IHIF Strategy Challenge (investment strategy student project)
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Transcript of IHIF Strategy Challenge (investment strategy student project)
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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