A Tropical Bed and Breakfast Hotel in Hawaii - Essay Example

? Maui Heaven: A Tropical Bed and Breakfast Hotel in Hawaii Prepared by: Presented on: April 11th, Table of Contents Introduction Pg. 3 Geographic Location and Attractiveness Pg. 4 Target Market Pg. 6 Details, Description, and Amenities Pg. 7 Selection of Rooms Pg. 8 Revenue and Occupancy Data Pg. 9 Hotel Management and Departments Pg. 11 Security Pg. 12 Market Competition Pg. 13 Marketing Plan Pg. 14 Conclusion Pg. 15 References Pg. 17 Introduction A bed and breakfast hotel marketed under the name of “Maui Heaven” on the island of Maui in Hawaii has the advantage of offering a restaurant, gift shop, and local tour guide facilities along with well decorated rooms and modern architecture set in a tropical garden as the foundation of the business plan. Through this investment, which will likely costs between $250,000 and $400,000 to purchase and develop in Hawaii, a business plan can be created which estimates 40% occupancy in the off-season with 80% occupancy in the main tourist season, and rooms priced at an average of $200 dollars per night. In a hotel with twelve rooms, the income potential of multiple occupancies in each room plus related fine dining, room service, and local tour guide services suggests that substantial revenue is available as a consequence of business operations. Due to the paradise-like natural beauty of the Wailea area in Hawaii where the hotel is planned, the bed and breakfast will be marketed under the name of “Maui Heaven,” and seek to appeal to independent travelers, couples, and honeymooners who travel to Maui looking for a short or long-term holiday. The hotel business plan also includes a focus on ecotourism and tour guide facilities on Maui that provide vehicle rental and daily tours to popular exhibitions. On the premises of the hotel is a fine dining experience, garden restaurant that is positioned behind the main building and allows the visitors to pass the time with natural views of the ocean and mountains. This area is all landscaped and gardened with the indigenous tropical plant species native to Hawaii, and includes a small gift shop with tour guide books, postcards, t-shirts, and other souvenirs sold as an additional revenue stream. As a business plan, “Maui Heaven” intends to employ 12 people to start on rotating shifts at the front desk, restaurant, and as tour guides. The hotel brand, “Maui Heaven” will be independent from the chain hotels in the region, and appeal to the small groups of travelers interested in tropical ecotourism, budget travelers and environmentally conscious tourists who seek rest and relaxation on Maui’s beaches. The brand will be built on the island of Maui through print publications and flyers placed in central tourist information stations and the airport, as well as through the internet and the hotel’s website. The website will enable the hotel to take bookings and room reservations directly, as well as to communicate with prospective travelers from around the world before they visit Hawaii. The website should also include photos of Hawaii and information on the beaches and natural wonders of Maui. In summary, the hotel “Maui Paradise” will be built as a bed and breakfast hotel with a focus on ecotourism, have 12 rooms for guests in addition to social space, beer garden, restaurant, and parking. The location will be in the state of Hawaii, on the Island of Maui, and in the town of Wailea, near to the beach or with a beach view in a quiet, natural location within short driving distance from town. The hotel will pickup and greet visitors at the local airport upon request, and thus should have a minimum of three vehicles available for use in tours. Geographic Location and Attractiveness The geographical location of the island of Maui in the state of Hawaii is located in the middle of the South Pacific Ocean and a long flight from most mainstream American households. As such, Hawaii has an advanced tourism industry that provides much of the economic sustenance for the state and is already heavily engaged in marketing and advertising. The natural environment includes beaches and mountains that are full with rainforests and Hawaii’s unique plant and animal ecosystem. These are attractive to tourists who travel to the area for short or long term holidays to enjoy the sun, nature, and culture of Hawaii on Maui. In “Designing Paradise: The Allure of the Hawaiian Resort,” the authors Don Hibbard and Augie Salbosa describe the development of tourism in the Wailea region of Maui. "Similar to Lana'i and Po'ipu, Kaua'i, Wailea on Maui also underwent a late-1980s surge of up-scale hotel development." (Hibbard, 2006) The business plan of the bed and breakfast “Maui Heaven” is not to compete with the large, five star hotels in the region, but rather to build a personalized experience based on hospitality and ecotourism. The