5th IHIF Strategy Challenge

Challe

nge Accepted

that if the population of China walked past you in single file, the line would

never end because of the rate of reproduction

Did you know

?

Water based

Mainland Urban Mountains

 National brands

 

International brands

Lu

xu

ry  

Bu

dg

et    

Resort industry in China

114 million YoungMiddle classUrban

(BCG, 2011 ; Euromonitor, 2012)

(Euromonitor, 2012)

33 million travelers

81 million non-customers

Evaluation of the potential market

Forecast annual growth of the GDP of 7.2% (IMF, 2012)

Forecast annual growth of the tourism: + 15% outbound tourism (UNTWO, 2011)

+ 16% domestic tourism (BCG, 2011)

Forecast to increase: 450 mio (2010) – 650 mio (2020) (Euromonitor, 2012)

CAGR disposable income 2008-2020: 8.1% (Thayer Lodging Group, 2011)

Shortfall of midscale supply (Deloitte, 2010)

The new generation lives in the now and does not save money (UNWTO,

2011)

Young travellers often spend more and are responsibility free (UNWTO, 2011)

Young Chinese have demonstrated a higher interest in leisure travel (TLG,

2011)

Accessibility to transportation infrastructures

China

Urban

Young

Middle class

What do they want?

A European experience

What do they want?

DesignThe Place

to be City centres

China

we offer ?

Wellness centre & activities

Wine Bar & wine activitiesBanquet facilities

What do they want?

DesignThe place to be

City centres

China

we offer ?

Wellness centre &

activities

Wine bar and wine activities

Banquet facilities

“A relaxing and trendy European oasis in the heart of city centres,

at an affordable price”

Water based

Mainland Urban Mountains

 National brands

 

International brands

Lu

xu

ry  

Bu

dg

et    

Resort industry in China

National brands

 

International brands

Competitors

--

 

 

Price

 

 

++ 

 

Attractive to the Young segment

Gloria Aloft

Silka

Holiday Inn

Ibis

Jin Jiang Inn

Park Plaza

++ 

 

--

 

 

One signature amenity

Provide 5 secondary experiences

Provide one full-service F&B outlet

Short-term overnight lodging

Minimum of 25 rooms

Emphasize a leisure or retreat-environment experience

Criterias of a resort(University of Memphis, 2009)

Seasonality

Main challenge of a traditional resort (Panel: Profitability of Resorts Hotels, 2011)

Overcome by being an

urban resort

How do we overcome barriers in China ?

Local partnerships

Management company

Asian Investors

Development of the 50 resorts

BeijingYantaiGuangzhouChengduNingboShanghaiQingdaoXianShenzhenHuangshanHangzhouGuilinKunmingDalianXiamen

Investment per resort

Land: 1’041’000 €

Building: 24’500’000 €

Equipment: 872’000 €

Liquidities: 890’000 €

27’300’000 €

90’000 € / room

Revenues (€)

13%

10%

44%

23%

10%

Food

Beverage

Room

Wellness + activities

Wedding + banquets

2013 2014 2015 2016 2017

Revenues 7,886,000 8,585,000 9,188,300 9,680,000 10,000,400

RevPAR 38 42 45 47 48

2013 2014 2015 2016 2017 100% TO

Operational profit for 16 rooms (€)

372,592 406,464 433,562 453,865 460,659

677,440

Operational wedding profit (€) 574,000 609,000 644,000 679,000 728,000

728,000

% Variation 54% 50% 49% 50% 58% 7%

BANQUETS ROOM

Profitable activities (in m2)

2013 2014 2015 2016 2017 100% TO

Operational profit for 4 rooms (€) 93,148 101,616 108,390 113,471 115,165 211,700

Operational wine profit (€) 274,939 286,272 297,158 307,519 316,927 316,927

% Variation 195% 182% 174% 171% 175% 50%

WINE BAR

Net Profit/Loss (€)

2013 2014 2015 2016 2017 -

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2013 2014 2015 2016 20170

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Reimbursable Fee

Incentive Fee

Base Fee

Management Fees (€)

T

  2013 2014 2015 2016 2017Dividends 68,570 309,770 519,740 744,800 904,180

Net cash position 2,234,076 3,424,494 3,038,368 2,525,237 1,887,058

Internal Rate of Return

19 %

Expected ROE 16%

WACC 9.44%

Economic Value 31,399,000

- Net Asset (27,262,000)

Net Present Value 4,063,000

Finance (€)

Total Equity 10,900,000

SWOT

• Urban resort locations

• Few international competitors

• European style

• Growth of :• Domestic tourism• Chinese middle-class • Wellness demand• Wine demand

• Government investment in

favor of domestic tourism

• Lack of mid-scale supply

• Non captive customers

• Lack of qualified labour

• High taxes on imported wine

• Entry barriers of Chinese

government

• Entrance of international

competitors

• Ease of access to Visas for

Chinese

Str

en

gt

hs

Weakn

ess

es

Opp

ort

un

itie

sTh

reat

s

Thank you for your attention.

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