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Business plan of a guest house

Business Plan of Rose Gardens Guest House

Executive Summary

Introduction

The long term goal of Rose Gardens Guest House is to become the most popular choice in Bloemfontein for temporary lodging, by creating a differentiated experience and capitalizing on personal service.  We will differentiate the Guest House by creating an environment of pampered luxury at a very competitive tariff.  Expanding our exposure via the Internet will allow us to attract a wider network of customers.

 

The company

 

The Rose Gardens Bed and Breakfast will be a partnership, equally owned by Johan Rosevenor and Graig Marsh.  Mr. Rosevenor will reside on the property to manage and maintain the business.

 

Our Services

 

Rose Gardens will fulfil the needs of the many business travellers looking for an exclusive and relaxing guest house.  Each room has been fitted with a coffee bar, air conditioning, Wi-Fi and DSTV.
Creating a cosy, visually attractive environment, Rose Gardens Guest House will attract many returning customers.

 

The Market

 

Our two major customer segments are business travellers and tourists going to or coming from Cape Town, looking for overnight accommodation.

A modest projection for increased unit rental is 30% per year.  Competitors in the Bloemfontein area have averaged 30% + rental increases over the past three years, and the Bloemfontein Hotel is forecasting 50% increases for the next two years before hitting full capacity.  This projection is without any significant increase in advertising or exposure, but is based on the general average increase in tourism.

 

Financial Considerations

 

We estimate average monthly fixed costs to be at R18 000.  Peak and off-season will have a significant impact on the monthly earnings, and for the first year, peak season revenues will offset off-season losses.  As Rose Gardens Guest House gains market share in the Bloemfontein hospitality sector, we anticipate that off-season revenues will be enough to break even during that season.

 

Objectives

 

  • To increase exposure and market share by registering on Internet Websites that promote tourism, such as Wheretostay.co.za
  • Through direct advertising and incentives, we hope to increase off-season occupancy by 30% in the first year.
  • Increase off-season use by divesting into other service offerings such as conferencing, weddings and other events.

 

Mission

 

The mission of Rose Gardens is to become the best value for money Guest House in Bloemfontein by offering extended services at affordable prices.    We plan to create an environment that oozes luxury, style and a pampered feel.  The Rose Gardens guest will have every need met to ensure his/her comfort.  Special occasions, catered meals, chilled wines and other add-on’s, will be available at an additional fee.

 

Amenities that go beyond the typical guest house will include:

 

  • A coffee bar in the room, containing ground coffee, a variety of teas, biscuits and rusks.
  • Wi-Fi in all the rooms
  • Daily fresh-baked muffins and fresh fruit
  • Rose Gardens will offer a shuttle service to nearby attractions.

 

Keys to Success

 

In order to succeed, Rose Gardens will strive to achieve the following goals:

  • Position Rose Gardens guest house as the number one choice for weary business travellers.
  • Position Rose Gardens guest house as the first choice for overnight tourists.
  • To attain a profitable share of the hospitality market in Bloemfontein
  • To maintain sound financial management of the venture.

 

Company Ownership

 

The Rose Gardens guest house will be a partnership, equally owned by Johan Rosevenor and Graig Marsh.  As of this writing, the decision to incorporate has not yet been made, but will be considered after the owners relocate to Bloemfontein and establish local legal representation.  Mr. Rosevenor will reside on the property, managing and maintaining the business.  Mr. Marsh will remain in Johannesburg to fulfil his employment contract. 

As the guest house becomes self-supporting, Mr. Marsh will resign, and transfer his retirement money to the capital reserve.  He will relocate to Bloemfontein to assist with the management of the guest house.

 

Services

 

The Rose Gardens guest house offers affordable over-night facilities to business travellers and tourists.  We also offer conferencing and other events facilities.

 

Market Analysis Summary

 

Rose Gardens guest house will focus on quality, luxurious, and individualized accommodation for travellers.  Our most important groups of potential customers are those who traditionally choose the individualistic atmosphere of guest houses to the more traditional and sterile surroundings of hotels.  Creating a “home away from home”,  will ensure many return customers.

