Hotel and Lounge Business - Example

Hotel and Lounge Business Plan Name Institution Name Course Name and Code Date Table of Contents Executive Summary 3 Introduction 4 Market Feasibility 4 Nature of the Market 4 Customer Analysis 5 External Factors and Industry Dynamics 6 Technical Feasibility 6 Product and Service Development 6 Sales and Distribution 7 Availability of Resources 7 Laws and Regulations 7 Technological and Operational Changes 8 Financial Feasibility 9 Market Research 9 Financial Dynamics and Opportunities 9 Investment Requirements 10 Financial Risks 10 Sources of Financing 11 Financial Numbers 11 Human Resource Feasibility 11 Ownership Structure and Owner’s Roles 12 Manpower Requirements 12 Company’s Growth Strategy 13 References 14 Appendix A 15 Executive Summary Hotel and Lounge aims to address the requirements of the local market that require local food and beverages. The establishment is middle class in which the high class, middle class and low class customers are targeted. The establishment with sitting capacity of 75 people will open from 7am to 9 pm throughout the week. The business will be a partnership of five members but the members will not be directly involved with management of the business. A cost-mark up approach will be used to accomplish the costing requirements and the payback period is two years while break even will be one and half years. The employees will be sourced through online platform and the motivation will include competitive compensation, challenging working conditions, and permission and support to attend different seminars and workshops. Introduction Hotel and Lounge is an establishment that targets local customers that require local food and beverages. The sitting capacity of the establishment is fifty people for the hotel section while the lounge section targets twenty five customers. The establishment aim to balance the needs and requirements of the local customers and regional customers. Both in-house and outside catering services will be provided. The business will open at 7 am and close at 9 pm throughout the week. The human resource approach will review the needs and requirements of the different employees including their experiences before assigning duties and responsibilities. The legal nature of the business is made of five individuals and the structure of the business is partnership. Market Feasibility Nature of the Market The food and beverage industry is large because people need food and drinks to survive. The market size is estimated as the entire population of the town. In addition, any new birth increases the size of the population (Hakala, 2011). Furthermore, Hotel and Lounge are targeting different customer segments ranging from children to mature population. Hotel and Lounge will continue receiving more customers provided effective marketing strategy exists and quality of services and products provided. The needs and requirements of the customer keep changing and what remains is the food and beverages (Levie & Lichtenstein, 2010). Some customers are shifting to health food offering while others are been introduced to first food. The market is not at full capacity because of the divergent food and drinks requirements, and other fundamentals associated with food and beverages. Customer Analysis The food industry enables customers to access the food and services from any establishment. There are numerous establishments that target different customers depending on the cost, variety, cuisine and other fundamentals associated with food. For instance, there are high level establishments that provide international cuisines while Hotel and Lounge aims to provide local food and drinks (Levie & Lichtenstein, 2010). Targeting the local customer is integral to the strategic approach because the market currently offers fast food and continental cuisines but does not consider the requirements and expectations of the local customers. Complaints from the customers on the availability of local food and beverage were among the reason in which Hotel and Lounge has to enter into the market. The local community are ready to purchase the products because of the numerous complaints and suggestions to establish a local eatery to address the needs and requirements of the local community (Levie & Lichtenstein, 2010). Continuous research and development will be done to ensure the diverse foods and drinks in the community are offered at the establishment. The aim is to engage and create loyalty among the local customers into purchasing the services and products. In addition, there will be another arm that will take the food and drinks to the customers. The arm will be outside gathering in which Hotel and Lounge aims to engage the customers and take the products to the location of the customers (Hakala, 2011). The customers in such situations include organisational functions, events, ceremonies, weddings, birthdays and similar functions. The aim is to increase the market share and utilise the outside gathering as a marketing strategy in which word of mouth would be relied. External Factors and Industry Dynamics In operating the Hotel and Lounge, numerous external factors have to be considered. The government controls the industry through legislations and requirement of observing numerous