Phoenix Project Management

BUSINESS PLAN

"White Spirit" TOURIST COMPLEX

TARLUNGENI -ZIZIN

ROMANIA

SCOPE

Project

The object of the feasibility study consists of the investment project regarding the development of a Tourist's Complex in Tarlungeni-Zizin, Romania, with the following facilities:

A hotel with an accommodation capacity of 80 rooms, at international three stars' standards, with restaurant, bar, night-club, conference rooms, parking, international telephone network;

A modern and nice chalet with an accommodation capacity of 10 rooms and a small fast-food;

The most modern artificial snow ski slope in Romania, which will have a cable transport, which will accommodate 1500 tourists at each 60 minutes;

A ski school, which will benefit from the experience of some instructors -masters of the winter sports in Romania;

A riding school (the horses will be let for rides in the mountains);

A skating rink;

Playing fields for lawn tennis and basket -ball.

The target of the analysis is that of providing the decision-makers with a set of technical and economic information for assessing the investment project viability and profitability.

Location

The Tourist's Complex is going to be situated in the region of Brasov, on the valley of Zizin (at 12 kilometers from Zizin town), in the countryside of Tarlungeni.

The location is considered to be advantageous due to the fact that:

it is surrounded by a wild and beautiful nature and

it is the only modern Tourist's Complex in the area.

There are necessary additional works for connecting the location to utility networks.

PROJECT DESCRIPTION

Concept

The proposed hotel will be designed and equipped meeting the requirements of international three star hotel's standards.

Building architecture will be modern, so that it will create a dynamic and personalized look.

The hotel is designed to respond to the needs of the holiday tourism; it offers luxurious and comfortable rooms, as well as quality services in a friendly atmosphere at an accessible price level for people with medium and over medium income.

The hotel will have 80 rooms, a reception area with special places for waiting, a restaurant, conference hall, and bar, nightclub, parking and others.

The artificial ski slope will be the most modern in Romania at the moment and will permit skiing from the beginning of October since the half of April. Even extra season, those who love skiing will have the possibility of skiing on a surface imitating snow.

The chalet is designed to be a nice place for spending pleasant moments at a cup of chat (but not only). It ensures accommodation for people with medium income.

The Tourist's Complex will benefit of different entertainment possibilities: a riding school, a skating rink, flights with paraglides, playing fields for lawn tennis and basket-ball, rides with snowmobiles.

The concept must ensure the developing of the project at a low cost. The design ensures an efficient utilization of the available space, as well as low operating costs resulting from the flexible and efficient structure of the stuff.

Project description

The project consists of the construction of a hotel building at the bottom of the ski slope and also of the construction of a chalet, of a skating rink, a riding school, a ski school, deposits for the equipment needed for different entertainment modalities.

The destination of the hotel building will be:

At the basement: appendages, technical rooms, store rooms;

At the ground floor: Lobby, Reception Desk, Caf-Bar, Nightclub , Restaurant, Conference hall (with a double access, from interior and from exterior too), Foyer, Billiard, other areas;

At the floors 1 to 3: accommodation area. The accommodation area contents different categories of spaces: 60 double rooms; 18 single rooms, 2 suites, service room, lobby.

The areas will have the next surfaces:

Lobby, Reception Desk, Commercial Spaces: 850 sq.;

Restaurant: 210.

Conference Hall: 150 sq.;

Administrative spaces: 200sq.;

Anexes: 100 sq.;

Other offices: 120 sq.;

Accommodation: 2500 sq..

Parking: 1000 sq.;

Technical rooms: 200 sq..

The percent of the covering of the land by these buildings is about 8.86%.

The destination of the chalet building will be:

At the ground floor: fast-food, Reception Desk, Kitchen room, appendages;

At the first floor: accommodation area. The accommodation area has 10 double rooms.

The areas will have the next surfaces:

Fast-food, Reception Desk, Kitchen, appendages: 850 sq.;

Accommodation: 180 sq.;

Hotel Resistance:

Reinforced concrete structure and supra-structure, leading to a seismic resistance of 9 on Richter scale.

