Your own business: opening your own guest house
* The calculations use average data for Russia
1. PROJECT SUMMARY
The project involves the construction and operation of a guest house on its own land plot located on the Azov coast of the Krasnodar Territory. The facility is located in close proximity to the city of Yeisk.
Required investments – 13.8 million rubles. The project is characterized by a high level of costs and a significant payback period, but the risks are minimal, and the market is quite stable.
The main competitive advantage of the project is the high level of quality of services, including the availability of a wide range of additional services. The advantage of a guest house over a hotel lies in much simpler procedures for registering a business and registering with supervisory authorities. In addition, the project does not require highly qualified personnel, a complex organizational structure or business process structure.
Key indicators of the project's economic efficiency are given in Table. 4.
2. DESCRIPTION OF THE INDUSTRY AND COMPANY
The goal of the project is the construction of a guest house in the resort area (Azov coast of the Krasnodar Territory, Yeisk district). The advantage of a guest house over a hotel is a much simpler operating scheme: there is no need to convert the land plot to the commercial category, there is no need for a star rating, there is no need to organize a restaurant, etc. The guest house's room capacity can reach 20-30 rooms, which is fully consistent with the goals of the project. The main target group is vacationers during the holiday season, from the beginning of May to the end of September.
In recent years, interest in domestic tourism in Russia has been growing, which is associated with a number of economic and political factors: the annexation of Crimea, the popularization of domestic tourist destinations at the state level, a decrease in the solvency of the population, armed conflicts in the Middle East, etc.
According to the World Tourism Organization, in 2014, Russia was visited by about 28 million tourists from abroad, which places it in 9th place in the world in terms of tourist attractiveness.
According to Rosstat, from 1995 to 2011 the influx of foreign tourists to Russia increased by 27%. On the other hand, in the same period, Russians also mastered many foreign tourist destinations - primarily beach ones: Turkey, Egypt, Thailand, Greece, Bulgaria. In 2010, the number of domestic tourists was 32 million. Unfortunately, similar data for recent years are not presented in open sources of Rosstat or the Federal Agency for Tourism. However, it should be assumed that in 2015 domestic tourism destinations were in even greater demand than in previous years; and in 2016, we can expect unprecedented growth in the industry.
The main obstacle to the growing popularity of domestic destinations is the undeveloped infrastructure: relatively low quality of rooms, service, lack of a wide range of services; all this against the backdrop of a fairly high price level.
The coast of the Sea of Azov today represents a slightly more economical holiday option compared to the Black Sea coast of the Krasnodar Territory or Crimea. In particular, Yeisk Spit is visited by vacationers even from remote regions, such as the Novosibirsk region, Yamal Autonomous Okrug, etc. However, the main share of visitors are guests directly from the Krasnodar Territory and Rostov Region, who come to relax on the weekend. Territorial and price accessibility allow us to achieve a higher level of occupancy of the guest house compared to a hotel on the Black Sea coast.
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Competition in the region under consideration is much lower than on the Black Sea coast, and the same applies to the level of service. Consequently, the company that offers the most complete range of services and their high quality will be popular. This is planned to be used as the main competitive advantage of the project.
The guest house itself is a 3-story building with a basement and an adjacent area with parking and a recreation area for guests. On the ground floor there is a reception area, a kitchen, as well as living quarters for the owners and staff; in the basement there is a laundry room, a boiler room and other technical and auxiliary rooms. The room capacity consists of 10 rooms with a total capacity of 30 people (6 double and 6 triple rooms). The distance of the guest house in a straight line from the coastline is 800 m, from the public beach – 1200 m; The guest house is within easy reach of public transport for the convenience of guests without a car. It is assumed that you can cook your own food in the equipped kitchen, as well as on the grill located in the adjacent territory.
The management structure of the guest house is also simple. Management is carried out by the owner of the project, being constantly at the guest house. Auxiliary functions for cleaning the house and territory, doing laundry, etc. performed by seasonal hired workers from among local residents. Highly qualified personnel are not required.
The total area of the guest house is 600 sq.m. Investment costs for construction and finishing of the building are calculated based on average market prices of construction companies - 18,000 rubles. / sq.m. and amount to 10.8 million rubles. Equipment of the building and territory - about 3.0 million rubles. Total – 13.8 million rubles, which are supposed to be taken on credit for a period of 18 months.