regulatory requirements. The government requires Hotel and Lounge to acquire numerous permits and documentations (Levie & Lichtenstein, 2010). The government also needs the business to pay taxes, adhere to occupation health and safety, and fulfil labour requirements. The industry is competitive and keeps changing meaning change and learning systems should be integrated into the business operations (Hakala, 2011). Competition is unavoidable while different stakeholders have interest in the business. For example, labour unions and insurance agencies require contributions from both the employer and employees. Therefore, fulfilling the external factors is crucial in efficiency and effectiveness at the Hotel and Lounge. Technical Feasibility Product and Service Development The establishment and any development will be in house because the customers will either visit the establishment or outside catering used to engage the customers. In certain situations, subcontracting will play an important role because the local customers may require additional services that are not offered in the establishment or the offerings needs adjustment. To prevent numerous complications, the in house approach will be employed and locally qualified personnel employed to provide services and products. In addition, external members will be engaged in determining whether the products are appropriate and measures requirement to satisfy the customers and other stakeholders. Hence, a combination of in house and subcontracting plays a crucial role in offering the services and the products. Sales and Distribution A combination of different approaches will be employed in fulfilling the requirements of sales and distribution. In house will be used to target customers that want ready food and beverages. Different type of in house approaches will be employed including readily made food and special order. The special order will be provided within 45 minutes while the ready order will be provided within five minutes. Sales representatives will be require to visit different organisations and sale the idea of outside catering and provide information on the appropriateness local food and beverages in regional meetings and conferences. The aim is to ensure different customers understand the product offering, and understand how they can benefit from the services offered by Hotel and Lounge. Therefore, in house and sales representatives will be used to fulfil the sales and distribution requirements. Availability of Resources In providing the food and beverages, Hotel and Lounge will require the local experts in food production. Appropriate skills are available and the raw materials can easily be sourced. Different equipment including preparation tools and serving utensils are available in the local supermarkets and stores. It is also easier to engage the suppliers because the local ingredients will be used to produce the products and services. Thus, the different resources required are easier to get and fulfil the objectives of the establishment. Laws and Regulations The food and drink industry including the hotel industry has numerous regulations and legislative requirements. In establishing the business, it is crucial to analyse the different legislations based on the nature of products, and statutory requirements. High quality food and integration of safety are important in the food industry (Hakala, 2011). Food poisoning sometimes is a problem while allergic reactions can create additional problems. Ensuring the quality of products and following legislations and standards requirements reduces or eliminates problems associated with food and beverage poisoning, including health and safety requirements. Different documentations are also required both for the business and individuals working at the organisation. Public health documentation is required for the different employees while permits and licences are required to run the business (Priem, Li, & Carr, 2012). Additional paperwork will be required because of the presence of alcoholic drinks and other public health requirements. The frequent inspection and requirement of complying with different legislations should be integrated in running the business. Environmental sustainability is important and businesses seek to integrate sustainability measures to support the businesses (Hakala, 2011). For example, conservation of water and energy conservation are commonly employed in encouraging environmental matters. Adherence to environmental requirements and effective resource utilisation improves both the business operations and sustainability requirements. Technological and Operational Changes The needs and requirements of the customers keep changing meaning the food and beverages should reflect the requirement. The tools and equipment used to produce the products and also serve the customers should reflect the changing dynamics of the industry. In continuous research and learning, it is possible to determine the appropriateness of the technology relative to the requirements of foods and beverages industry/ hotel industry. Financial Feasibility Market Research The projected revenue is based on the product and services provision. A single fixed price is not possible because of the changing dynamics in the industry. A general costing