Installations:

The buildings will be equipped with electrical installation connected to the urban network;

Water supply will be connected to local networks;

The heating will be done by its own system of central heating;

Integral air conditioning and ventilation;

Own electric generator for emergency, which will function with liquid combustible.

3. PROJECT REALIZATION

Project cost; Project dates

Overall project cost was set at 5,500,000 USD.

The evaluation is detailed in annex.

Note:

Project cost is orientative   at this stage; the occurrence of a higher or lower cost for certain chapters will not change the overall project more than 10%. The deviation will be established only further to acquiring the area, elaborating the construction details and obtaining all the approvals from authorities and appointed checkers.

We propose a time for the project execution of 14 months, including the preparation phase.

Operational costs

We consider an amount of 25,000 USD per month for the first 6 month(from the hotel construction) enough to cover all operational cost.

Estimated operational revenues

The presented figures depends on the following:

Professional skills of the project development team;

Evolution of market.

But we have to mention that this is the most pessimist level of incomes that could be obtained.

Service of debt

Total project cost - 5,500,000 USD

Loan reimbursement term - 10 years, including 2 years of grace.

Projected Cash-flow and Profit and Loss - first 12 operational years

From the cash flow and profit and loss projection for the first 12 years of activity results the profitability of the project and the capacity to reimburse the credit.

MARKET ANALYSIS

The project was initiated in respect with specific market conditions:

Comparing with the regional development in Central and Eastern Europe, Romania suffers an acute shortage of Tourist's Complexes, designed according to international standards. This is also the case of Romanian Resorts from the Carpathian Mountains.

Today tourists look for some modern accommodation facilities, with many opportunities of spending in a very pleasant manner free time.  

General consideration

On medium and short term this shortage is foreseen to be maintained, as a result of the integrated action of several objective factors:

The expansion of tourism in the mountain resorts;

The high level of needed investments in Tourist's Complexes, linked with difficulty in raising funds required for developing investments project;

Leading to a serious diminishing of the accommodation capacity, that has already been lacking.

4.2 Worldwide context

Recent world tourism studies have revealed that the tourism network will score a growth by 56% at the start of the 3^rd millennium. But this growth will not be equally distributed on regions. Western Europe will maintain its leading position. The European countries to gain most from the future tourist boom will be Turkey (+186.7%), Portugal (+47.8%), Ireland (+43%) and Spain (+40%).

It should be expected a rough competition in the followings years for attracting tourists, as it is well known that besides the revenues created in the hotel industry, tourism currently generates, on a world scale about 655 billion USD from taxes.

Although possessing an important tourism potential, Romania continues not to be among the priority destination of the international tour-operators. But this project intends to make a step in changing things, because it will be designed meeting the latest standards at international level and it has a great advantage: is located in an area not opened yet to the tourist's circuit, in the middle of a wild and magnificent nature. The project also benefit of an advantage that will turn it, in time, in a modern spa: it is at about couple hundred meters far from the source of Zizin mineral waters.

National context

The development of Romania's tourism infrastructure is one of the highest priorities of the Ministry of Tourism. Major emphasis is being placed on the introduction of more efficient management systems, better pricing strategies and advertising methods. In addition, investors may have good opportunities to participate in the upgrade of major infrastructure facilities that tourism depends on, including roads and railway rehabilitation, main airports, and telecommunication networks.

STATUS OF ROMANIA'S TOURISM INFRASTRUCTURE

Few countries can offer the variety of attractions for tourists as Romania. From beach holidays at the Black Sea Coast to viewing rare birds at the Danube Delta to snow skiing or soaking in curative mineral waters in mountainous Transylvania, Romania's physical features offer a multitude of attractions for tourists. Add on centuries of accumulated history, preserved medieval villages, unique rural culture, and beautiful palaces and monasteries, it is clear why the current government has put developing tourism as one of its main objectives.