hotel will have a maximum occupancy of 24 people in 12 rooms, with families permitted to stay with small children in a single room. The hotel will operate an independent tour facility for visitors, assisting them to travel around the island and see the major sites in hotel transportation. The hotel should employ two expert guides in association with this, locals who have lived in Wailea all their life and who understand the Hawaiian culture natively. The hotel will operate in the bed & breakfast niche and ecotourism sector, distinguishing itself with social life built around its bar and restaurant. A swimming pool is not provided, but the hotel will be located within walking distance to the beach, with an outdoor shower area for swimmers and sunbathers. The hotel will be owned and managed as a family business, with the owner and wife working together on the business management aspects of the operations and employing 12 additional workers as guides, cooks, waiters, and hotel assistants. Maid and cleaning services should be part-time and half-day positions, whereas the others will be scheduled primarily as day and evening workers to manage the hotel, tours, and restaurant facilities. The natural beauty of highlight should inspire the architecture and design of the location, and the tropical aspects of the garden should mix organically with the decoration of the restaurant and bar. Target Market “An important value for native Hawaiians and Hawaii locals is the idea of ‘malama aina’ or to care for the land. On Maui there are a variety of activities visitors can explore to see how native Hawaiians of the past worked the land and how locals today are keeping Hawaii more sustainable for generations to come.” (Hawaii Tourism Authority, 2011) Visitors come to Maui to experience the wonders of its beaches, hike through tropical, volcanic nature trails, and to explore the historical and cultural aspects of the state of Hawaii. Maui is famous for pineapples, macadamia nuts, tropical fruits, rare bird species, swimming with the dolphins, whale sightings, and beautiful beaches. Haleakala National Park is a popular destination, and for those not interested in natural activities, there is an abundance of shops, small artisan markets, organic farms, and nightclub activity in Maui to provide entertainment. Maui generally attracts holiday travelers on vacation or celebrating an important family event. “Maui Heaven” appeals to this base of tourists by offering a small, family-owned bed and breakfast experience in a tropical location close to the beach, with ecotourism facilities and a popular restaurant and bar. The hotel will market to independent travelers, honeymooners, backpackers, small groups, and couples as an alternative destination to the large five star hotels and their expense. Details, Description, and Amenities “Maui Heaven” will be built as a modern style hotel set in a tropical forest as a background, either by purchasing an undeveloped piece of land and building a new facility, or through purchasing an existing property and renovating it. Due to the effects of the financial crisis, which has reduced real estate property values in Hawaii as elsewhere in the U.S. significantly, the owners believe that the current time is more favorable for purchasing and renovating an existing property rather than building new. This not only saves the costs of construction and labor, but also speeds up the time from purchase to opening for the business plan. Typically, properties on Maui of the size required for the business plan sell for a price of between $250,000 and $400,000. Beachfront properties in this range generally start at $1 million. The business plan requires a building of three to four stories with twelve apartments, condos, or existing hotel rooms that can be converted into the new hotel through redesign and redecoration. In association with this, the restaurant and bar facilities will be positioned on the first floor in the back extending out into a garden. A minimum of one acre of land in required for parking and garden facilities. Purchasing an existing location should be easier than building, as well as cheaper and quicker to implement the start-up business plan. The expectations of the business plan include $50,000 for the down-payment on the property at a 10-20% deposit on a mortgage with the Bank of Hawaii. Interest rates are currently favorable for this venture as a long-term investment, but the business plan requires an additional $50,000 for the costs of renovation and as savings for staff-salaries and other costs during the first year of start-up. The website and publicity budget is only $5,000 in comparison. The majority of the renovation work will be undertaken by the ownership using contract labor, and should be completed at a cost of $10,000 for renovation work and $15,000 for furnishings and supplies. Constructing