approach for the outside catering and in-house product will be considered. The Hotel and Lounge is a middle level business that targets high class and low class customers meaning the pricing has to incorporate such dynamics. The selling price will be based on the cost of product, and a mark-up included in determining the final selling price. Financial Dynamics and Opportunities Determining the cost per unit of food or beverage is sometimes demanding and utilising a percentage is commonly used in the hotel industry. The cost structure will factor the numerous processes and approaches to procure the raw materials and develop these raw materials to the final product. It is estimated that the cost of production should not exceed 35% while profit will be around 60%. The approach is utilised for any product that is offered to the customers. In addition, for the outside catering customers, costs for transportation and seeking part time employees will be included in the costing. Therefore, different costing will be employed in determining returns for the investment. The following are the variable costs: Classification Costing strategy Ingredients Accounts for 15% of any sale e.g. per plate or per class/bottle Waiters/chef allowances Electricity and energy Waste disposal Water and sewage Consumables The following are the fixed costs Classification Costing strategy Rent Accounts for 15% of any sale e.g. per plate or per class/bottle Internet cost Salary Interests Institutional documentations e.g. permits Investment Requirements Hotel and Lounge is a new business that requires numerous resources and technical advice. The initial investment requirement to operate the business includes funding on equipment and tools, leasehold improvements and fixtures/fittings, legal obligations is setting the business, initial inventories, and consultation costs (Kraus et al. 2011). In addition, the operational expenses have to be considered because it is estimated the business will break even within one and half years. Breaking even is based on the demand on local food and beverages, and the costing strategy will generate more revenues to cover the operational and investment costs. Financial Risks The payback period is one year and six months while risks are common in the hotel/food and drinks industry. The risks are divergent because of the factors associated with procuring the products and services, and utilising these services and products to accomplish the requirements of the customers. However, if the business is managed effectively, the risk will decrease while the rewards will increase (Hakala, 2011). Food and beverage industry is risk because the food and drinks can easily spoil and the solution is strategizing through utilising appropriate equipment and storage approaches. The personal financial risks are a sensitive matter because the partners will be required to contribute equally in funding the business (Kraus et al. 2011). It will be the prerogative of the partners to determine the sources of the funds, which is independent from current management or using the business as collateral. Sources of Financing The five partners will be required to contribute equally to the initial costs and operating costs. The aim is to utilise personal resources to operate the business and depending on the financial nature of the business, further funds will be acquired from financial institutions (Hakala, 2011). The food and beverage industry is sensitive and instead on taking funds from financial institutions, it is advisable to utilise personal resources. Financial Numbers The business venture is attractive because of the financial numbers. For example, the gross margin is supposed to be around 50% while net profit should be around 40%. In addition, return on investment is expected to be around 35%, which are the most minimum financial indicators. The payback period of the investment is two years while the break even period is one year and six months. Human Resource Feasibility Technical and Management Experience The following table summarises the technical and management experiences required for the business. Position Experiences and Skills Manager (Human resource and marketing) The individual should be able to manage the entire business operations and also determine whether the employees operate effectively. The manager should advance marketing requirements. The manager should have operated in a hotel industry and has the appropriate skills and experiences in engaging the customers and leading other employees. Accountant (Procurement and Financial Matters) Should receive information from the different employees in the establishment and update the information appropriate. The accountant receives information from records keeper, cashier and kitchen supervisor. The account is supposed to generate financial statements and formulate and aid in implementation of budgets. Cashier (Collects cash at the hotel) The cashier should be able to receive the cash from the customer and ensure all collections have been documented effectively. Chef Should have the skills and experiences to produce food that targets both the local customer and regional customer Kitchen supervisor Ensure the different individuals within the hotel accomplish their diverse operational requirements