All rooms are equipped with split systems, TVs and bathrooms with showers. Creating additional seats in each room is possible through the use of chair beds.
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As a form of ownership, it is advisable to choose an individual entrepreneur with a simplified taxation system (the object of taxation is income). The owner performs the main management and commercial functions.
3. DESCRIPTION OF SERVICES
The guest house provides, first of all, accommodation services for guests, usually short-term - on average up to 10 days. To ensure competitiveness, it is planned to provide a number of related services, most of them free of charge. The full list of services is presented in Table. 1.
The price segment of the project is average; At the same time, the quality of services and the condition of the room stock are above average. This will attract more guests and ensure their loyalty for repeat visits and recommendations.
Table 1. List of services
Licensing of services is not required, confirmation of hotel category is not required. It is necessary to obtain permits from the fire service and the Consumer Supervision Authority.
4. SALES AND MARKETING
According to Rosstat, the hotel services market in 2014 decreased compared to 2013, which is associated with a decrease in the solvency of the population and savings in money. There is a decrease in expenses for both tourist and business trips. However, the 2015 results, obtained by extrapolating data from the first three quarters, remain at the 2014 level. At the same time, profit and profitability indicators are growing, reaching record levels.
Figure 1. Dynamics of the main financial indicators of the hotel services market in Russia in 2011-2015, thousand rubles/%
It should be expected that the main decline in the market will occur due to business travel, and the tourist segment will grow in all respects. This is caused, as mentioned above, by the popularization of domestic resorts, infrastructure development and blocking of popular tourist destinations.
The popularity of the Yeisk Spit as a tourist area is due to the mild climate, tourist infrastructure in the immediate vicinity (Yaysk) - a water park, dolphinarium, oceanarium, cafes, restaurants, parks, etc. In addition, this microregion is popular in terms of outdoor activities, primarily windsurfing. In addition, 40 km from Yeisk there is Khanskoe Lake, famous for its healing mud and iodine-bromine and hydrogen sulfide mineral water springs. Thus, we can only talk about the prospects for the growing popularity of Yeisk and the Yeisk Spit as a resort.
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In a broad sense, any hospitality enterprises located in a given microregion can be considered as competitors: boarding houses, hotels, mini-hotels and guest houses. Their total number is about 100 units. However, given the different level of services provided and positioning, only guest houses – about 30 units – should still be considered direct competitors. The main disadvantages of existing guest houses include small capacity - these are mainly private households converted into a guest house; monotonous number of rooms - several identical, rather large rooms; amenities not in the room - shared toilet and shower for several rooms; lack or low quality of additional services - lack of cook services, laundry, linen change every 7-10 days, etc. Accordingly, the implementation of all stated in Table. 1 services will give an undeniable competitive advantage to this project.
Sales of guest house services are carried out through travel agencies, the average remuneration of which is 10% of the cost, as well as through Internet sites booking.com, eisk-leto.ru, etc.; Part of the sales volume will come from intermediaries working directly at the city’s railway and bus stations. The share of sales through agencies and intermediaries in the first two years of the project can reach 80%, then it will decrease significantly, to 30-40% by the fifth year of the project. In addition, it is necessary to create your own website with a complete description of the house, rooms and services. The sales volume of a website with good indexing in search engines can reach 30-40%. The share of repeat visits with good quality of service, ensuring high guest loyalty, should account for at least 25-30%.
Interaction with agencies and intermediaries is carried out directly by the owner of the guest house, without the involvement of third-party specialists.
5. PRODUCTION PLAN
Geographically, the facility is located in close proximity to the city of Yeysk, in direct access to public transport. The distance of the guest house in a straight line from the coastline is 800 m, from the public beach - 1200 m. Yeysk is a resort town on the Azov coast of the Krasnodar Territory, a seaport. The population of the city is 85.7 thousand people; is located at the base of the Yeisk Spit, washed by the waters of the Taganrog Bay and the Yeisk Estuary. The climate is temperate continental, characterized by relatively low precipitation and the absence of frequent temperature changes. The holiday season lasts from the beginning of May to the end of September. The transport infrastructure is represented by a railway and bus station. A regional highway connects Yeysk with the capital of the region, Krasnodar, and the capital of the federal district, Rostov-on-Don.