the furnishings such as the beds, dressers, and tables for the rooms from raw materials rather than purchasing them from retail stores is another way the hotel intends to save costs and implement a distinctive Hawaiian decor to the premises. Selection of Rooms (types of rooms) The business plan for “Maui Heaven” intends to market the hotel as an upscale, boutique bed and breakfast for couples and backpackers who are environmentally conscious and into ecotourism activities. The rooms should be simple, minimal, and elegant with modern decorations reflecting the natural theme. All of the rooms will have attached bath, toilet, and shower, leading to the decision to purchase a condo or apartment complex and renovate as suites if the possibility exists in the real estate market. Maui is one of the most expensive real estate markets in the world; however, the rate on return through hotel room rental is excellent. For example, 12 rooms at 80% occupancy for the high-season of tourism lasting 6 months would be a potential for over $400,000 a year in revenue just from the room rental, not including income generated from the restaurant, bar, and tour facilities. However, hotel business is notoriously cyclical and subject to declines related to natural disasters, economic downturns, terrorism, plane crashes, and the like. Thus, the business should seek 50% margins after staff, residence, and utility costs as the basis of the business plan. The rooms for guests should be tactfully decorated, and always kept clean for the tourists. Wood floors, plaster walls, and framed paintings should form the basis, with the bed, tables, and other furniture matching throughout the hotel design. When possible, natural Hawaiian woods such as koa will be used to build a “tiki” environment. The bar, front desk, restaurant, and rooms should all be built during the initial stage of construction from raw materials and not purchased retail, though the kitchen will need professional stainless-steel finishing. The rooms must have an internal and external phone system for room service and outward calls, as well as a TV, alarm clock, and other essentials. Internet facilities will be provided in a “cyber cafe” connected to the giftshop, allowing guests to check their email or send photos to friends from their holiday at a small charge from the computer kiosk. Revenue and Occupancy Data The tourism industry in Hawaii and Maui is improving steadily, though subject to setbacks related to natural disasters or economic problems as they are experienced internationally. During the recession, tourism in Hawaii and Maui were hit hard, and some hotels and guesthouses went out of business. This makes the real estate prices and possibilities for future business attractive to investment. Eric Simon writes in “Promising Trends for Maui's Tourism Industry,” “The recent global economic downturn has left a host of industries all over the world scrambling to recover. During this time, one of the hardest hit areas in the United States has been Hawaii, and in particular the Island of Maui. Maui's main industry is tourism and in 2007 it made well over 3 billion dollars from it alone, welcoming over 2 million visitors to its shores. But since the recession they've seen two airlines go bankrupt and their tourism numbers dwindle as people the world over began to tighten their belts. In 2008 it was reported that Maui lost around $166 million dollars in their tourism industry. But as the global economy begins to show slight signs of recovery, a few promising trends have arisen.” (Simon, 2011) The business plan relies on an average price of $200 per night for the hotel suite, revolving around 12 rooms with attached baths. It expects 60% to 80% occupancy in the main tourist season of 6 months and off-season occupancy at 30% to 40% for 6 months. The hotel intends to earn revenue through room rentals, food service, a restaurant, bar facilities, travel and tours, as well as a gift shop and cyber cafe. With this is factored the costs of 12 employees, not including the owner and family, the cost of three vehicles, insurance for the hotels and tour facilities, and other costs. A general cost breakdown can be seen in the following expectations: Mortgage Payment - $2500 p/month Car Payments – 3 Vehicles: $1500 p/month Salary & Benefit for 12 Staff – Paid from $10 to $20 per hour, 20 hours per week part time and 40 hours per week full time – 8 full-time staff: $20,000 p/month and 4 part-time staff: $5,000 p/month for a total of $25,000 p/month in salary payments expected. Insurance – Car & Business: $500 p/month Utilities - $250 p/month The restaurant will be managed on a daily and weekly basis by the cook and restaurant staff with oversight from the owner. The bar and restaurant will manage food and beverage receipts separate from the main hotel, but include the room service meals in its business