appropriately. The kitchen supervisor skills include effective allocation of duties, conflict resolution with the customers and ensuring the business is operated effectively. Waiters Serves the customers have high customer engagement skills Cleaners Ensure the establishment is clean Records keeper/update Keep all the records and update these records Ownership Structure and Owner’s Roles The ownership structure of the business will be partnership made of five members. Each of the members will have a specific role and participate in numerous meetings to advance the requirements of the business (Kraus et al. 2011). The partners will not operate the business directly but experts will be given the authority to operate the business (Onetti et al. 2012). The aim is to use the best available skills while managing personal interests. The partners will operate as directors of the business and determine the direction of the business. Manpower Requirements An online recruitment approach will be employed to engage with the right manpower. Most of the recruit requirements will be accomplished online and the compensation will be based on combination of pay for time and wages (Hakala, 2011). The employees will be motivated through the salary including creating a challenging business environment. The employees will be trained and allowed to attend workshops to learn new methods and approaches of fulfilling the requirements of the customers. Company’s Growth Strategy Hotel and Lounge growth strategy depends on whether the break even objectives can be met and challenges experienced during the period. Quality is important to the success of the business and quality measures and auditing will be implemented (Hakala, 2011). For example, auditing and qualify the suppliers to ensure high quality raw materials are delivered and reviewing the entire supply chain will ensure high quality products are products. Weekly review on Friday will be done to determine the causes of any complaint and also individual complaints from the customers are addressed within the shortest time possible (Kraus et al. 2011). Depending on the revenues generated, the business aims to open additional branches within the town. The organisational structure will change if additional branches are opened. For example, opening a new branch will mean the investors will be required to manage new outfit while managing the original establishment (Kraus et al. 2011). The employees will be promoted through been allowed to operate in the new establishments but a higher organisational level. References Hakala, H. (2011). Strategic orientations in management literature: three approaches to understanding the interaction between market, technology, entrepreneurial and learning orientations. International Journal of Management Reviews, 13(2), 199-217. Kraus, S., Kauranen, I., & Henning Reschke, C. (2011). Identification of domains for a new conceptual model of strategic entrepreneurship using the configuration approach. Management Research Review, 34(1), 58-74. Levie, J., & Lichtenstein, B. B. (2010). A terminal assessment of stages theory: Introducing a dynamic states approach to entrepreneurship. Entrepreneurship Theory and Practice, 34(2), 317-350. Onetti, A., Zucchella, A., Jones, M. V., & McDougall-Covin, P. P. (2012). Internationalization, innovation and entrepreneurship: business models for new technology-based firms. Journal of Management & Governance, 16(3), 337-368. Priem, R. L., Li, S., & Carr, J. C. (2012). Insights and new directions from demand-side approaches to technology innovation, entrepreneurship, and strategic management research. Journal of Management, 38(1), 346-374. Appendix A Start-up Expenditures and Expenses Worksheet Item Total Cost Cash Required Land ________0__ __________ Capital Equipment _________$50,000_ __________ Computer and accessories __$4,000________ __________ Beginning Inventory _____$10,000_____ __________ Start up Supplies ______$5,000____ __________ Licenses and Permits _______$2,000___ __________ Leasehold Improvements _____$1,000_____ __________ Utility hook-ups & Installation __$5,000________ __________ Advertising (Preopening) ____$1,000______ __________ Insurance ________$500__ __________ Other ___$10,000_______ __________ _______________ __________ __________ Total Estimated One-Time Cash Requirements _______$88,500___ __________ Start-up Operating Expenses Estimate No. of Months Total Cash Item Monthly Expense X Before Break even = Required Owners Salary __________$10,000 __________ __________ Employee’s salary, wages, benefits _______$30,000___ __________ __________ Rent __________ ____$10,000______ __________ Promotion expenses _____$2,000_____ __________ __________ Supplies and postage __________ _$1,000_________ __________ Vehicle Expenses ______$3,000____ __________ __________ Telephone __________$2,000 __________ __________ Travel __________ _____$3,000_____ __________ Interest __________ _$5,000_________ __________ Maintenance ________$3,000__ __________ __________ Other __________ $6,000__________ __________ Total Cash Required to Cover Operating Expenses ___$75,000______ Plus: Total One-Time Cash Requirements (Previous Table) __$88,500________ Add 10% Safety Factor ____$16,350______ Total Cash Required for Start-up _____$179,850____ Read More