7,875 $2,500 $937.50
HOlIday INN ExPrESS - BakEr, Ca
Hangars and Hooks Lamps Lamp Shades Shower Curtains Guest Room Refridg. Guest Room Microwav. Coffee Makers Computer System Telephone System Hair Dryers Ice Buckets Ironing Boards Irons Luggage Racks Night Lights Bathrobes Bellmans Cart Towels Bed Covers Blankets Comforters Pillow Cases Sheets Cleaning Supplies Music System Security Cameras Wi-Fi System Design Services Installation Services Freight
450 110 110 75 72 72 75 1 1 75 75 72 72 72 72 72 3 600 110 120 120 500 120 1 1 1 1 1 1 1 Total
$900 $3,850 $1,100 $1,125 $12,600 $5,400 $3,375 $13,000 $20,000 $1,500 $375 $1,800 $1,080 $1,080 $1,800 $504 $1,050 $1,800 $2,200 $1,800 $3,000 $2,000 $2,160 $1,500 $1,800 $2,000 $1,500 $10,000 $15,000 $10,000 $435,306.50
HOlIday INN ExPrESS - BakEr, Ca
PrOJECTIONS Baker Hotel llC estimates that guests will stay an average of two nights, once per year. Baker Hotel llC expects to be the best choice for hotel service in the Baker, Ca area, and as such, will encourage guests to stay longer and pay more. Baker Hotel llC estimates that in addition to the room rate, guests will purchase food from vending machines, purchase small to medium size souvenirs such as post cards and keychains, as well as t-shirts and other like merchandise. Guests of the hotel may also partake in in-room entertainment, purchase wireless internet, or use the in-room telephone, all for an additional nominal charge. Baker Hotel llC estimates from these figures that each guest stay will generate between 15% - 20% more revenue than the actual room rate. HOUrS OF OPEraTION aNd rESErVaTIONS Because of the nature of the business venture that Baker Hotel is taking part in, there will need to be staff on hand 24 hours a day, 7 days a week. reservations for rooms will be taken 24/7, by Holiday Inn national, HolidayInn.com, through other internet brokers such as Hotels.com, by calling the hotel directly, through Holiday Inn's national reservation system, and also through walk-in guests who have no reservation. COST OF SalES Projected cost of sales for Baker Hotel llC are around 45.5% and 50%, with national and industry averages being in the neighborhood of between 34% to 45%. The reason for any discrepancy can be attributed to the size of Baker Hotel llC. With a room inventory of 71, and industry averages nearly double that at 150, Baker Hotel llC will still run an efficient operation with high margins despite its size. PrICING Baker Hotel llC expects to charge an average room rate of $75 for the first year, and then slowly increasing the room rate, leveling out at $94 per night at the end of year 5. This is higher than the current average room rate currently offered, but due to the age of the property, national brand recognition, and amenities offered, Baker Hotel llC feels that people will not only pay these room rates happily, but flock to the property to stay over other limited service hotels in the area.