operations. Hotel Management and Departments The basic organization for the hotel is decentralized, based upon a casual and friendly atmosphere of operations, with the owner also acting as general manager for the facilities. Security Security at the hotel is an essential feature and will be undertaken by all employees as part of the training and operations of the hotel. Where the hotel does not expect inordinate problems from the location or guests, staff will be required to be vigilant at all times for unregistered individuals on the premises or outside the restaurant and garden area. At the beginning, the hotel will establish a system of room and window locks with smoke detectors and fire extinguishers as required by code. The manager and owner will be responsible for making and decisions which would apply to escalating a local situation to an emergency through calls to police or paramedics. First aid facilities will be kept on site and in tour vehicles in case of any problems while on tour with the clients and guests. Hospital and emergency numbers should be kept in a location near the office and kitchen phone that they can be found and referenced in an emergency. Security may also require an alarm system in the front office, bar, and restaurant to protect the location during the hours when facilities are closed. A motion-sensitive alarm limited to these areas would be approximately $1500 to $2500 minimally to install additionally as part of the business plan. The budget for security does not include armed or private security officers on site, as the understanding is that hotel staff will be able to manage aberrant situations as they arise, and the expectation is that such incidents will be infrequent. Nevertheless, if regular security issues with local individuals does arise due to the bar or restaurant activity on the premises, management can budget the additional cost of a private security guard through a third party service as part of the business plan. Market Competition The market competition in Maui and Hawaii in the hotel industry is strong, and many businesses may fail to proceed sustainably in the environment with its seasonal ups and downs in business traffic. The Major competition to “Maui Heaven” will be five-star hotels that attract high-paying clients and large tour groups, franchise hotels with international marketing budgets and name recognition for their brand, other small bed and breakfast hotels operating independently, and other travel and tour operators in ecotourism. The business plan intends to use the internet, viral marketing through fliers and posters, airport and tourist center marketing, and word of mouth to build business. The statistics below list the average industry occupancy rates for hotels in Hawaii and Maui: “Consulting firm Hospitality Advisors reported... Maui occupancy at 73.6 percent, up 6.7 percentage points from 66.9 percent last January. Average daily room rate (ADR) for the month at $245.23, up $15.32, or 6.7 percent, from $229.91. Room revenue per available room (RevPAR) daily for the month at $180.49, up $26.68, or 17.3 percent, from $153.81.” (Maui News, 2011) In targeting a slightly lower room rate than average on Maui, the hotel seeks to attract budget travelers and middle class couples who are looking for a room that is slightly upscale but friendly and making it easy for all of the local tourist sites to be visited. The integration of local tours and hotel operations is also common on the island among competitors, thus the hotel will be required to cherish every customer to encourage them to stay longer and enjoy the service the facilities provide. With the average occupancy rates in the state of Hawaii over 80% in the high-season, the market is surely positioned for the entry of new and innovative businesses. As Hawaii News Now reports: “Hawaii statewide hotel occupancy for February 2011 was 81.7 percent, more than six percentage points better than February 2010, with gains from U.S. West (11.8 percent), U.S. East (10.9 percent), Japan (8.2 percent) and Canada (19.7 percent).” (Dicus, 2011) Marketing Plan The marketing plan for “Maui Heaven” is based on the ecotourism themes that are also seen in the design and architecture of the hotel, restaurant, and bar. The hotel intends to build an international marketing campaign through a website, constructed at a cost of $1500 to $2500, using open source web development tools. The website should include travel information about Hawaii and Maui, instructions on how to get there, maps, booking information, and reservation facilities. Photos of the beaches, jungles, mountains, and wildlife of Hawaii should include detailed information and background. The hotel will also print fliers and posters for “viral marketing,” leaving this literature at tourist information centers, airports, and other facilities in order to build local traffic