The development of the industry will present both opportunities and challenges. Since the end of communism, Romania's infrastructure, transportation and hotel accommodation have yet to fully evolve to meet western standards. For investors looking for an early market entry, Romania can be considered an excellent option, as development levels are comparable to Poland or the Czech Republic ten years ago. Since tourism is in its infancy in Romania, investors will need to undertake the challenges of growing the market by improving both the domestic conditions and its international image as a tourist destination. Large hotel chains like the Marriott, Hilton, Ibis and Holiday Inn, have invested heavily in Romania, a sign that potential for a return on investment exists.
Most of Romania's tourism facilities are run down and operated by incompetent management. In the 1960s, Romania invested heavily in its tourism facilities, especially at the Black Sea, and was at that time successful in attracting international tourists mostly from Germany, Great Britain, Scandinavia, France, Italy, Austria and Belgium. During the eighties, quality of tourist accommodation was not maintained, with a resultant decline in the number of foreign tourists.

During the past ten years, Romania has experienced:

A 20% decline in the number of foreign tourists arriving, from 6.5 million to 5.2 million since 1990;

A 14% drop in total number of beds in hotels and accommodation facilities, from 328,000 in 1990 to 283,000 in 1999;

A drop in the accommodation occupancy rate from 57.8% to 34.5%;

A reduction in the length of stays in accommodation by 61% for Romanian tourists and 53% for foreign tourists.

The national and regional transportation infrastructure is inadequate and represents the main obstacle to the development of the tourism sector. Marketing needs to be upgraded, especially with American and European tour operators, and overall service quality needs to be competitive with other European resorts.

CURRENT CAPACITY AND QUALITY

Romania has 3,250 accommodation facilities containing 105,425 rooms that can hold 282,806 persons/places. Accommodation facilities include hotels, inns, tourist villas, tourist huts, tourist and agro-tourist pensions, camps, vacancy villages, bungalows, kindergarten and pupil camps, tourist camps, and passenger ships. Hotels contain the greatest amount of accommodation capacity with 161,528 places (57.1%), followed by kindergarten and pupil camps with 41,400 places (14.6%), camps with 25,774 places (9.1%) and tourist villas with 21,205 places (7.5%).

QUALITY RATING OF ACCOMODATION

According to quality ratings, the greatest number of rooms, 58.4% carry a two or three star rating, indicating the average quality level of the majority of the structures. One star and unclassified ratings comprise 39.1% of the rooms and are considered to be noncompetitive on an international level. The superior comfort offered by four and five star rooms comprise a very small percentage of the existing rooms, only 2.5%.

The state owns about a half of the accommodation structure or units, which contain 69.8% of the guest (person) capacity. On the other hand, the private sector has assumed complete ownership of only 35.3% of the units containing 19.1% of the guest capacity. Based on the density of hotels and guest capacity, the seaside area, excluding Constanta, contains the greatest concentration of accommodation units, 41.8%, and is able to host the largest number of persons, 46.6%. The seaside is open mostly in the summer months, and just a few hotels are not closed in extra-season.

The Black Sea is a favorite summer destination for Romanians, particularly as a weekend getaway. The area stretches for 245 km (153 miles) with the lower 72 km (45 miles) developed into a string of beach resorts and health spas catering to all ages and interests. The wide sandy beaches and gentle waters create perfect conditions for water sports like swimming, water skiing and scuba diving. The area contains a plethora of hotels and facilities as well as an abundance of undeveloped land to build new resorts.

Principal tourist destinations are located in the family resort city of Mamaia, the upscale areas of Neptun and Olimp, and the lively city of Costinesti which appeals to the 18-30 year old bracket, and less in some other resorts (like Eforie-Sud), because of the bad conditions of the hotels from these resorts . Internationally, the Black Sea Coast possesses potential to attract foreign tourists, however it has a limited reputation and investors will have to compete with other more well-known and developed tourist area along the Spanish, Greek and Turkish coasts.


