1.0 Executive Summary
The purpose of this business plan is to secure $20 million of capital for the development of a boutique hotel based in Savannah, Georgia. The Whitaker LLC (“the Company”) was founded by Matthew Deutsch with the intention of providing an outstanding hospitality experience in a luxurious yet smaller scale hotel facility. Full scale operations are expected to commence two years from now once the capital has been secured in the buildout has been completed.
Operations
The primary driver of the company’s revenue will come from the ongoing rental of luxurious hotel rooms on a nightly basis. The pricing point will typically range from $500 to $700 per night depending on the season. Each room will feature a number of amenities that will set the business apart from other hospitality businesses in the Savannah area.
To complement the hospitality operations of the business, The Whitaker will have a full onsite restaurant as well as a bar. There will also be a segment of the facility for specific types of wellness services that will be rendered by independent contractors. The location will also feature a pool, spa, and a moderate size fitness center.
The third section of this document will further discuss the operation of the business.
The Financing
At this time, the Company is seeking an aggregate of $20 million a capital. Of this funding $5 million will come from private investors while a $15 million loan will be sought for the build out of the location.
Given the highly predictable streams of revenue produced on a nightly basis, the Company could easily secure a working capital line of credit based on the substantial equity of the business, and the fact that the business will hold a significant number of tangible assets. However, it is unlikely that additional funding will be required during the first five years of operation.
The Future
The Company will make ongoing reinvestments into the scope of its marketing campaigns so that the location is known as the preeminent boutique hotel within the Savannah market. This will include aggressive use of social media as well as using multiple online booking platforms to ensure that occupancy rates remain near 80% throughout the course of the year. Moving forward, the company may also integrate event hosting operations given the luxury nature of the on-site restaurant.
Market Overview
The population of Savannah is approximately 180,000 residents. The median household income is $70,000. It is a major southeastern tourist location that is popular nationally. Each year, approximately 17 million people travel through Savannah. This will substantially reduce the operational risks of the business.
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The aggregate of $20 million will be allocated as follows:
2.2 Management and Investor Equity
This will be further discussed during negotiation.
2.3 Exit Strategies
Boutique hotels typically carry a significant price to earnings multiple given that they produce high margins on a predictable basis. Furthermore, The Whitaker will have a higher valuation given the fact that the location will feature a premium American style restaurant, which will also produce immense profits for the business. In the event of a business sale, the company will work with a qualified real estate focused mergers and acquisitions investment bank to find a suitable buyer. Most likely, an existing hotel system will acquire The Whitaker to include within their portfolio of higher end hospitality properties.
3.0 Operations
As noted in the executive summary, The Whitaker will be a premium boutique hotel that will be a sought-after hospitality destination among people traveling through Savannah and its surrounding areas. Each aspect of the location is being designed with luxury in mind. This will allow the business to command a $500 to $700 per night rate. During extremely busy seasons, the business may be able to charge as much as $1,000 per night for suites.
The location will feature 50 rooms. Of these rooms, 40 of them will feature king beds or double beds while 10 of them will operate in a suite capacity. Each room will feature a full bathroom with both a shower and bath bathtub, a mini bar, premium sheets, free access to Wi- Fi, and a large flatscreen TV. All rooms will face we have large windows in order to enjoy the natural beauty of Savannah.
The onsite restaurant will be a major driver of revenue for the business. This restaurant will primarily serve premium American fare. It is fully expected that many residents of Savannah will come to the restaurant given the unique ambience and outstanding cuisine. The restaurant will also serve room service to the Company’s guests.
To complement these operations, a full bar will be included in the restaurant area. The Whitaker will maintain a full alcohol alcoholic beverage serving license so that beer, wine, and cocktails can be served. The business will generate substantial gross profits from each sale ranging from 75% to 85% depending on the beverage.
The Company will also generate significant revenue from the onsite wellness services. The Company will contract with massage therapists, hairstylist, nail technicians, and yoga instructors to provide these wellness services. Is a further provide a luxury experience for patrons while also creating a major differentiating factor. It should be noted that the general public will be also able to use the services
Among fitness focused patrons, the location will feature a full fitness center as well as a heated pool and spa.
4.0 Overview of the Organization
4.1 Registered Name
The Whitaker LLC. The business is registered as a limited liability company in the State of Georgia.
4.2 Commencement of Operations
Revenue generating operations will commence in two years.
4.3 Mission Statement
To provide an exceptional hospitality experience for people traveling through Savannah.