from independent travelers. The restaurant and bar facilities are encouraged to bring local customers, and the hotel will market to honeymooners, couples, small groups, middle class families, and backpackers primarily as a client group. In addition to this, “Maui Heaven” will also offer free rooms on occasion to special guests such as travel writers, restaurant critics, reviewers, etc. to visit the location and enjoy the facilities, in hopes that the hotel will eventually become listed in travel guidebooks such as “Lonely Planet,” “Frommer’s” and others as a recommended destination in Maui, famous for its unique location, views, friendly staff, and restaurant. “Maui Heaven” should include world class standards that are made affordable for those who want a special trip to Hawaii. Conclusion “The Hawaii Tourism Authority President/CEO Mike McCartney stated today that November was another strong month for visitor arrivals and expenditures on all island; 2011 tourism momentum expected to continue... Visitor arrivals increased on all islands compared to November 2009, led by Maui (+18.9%), followed by Hawai‘i Island (+16.4%), O‘ahu (+15.7%), Lana‘i (+15.5%), Kaua‘i (+14.6%), and Moloka‘i (+7.4%). Visitor spending on O‘ahu, for the month of November 2010, rose 27.7 percent to $497.1 million, followed by Maui (+36.7% to $252.6 million), Hawai‘i Island (+36.9% to $124.8 million), Kaua‘i (+19.7% to $88.3 million), Lana’i (+38.5% to $6.2 million), and Moloka‘i (+33.5% to $2.5 million). And total Maui visitor arrivals are up 10% year 2010 thru November over last year.” (Isotov, 2010) The report above illustrates the strength of the Hawaii tourism market despite the problems experienced in the economic downturn and following the latest tsunami warnings. While natural disasters and world events can affect Hawaiian tourism strongly due to the fact that nearly every visitor must fly there from a long distance, the possibility for growth is enormous. Furthermore, the actual real estate environment in Hawaii is very small, making any opportunity to acquire a property at low prices and good interest rate financing recommended, especially for those who would like to live long term on the islands. Hawaii’s main industry is now tourism, and the revenue potential for a successful hotel on Maui is tremendous. The possibility also exists to develop the hotel for a few years and then to sell it as an operating business at a profit. In this manner, it may be able to found “Maui Heaven” on a location further from the beach, then develop and see it in order to buy a larger or actual beachfront property in Maui. The ecotourism, restaurant, and bar facilities at “Maui Heaven” should entertain most travelers in an affordable manner, making their stay in Hawaii a memorable one. The hotel will hope that regular customers return year after year in friendship, and that it can build activities and community with other business locations and tourist destinations in the area. The start-up costs for the enterprise are high, primarily due to the cost of real estate on Maui and the renovations required in order to get the property licensed and operating. Yet, these costs can be offset by significant income and allow for the employment of 12 people minimally as part of operations. For the ownership, it is the opportunity to own a home, small business, and bed & breakfast hotel on the island of Maui, one of the most beautiful paradise environments in the world. For this reason “Maui Heaven” has a good chance in succeeding, because it provides ownership and staff the opportunity to do what they love for a living and gives the guests an opportunity for a once in a lifetime experience. References Dicus, Howard (2011). Hawaii hotel revenue was soaring before the crisis. Hawaii News Now, Apr 05, 2011. Retrieved from http://www.hawaiinewsnow.com/Global/story.asp?S=14380123 Isotov, Sonia (2010). 19% Growth for Maui November Tourism; Momentum Continues in 2011. Maui Now!, December 28th, 2010. Retrieved from http://mauinow.com/2010/12/28/double-digit-growth-for-november-tourism-momentum-continues-in-2011/ Hawaii Tourism Authority (2011). Maui Ecotourism. Go Hawaii, 2011. Retrieved from http://www.mauinews.com/page/content.detail/id/546941/Hotel-numbers-continue-gains-in-January.html?nav=10 Hibbard, Don & Salbosa, Augie (2006). Designing paradise: the allure of the Hawaiian resort. Princeton Architectural Press, 2006. Retrieved from http://books.google.co.in/books?id=REJB-dhBLQsC The Maui News (2011). Hotel numbers continue gains in January. The Maui News, March 8, 2011. Retrieved from http://www.mauinews.com/page/content.detail/id/546941/Hotel-numbers-continue-gains-in-January.html?nav=10 Simon, Eric (2011). Promising Trends for Maui's Tourism Industry. Ezine Articles, 2011. Retrieved from http://ezinearticles.com/?Promising-Trends-for-Mauis-Tourism-Industry&id=5244941 Read More