Internationally, Romania has garnered a fine reputation for its curative health and spa resorts. The country hosts around 70 health resorts, some founded centuries ago by the ancient Romans. The mineral waters, mofettes (natural sources of carbon dioxide), and mud baths are known to treat rheumatism, dermatological diseases, kidney, respiratory and infertility problems, among others.

Romania boasts approximately 1700 springs and lakes of a therapeutical value, spread in 157 resorts and spas grouped by elevation as follows:

I. On the sea coast:
Agigea, Constanta, Costinesti, Eforie-Nord, Eforie-Sud, 2 Mai, Mamaia, Mangalia, Navodari, Neptun, Sf. Gheorghe, Sulina, Techirghiol, Vama Veche.

II. Up to an elevation of 100 m:
Lacul Sarat, Amara, Balta Alba, Valea Rosie, Caineni-Bai, Movila Miresei, Ivanda, Sarata Monteoru.

III. Elevation 100-200 m: Calacea-Bai, Boholt, Buzias, Tinca, Lipova, Baile Felix, 1 Mai, Dranceni, Baile Herculane, Maria, Bixad, Sarata-Deva, Raducaneni, Tauti-Magherusi.

IV. Elevation 200-300 m:
Strunga, Carbunari Calan-Bai, Baita, Bizusa-Bai, Beltiug, Vata de Jos, Ocna Mures, Mircurea Sibiului, Stoiceni, Calimanesti-Caciulata, Gura Ocnitei, Moneasa, Targu Ocna, Usturoi, Boboci, Craciunesti, Danesti, Tintea

V. Elevation. 300-400 m:
Baia, Ocnele Mari, Ocnita Dejeului, Someseni, Bazna, Cojocna, Sacelu, Vulcana, Geoagiu-Bai, Pucioasa, Turda, Sangeorgiu de Mures, Govora, Piatra Soimului, Persani, Slanic Prahova.

VI. Elevation 400-500 m:
Novaci, Ocna Sibiului, Poiana Campina, Telega, Vizantea, Sangeorz-Bai, Costiui, Oglinzi, Olanesti, Poiana Sarata, Venetia de Jos, Homorod Brasov, Rupea, Cohalm, Baltatesti, Rodbav, Moinesti, Biborteni, Ocna Sugatag.

VII. Elevation 500-600 m:
Sarata Odorhei, Siriu, Slatinita, Anies, Slanicul Moldovei, Sovata, Corund, Bodoc, Leghia, Malnas-Bai, Covasna, Seiche, Campulung Muscel, Praid, Sarata Campulung, Bughea de Sus, Brosteni, Luna.

VIII. Elevation 600-700 m: Zizin, Slanic Muscel, Meledie, Albesti, Tusnad, Valcele, Jigodin, Topluta, Borsa, Bradetu-Arges.

IX. Elevation 700-800 m:
Dambovita, Ozunca-Bai, Sugas, Breb, Iacobeni-Casin, Bran, Homorod-Odorhei, Sinaia, Turia, Timisul de Sus, Valea Vinului.

X. Elevation 800-900 m:
Vatra Dornei, Dorna Candreni, Busteni, Iacobeni, Borsec, Cheia, Cosna, Poiana Tapului, Poiana Negrii.

XI. Elevation 900-1000 m:
Sarul Dornei, Azuga, Lacul Rosu.

XII. Elevation over 1000 m:
Predeal, Bilbor, Harghita-Bai, Paltinis Stana de Vale.

The resorts are scattered across Romania from the Black Sea Coast to the Carpathian Mountains. Many facilities need improvements in accommodations to meet international standards.

OBJECTIVES FOR THE FUTURE

Government Tourism Infrastructure Promotion Plans

To accomplish the tourism reform, the Ministry of Tourism fosters the development of the transportation and communications sectors and of local infrastructure. It also promotes the technological progress, environmental protection activities, and the financial sector reorganization. The development and restructuring of these fields are prerequisites for the increased traffic of local and international tourists.