4.4 Vision Statement
To become the preeminent boutique restaurant that is nationally recognized for the quality of its service.
4.5 Organizational Objectives
• Properly complete the build out of the boutique hotel once the capital has been secured.
• Implement a wide-ranging marketing campaign that will brand The Whitaker as a premium hospitality business.
• Properly onboard staff that have a deep understanding of how to provide a luxury experience to hotel guests.
• Leverage multiple forms of online advertising in order to ensure that The Whitaker maintains an exceptionally high occupancy rate.
• Maintaining ongoing relationships with corporations in the Savannah market area in order to ensure that their out-of-town clients and employees will use the facilities when traveling through the area.
• Continue expand the scope of the restaurant’s marketing operations is this will further provide revenue and contribute to the overall economic stability of the business.
• Established ongoing relationships with personal concierge services that will have their clients booked at the facility when traveling in Georgia.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of the business plan will document the current economic climate, the hospitality industry, the customer profile, and the ongoing competition that the business will face as it establishes its operations in Savannah.
At this time, economic outlook within the United States is moderate. As a result of changing fiscal policies as well as changing trade policies – there has been a certain degree of volatility introduced to the market. This has caused a higher than anticipated degree of inflation. However, the Federal Reserve as well as major central banks are taking appropriate measures to ensure that inflation is kept tame while also fostering ongoing economic growth.
It should be noted that the revenue of The Whitaker will be less impacted by challenging business climate given the fact that the Company is specifically targeting in upper middle income to upper income earning clientele. These individuals have a greater degree of economic staying power, and they will be able to afford the nightly fees even during times of economic recession.
5.2 Industry Analysis
There are 50,000 companies that own and operate one or more hospitality locations within the United States. Each year of these businesses generate $290 billion revenue while employing two million people. This is a mature industry and its future growth will be similar to the economy as a whole.
One of the common trends within this industry is to integrate the latest in application technology so that guest can book their stays through an e-commerce suite. The Whitaker will capitalize on this not only through its proprietary website, but also through an application that will be developed within the second year of operation. This will be important for fostering repeat patronage to the location in Savannah.
5.3 Customer Profile
The following demographic profile will be used during the course of marketing operations:
• Household income of $75,000+
• Will spend $600 per night at the location
• Lives within 100 miles of The Whitaker location (among regional residents)
• Will spend four nights at the location (on average)
5.4 Competitive Analysis
This business plan has been written for sample purposes only. If it was an actual engagement to develop a boutique hotel business plan then a full analysis of the competition within the local and regional market would have been completed. This would have included an overview of the reviews of competing hospitality facilities, their onsite, amenities, and other attributes. Furthermore, a discussion of regarding how this boutique hotel would maintain a differentiating factor would’ve been thoroughly discussed as well.
6.0 Key Strategic Issues
6.1 Sustainable Operations
The Whitaker will have sustainable operations as a result of the following:
• The unique ambience of The Whitaker will set the business apart as compared to other boutique hotels in the market.
• The onsite restaurant and bar will produce a substantial revenue that will contribute to the overall stability of the business.
• A highly experienced hotelier, Matthew Deutsch, will be able to properly bring the operations of The Whitaker to profitability while concurrently positioning it as a premium hospitality location.
• Immense demand among wealthy travelers for boutique hotels within the Southeastern Georgia market area.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued to expansion the Company’s marketing campaigns to brand The Whitaker as an exceptional hotel within the target market.
• Expansion of marketing operations as it relates to restaurant and bar operations as these facilities can be used by local residence.
• Integration of event hosting operations for personal and corporate gatherings.
• Potential development of additional boutique hotel locations in major market areas of the southeastern United States.
7.0 Marketing Plan
7.1 Marketing Objectives
• Implement a wide-ranging marketing campaign that will properly position The Whitaker brand.
• Using an extensive amount of online marketing in order to create a premium brand name for the business which we sought after by wealthy travelers.
• Engage in public relations, so that numerous articles regarding the quality of the hospitality facility are featured in prominent publications.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• First year revenue will reach $10 million.
• Gross profits will reach $8.79 million.
Year 2
• Revenue will reach $10.5 million.
• Gross profits will reach $9.23 million.
• Total income will increase by 5%.
Years 3-5
• By the fifth year of operation, total revenue will reach $12.1 million.
• Gross profits will reach $10.6 million.