The required costs for the construction and equipment of the building are 13.8 million rubles. The area of the building is calculated based on the average standards of the hotel industry - 12 sq.m. per guest. total area of the building, which is the average for the mini-hotel segment, i.e. class, higher than guest houses. This will also provide additional competitiveness to the project.
For the construction of the guest house building, it is planned to attract a local construction company selected based on a competition. The selection criterion is not only the final cost of construction, but also the use of modern technologies, as well as the quality of projects previously completed by the company. The planned period of construction and finishing of the building is 10-11 months.
The costs of equipping the premises of the guest house are shown in Table 2. In addition to the costs indicated in the table, there are also costs for equipping the local area, a fire alarm system, etc.
Table 2. Costs for equipment of a guest house
The main part of the work to ensure the functioning of the guest house is carried out directly by the owner and his family. To perform auxiliary work during the high season (June-August), hired workers are hired (Table 3); It is advisable to outsource accounting, as well as security functions.
Table 3. Staffing and wage fund
The main item of current costs is utility bills, which can be divided into a fixed and variable part. The fixed part (fixed costs) includes the minimum payment out of season. The variable part changes depending on the number of guests per season. In addition to the seasonality factor, it is also necessary to take into account the occupancy of the hotel due to its popularity; in the first year, maximum occupancy is unlikely to rise above 50% during the high season. However, in the future, occupancy is expected to reach 90%.
The sales plan, taking into account seasonality, is presented in Appendix 1.
6. ORGANIZATIONAL PLAN
The project owner carries out all management, commercial and marketing functions: planning, market research, interaction with intermediaries and booking systems. This avoids the cost of paying a manager. In addition, on the scale of a guest house, these functions do not require high qualifications and special knowledge. Accounting is outsourced. There is no organizational structure as such for the project - hired and outsourced workers are directly subordinate to the project owner.
7. FINANCIAL PLAN
The costs of the preparatory period include investment costs for the construction and finishing of the building, as well as for the development of the project site - 13.8 million rubles. The costs of the main period include: payment for housing and communal services, wages of hired and outsourcing workers, commissions from travel agencies, booking systems and intermediaries, as well as costs for the provision of additional services, the amount of which is extremely small and difficult to predict.
The financial indicators of the project - revenue, cash flow, net profit - are given in Appendix 1.
8. ASSESSMENT OF PROJECT EFFECTIVENESS
The project is characterized by a high level of costs, both financial and time. The advantage is a low level of risks and high profitability upon reaching planned targets.
The payback period of the project is 28 months, the discounted payback period is 34 months. Taking into account the need to service the loan, the project begins to make a profit from the second year of implementation. Project performance indicators are given in Table. 4. The indicators are calculated for a three-year period, however, taking into account the long payback period and the unlimited period of project implementation, already in a five-year perspective they will be significantly higher, up to 1.5 million rubles. net profit per year.
Table 4. Project performance indicators
9. RISKS AND GUARANTEES
The project is in the service sector in a well-developed industry. The industry has been mastered both in terms of technology for providing services and in geographical terms - the region is already quite developed as a resort area. The risks associated with the implementation of the project are minimal. Risk reduction is also influenced by the positioning of the project in the middle segment with high quality of services - if there is a need to increase the profitability of the project, you can increase the cost of services by 20% without noticeable negative consequences for the elasticity of demand. In general, we can say that as the cost increases, demand remains positively inelastic, and acquires significant elasticity as the cost decreases.
The main risks are reflected in Table. 5.
Table 5. Assessment of project risks and measures to prevent their occurrence or their consequences
Considering that investments are made not in technology, but in a liquid tangible asset, bankruptcy of the enterprise, even in the worst scenario for the development of the project, is not possible. The cost of an already constructed and equipped guest house building can significantly exceed the costs of its construction and equipment.
Denis Miroshnichenko
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10.APPLICATIONS
ANNEX 1
Production plan and main financial indicators of the project in a three-year perspective