The outdoors, with its access to the garden, a beautiful rose clad front yard, and a private deck, is the perfect location for a summer garden wedding or party.  With the capability to cater for over 100 guests, Rose Gardens will make the event smooth and easy for the event coordinator.    We will also offer discounted packages for group bookings, making it convenient for party guests looking for accommodation.

 

Market Segmentation

 

A modest projection for increased unit rental is 30% per year.  Competitors in the area have averaged 30% + rental increases over the past three years, and the Bloemfontein Hotel is forecasting 50% increases for the next two years before hitting full capacity.  This projection is without any significant increase in advertising or exposure, but is based on the general average increase in tourism.

 

Market Analysis

 

Our two major customer segments are business travellers looking for accommodation in Bloemfontein, and tourists driving on the N1, looking for over-night accommodation.

 

Target Market Segment Strategy

 

We plan to be registered at every major destination-website in South Africa.  We’re also launching a direct marketing campaign which will include specials directed at returning business patrons.

As we are located on the main road coming into Bloemfontein from the N1, our location will also play a key role in the marketing strategy that is directed at tourists, passing by.

We will direct our marketing efforts for conferencing and other events, at the locals in Bloemfontein.

 

Competition and Buying Patterns

 

Currently there are two other Guest Houses in town that is accessible from the N1:

 

The Fat Duck guest house

 

Strengths: Has an award winning restaurant. Well-established guest house in town.   Sells produce in local grocery stores.
Weaknesses: Does not focus on one specific market, it specializes in too many different avenues to compete effectively in the hospitality industry.

 

Life is Beautiful guest house

 

Strengths: Has a day spa with a selection of beauty treatments.
Weaknesses: They are very expensive and cater mainly for women who makes it a destination, rather than an over-night option.

 

Neither one of these guest houses targets over-night travellers, looking for luxury and business essentials at an affordable price.

 

Strategy and Implementation Summary

 

With the right exposure, we believe that we can gain a significant amount of market share in the Bloemfontein hospitality sector.  Membership in WheretoStay.com (South Africa’s leading destination website for guest houses, lodges and hotels) will put us in front of thousands of computer screens on a daily basis.  The WheretoStay partner network allows real-time reservations on today’s most popular websites, including Yahoo! and Bing.  In addition, WheretoStay has developed exclusive relationships with other destination websites.

 

All of this visibility is fairly cheap with only a  once-off fee of R500.  It is much less expensive, yet more comprehensive that traditional marketing.  It is also extremely effective, since we target our marketing efforts on customers who are looking for accommodation, rather than traditional advertising, where the target is usually uninterested.

 

Competitive Edge

 

We start with a critical competitive edge:  there is no competitor we know of, that can offer the same convenience and luxury at such an affordable price, than at the Rose Gardens.  We have travelled extensively ourselves, and have come to know how to create the climate that others seek when looking for available guest houses.

 

Sales Strategy

 

Rose Gardens will sell its rooms directly to repeat customers, as well as on the destination website WheretoStay.co.za.  All reservations will be handled by Mr. Rosevenor.  Repeat customers will have the privilege of priority reservations during the high season.

 

Sales Forecast

 

Our sales forecast is based on the historical industry trend of Bloemfontein and the following rates an occupancy assumptions:

Please insert a realistic sales forecast here.

 

Management Summary

 

The Rose Gardens will operate as an owner occupied business.  Mr. Rosevenor’s salary for the first year of operation will be R12,000.00.  This salary, though low, is reasonable, considering that major living expenses (bonds, utilities, water & electricity, etc.) will be covered by the business.

 

Personnel Plan

 

As mentioned above, Mr. Rosevenor will reside on the property while performing necessary day-to-day management tasks.  The co-owner, Mr. Marsh, is currently employed in Johannesburg, but will retire in September 2011 and will relocate to Bloemfontein.  Since he will reside off the property, his total planned compensation is higher than that of Mr. Rosevenor’s.

 

The Financial Plan

Please refer to our Financial Plan page for more information on what the Financial Plan entails.

Break-even Analysis

Please refer to our Financial Plan page for a formula to calculate the Break-even point.

 

Projected Cash Flow

Click here to download a Cash Flow template.

Projected Income Statement (Profit and Loss)

Click here to download an Income Statement template.

Projected Balance Sheet

Click here to download a Balance Sheet template.

 

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