7.4 Marketing Strategies
The Company will use a number of marketing strategies that will create a significant amount of branding awareness for The Whitaker while positioning the brand as a preeminent boutique hotel within Savannah. To that end, the Company intends to work with a qualified marketing and advertising firm that will assist the business with developing marketing messages that will further these objectives. Although this may translate into a slightly higher cost of the onset of operations, the retained advertising and marking firm’s ability to quickly place advertisements will also engaging in public relations will be of immense importance to the business. The Company will retain this firm during the development in order to ensure that a significant amount of press is completed prior to the launcher operations.
The boutique hotel will also maintain an expensive online presence with a fully interactive website that showcases all rooms, the onsite amenities, and e-commerce functionality that will allow for bookings to occur directly to the website. This platform will be developed during the development and tested thoroughly to ensure that it is fully operational on the day of launch.
In furtherance of creating a well-regarded brand name, the business will maintain a presence on all social media pages. Of special importance will be Instagram, as the Company will upload a number of images and videos that showcase the premium nature of the boutique hotel’s operations. All social media posts will have links directly back to the Company’s website, which will ultimately contribute to the effectiveness of its search engine, optimization campaigns through social signaling.
Through public relations, the Company intends to work closely with publications that discussed and review hospitality facilities. The Company will coordinate these with efforts with its retained marketing firm to ensure that premium placed articles are included in major travel publications.
To further ensure substantial occupancy, the Company will also list all available rooms on all major travel portals. This will ensure that if vacancies are kept to a minimum.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The company will secure $15 million, via a long-term mortgage, for the development of the facility.
• Management and investors will contribute $5 million towards the venture.
• Revenues will increase at a compounded annual growth rate of 5.1%.
9.2 Financial Highlights
• Multiple streams of high margin revenue.
• A significant portion of the capital is being used to acquire real estate.
• The property in Savannah will appreciate substantially during the time it is held for boutique hotel operations.
9.3 Sensitivity Analysis
The Company’s revenues are only somewhat sensitive to challenging economic climates. As has been one of the themes throughout this document, this boutique hotel is specifically targeting upper-middle income to upper income earning people with a far greater degree of economic staying power. Furthermore, the multiple revenue streams produced by The Whitaker in a boutique hotel capacity will ensure the economics the ability of the business. The restaurant and bar will be able to use by the general public of Savannah, which will further ensure economic liability.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Savannah is a highly traffic tourist area that receives numerous visitors on a yearly basis.
• The revenues of the Company are highly predictable in nature.
• The Company will implement a wide-ranging marketing campaign that will position this boutique hotel as a premium hospitality facility.
• Limited competition within Savannah among hospitality businesses that operate a boutique capacity.
Weaknesses
• Operational complexities given the number of divisions within the business.
• Moderately high cost related to payroll.
Opportunities
• Continued to expansion the Company’s public relations campaigns so that the business becomes a well-regarded boutique hotel in Savannah.
• Development and expansion of event operations that can occur within the companies, premium restaurant.
• Yearly increases in the pricing in order to keep pace with inflation.
Threats
• A severe economic recession could impact the operations of the business.
• Inflation could cause the underlying operating cost of the business to increase.
Appendix B – Critical Risks
Development Risk – Low
Matthew Deutsch has already sourced the potential parcel of land that will be used to build out the boutique hotel business. At this time, the primary matter that needs to be addressed is securing the $20 million a capital to commence construction operations.
Financing Risk – Low/Moderate
The vast majority of the funding salt in this document will be specifically used to develop the 50-room boat hotel in Savannah. As a capital will be used for real estate as well as FF&E purchases. This substantially reduces the risk related to this financing.
Marketing Risk – Low
As noted in the seventh section of this document, the Company will use a number of marketing strategies that will create significant brand name awareness while positioning The Whitaker as a preeminent boutique hotel in Georgia. The business will use multiple marketing strategies to accomplish these goals.
Management Risk – Low
Matthew Deutsch is a highly experienced hotelier who will be able to effectively launch the operation of his business. He is dedicated to providing a premium hospitality experience to all hotel guests.
Valuation Risk – Low
The valuation risk is offset by:
• Substantial assets as nearly all capital will be invested in real estate.
• Multiple high-margin revenue streams.
• The market size of Savannah and its surrounding areas will support The Whitaker in all economic climates.
Exit Risk – Low
As noted earlier, there are no long terms to sell this business. If it is financially reasonable to do so, a qualified real estate or hospitality focused investment bank will be hired to market The Whitaker to a potential buyer. The buyer will most likely an existing hospitality group seeking to enter the Georgia market with a boutique hotel.