From the point of view of a potential foreign investor, Romania is offering important comparative advantages, such as:

it is the second largest market in Central Europe;

it is located at the cross-roads of commercial traditional routes- allowing an easy access to over 200 million consumers in a 1000 kilometers radius;

also, it is located at the junction of three prospective European transportation corridors;

it has an ideal location offering competitive prices for goods transiting between the Caspian Sea, the Black Sea and the Western Europe;

it has an extensive maritime and river navigation facilities - Constanta is the largest port on the Black Sea allowing through the Rhin-Main-Danube canal, an un-interrupted access from the Black Sea to the North Sea;

international airports in: Bucharest, Constanta, Timisoara, Arad, Suceava;

a national telecommunication network based on optic fibers and large capacity digital equipment, integrated in the European optic cables thoroughfares and via satellite;

well-developed networks of mobile telecommunications in GSM and NMT/LEMS systems;

a skilled and relatively low priced labor force, well trained particularly in technology, IT and engineering;

Local context

The Tourist's Complex will have to compete with others from the same category, located also in the County of Brasov, Romania. That is why is necessary to personalize its offer. In this context, we have to mention some important aspects:

the location of the hotel in Zizin Region is an advantage, because it will be the only modern Tourist's Complex of the region, so it could be easily personalized;

the main competitors are the resorts from Brasov, Predeal and Sinaia, so the Complex has to make the best possible policy "quality-price" and to establish some promotional prices. From this point of view we can mention that the Hotel will have the lowest renting prices for its category in the Brasov County(all others have renting prices between 60$ and 100$/night/room and the rest of the prices are also the most competitive in the region;

the Tourist's Complex will have a great diversity of complementary services in the benefit of the clients( Conference Hall, Caf-bar, Nightclub, Billiard, transport from Train station of Zizin and Brasov to Tarlungeni etc);

the ski slope will be the most modern artificial snow ski slope in Romania at the moment;

the entertainment possibilities are numerous: tourists can ski (12 months per year), skate, ride horses, ride snowmobiles, fly by  motor par-pants, learn skiing, play lawn tennis or basket-ball in the summer;

Zizin Region is known as a region not opened yet to the tourists' circuit , with no pollutant industry, and a wild, beautiful nature, so that those tourists who want a special holiday will appreciate a 3-stars hotel with very good services and the great entertainment possibilities;

Brasov County is a place where the local authorities intend to develop the tourism and encourage the private investments too.

Perspectives

The projection on medium term (5 - 10 years) reveals a higher interest from foreign and Romanian investors for the tourist's network of the Romanian Carpathians Mountains, expressed by both building new resorts and modernizing and operating existing ones.

For the next 3-5 years, we should expect significant changes regarding the mountain resorts and the hotels' category structure would change, as 3 and 4-stars hotels will represent the majority.

The perquisites for these assertions are linked with the following aspects:

The modern Tourist's Complexes with 3 and 4-stars hotels and numerous entertainment possibilities are mainly requested by foreign tourists and Romanians with higher living standards;

the projections on medium term show a growth of the economic environment, which will lead to an increase in the population's living standards and to changes in structure of the family budget, by allotting greater shares for tourism, leisure and entertainment;

we expect for the next years a higher interest from the foreign and Romanian tourists in spending free time on the Romanian Carpathians Mountains Resorts, because the report "quality of services -price" had become better.

Competitive strengths

A modern Tourist's Complex supply, the best in Brasov County(Zizin Region, Tarlungeni Countryside), with facilities and terms of comfort according to the latest standards in its field;

An excellent report "quality of services - price";

A specialized management team, with experience in internationally hotel chains;

Low operating costs;

A factor of economical development of the Zizin Region (a large number of unemployed people will get jobs; the road infrastructure, the telecommunication infrastructure and the sewerage of Tarlungeni will be developed);

The Project will probably become one of the modern spa in Romania, because is located near the mineral water source of Zizin;

Private ownership.