HOlIday INN ExPrESS - BakEr, Ca
PErSONNEl aNd kEy STaFF Baker Hotel llC plans to bring on 20 people to begin with as staff to provide support to the management team. These include front desk people, cleaning staff, maids, grounds keeping, and maintenance staff. Most positions will be full time on an hourly basis, and wages will range between $9 per hour and $15 per hour. Baker Hotel llC expects there to be a natural attrition of workers, and will be left with between 15 and 13 employees. This will help eliminate redundant positions and workers, and ensure that Baker Hotel llC is running the leanest, most profitable operation possible. Below, find an estimated staffing chart: Front desk: 2 people per shift (3 shifts) Cleaning Staff: 1 Maids: 1 from 6 am-12 pm; 1 from 11am-7pm; 1 from 7pm-3am * (From 3 am until 6 am, Front desk clerks will be responsible for handling guest needs such as extra pillows, extra blankets, light clean-up, ect.) Grounds keeping: 2 Maintenance: 2 reservations: 1 MaNaGEMENT ExPErIENCE Jaspal Sidhu Jaspal Sidhu is the majority owner (90%) of Baker Hotel llC. Jaspal is the current owner and operator of ace Engineering and akal Construction, located in las Vegas, NV. Jaspal has an extensive 15 year career in the planning, construction, and design of a variety of residential, commercial, and industrial projects, as well as in office and business management. Jaspal has worked on and successfully built 4 limited service hotels, all with major branding agreements with chains such as Comfort Inn and Suites, Hampton Inn, and Holiday Inn Express. In addition, he currently is working on an additional hotel project that is slated for completion in december of 2009. Below are a list of completed projects that Jaspal has worked on and been instrumental for their completion: Holiday Inn Express - Carson City, NV Hampton Inn and Suites - reno, NV Comfort Inn and Suites - reno, NV Comfort Inn and Suites - las Vegas, NV Tamba Cuisine restaurant - las Vegas, NV Polos Verde Plaza - las Vegas,, NV aM / PM Gas Station - las Vegas, NV
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HOlIday INN ExPrESS - BakEr, Ca
Gurbax "rai" Marwah rai Marwah is a minority stake holder in Baker Hotel llC, owning 10%. While his ownership may be small, rai has extensive management and operation experience hen it comes to hotels and hospitality oriented businesses. rai owned and operated a limited service hotel almost identical to the proposed Baker Hotel llC project for over ten years, from late 1980's to the late 1990's. He currently owns and operates twenty six denny's and Subway restaurants, three 7-11 franchises, and 2 Popeyes Chickens. In addition to the food service operations, rai also currently owns and operates an 83-unit Comfort Suites built from the ground up (By akal Construction). The Comfort Suites, located in Barstow, Ca, has been operational since december of 2008, and has had a positive cash flow. rai also is in the process of building and finishing up a second hotel project, an 87-unit Fairfield Inn and Suites. This project is halfway completed, and is slated for open in december of 2009. deepwater Hospitality deepwater Hospitality is a comprehensive professional consultancy and management firm offering a range of services to the hospitality industry -- from financing of existing hotel assets to hotel brokerage and investment; from development to construction, construction supervision, and interior design; and from management to purchasing. The management groups combined experience in the hospitality industry has strong ties and relationships with franchisors, hotel owners, and industry leaders. The depth of our network provides the essential tools and information to give our clients the edge they need in the quest for the best performance of their hospitality assets. deepwater Hospitality will be responsible for the hiring and oversight of all of the management positions within the Baker Hotel llC project, and may take over all aspects of staffing. deepwater is also an approved management company, which is required due to IHG regulations and the Holiday Inn Express franchise agreement. as you can see, Baker Hotel llC has assembled a "dream team" of owners and construction firms, management experience, and also a hospitality group designed to bring the best of the best in this project, and to provide Baker Hotel llC the needed tools for success.
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HOlIday INN ExPrESS - BakEr, Ca
PrOPOSEd lOCaTION The proposed location for the Baker Hotel llC project is Baker, Ca. Baker, Ca presents a unique opportunity for hotel and lodging operators. located along the I-15, one of the busiest roadways in america, Baker Hotel llC has the ability to not only capture travelers from las Vegas and los angeles, but it also can capture the majority of tourists that head to the Mojave National Preserve, as well as the death Valley National Park. These national park facilities have limited resources, and Baker Hotel llC expects that it will be the starting or stopping point for a majority of travelers, allowing them to get a good nights sleep and a hot shower before or after their outdoor excursion. For a more detailed breakdown of traffic counts and site feasibility, please see the included Baker, Ca Feasibility study. FraNCHISE aGrEEMENT Please see the attached franchise documentation for Baker Hotel llC and Holiday Inn Express PrOJECTIONS Please see the attached Profit and loss Statements for Baker Hotel llC, given monthly for year 1, and quarterly for years 2 and 3.
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