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Hospitality Facilities Planning And Development

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					                       Hospitality Facilities Planning And Development

Executive summary

       This feasibility study deals with planning and development of hospitality facility,

namely a hotel serving as an eco-tourist retreat in Halls Gap.

       We are targeting customers who are willing to spend their vacation in wonderful

natural environment and have a good rest, whether it be active outdoor activities or just

meditating and communicating with nature. Target customers are both tourists from other

countries and inhabitants of Australia who are on vacation. Target group includes families,

couples, groups of young people, and senior citizens.

       The expected financial outcomes for the years 2001 – 2005 are expected to rise with a

fall in 2002 and 2004, which is going to be restored to the original level and in prospective

then multiplied.



Development

       The configuration of the facilities built is going to be the following: hotel rooms,

indoor facilities and outdoor facilities.

       Hotel rooms are distributed in the following way:

       -   Doubles - 18;

       -   Deluxe - 9;

       -    Suites - 10.

       -   Executive suites - 5.

       -   Family rooms – 10.

       TOTAL: 51 rooms.
       The other non-room facilities in the hotel are going to include a pool, a heated pool, a

public spa, a restaurant, a BBQ spot, direct dial phones, a golf course, in room videos and a

tennis court.

       The hospitality facilities are going to be built in the region of Halls Gap. It is

approximately 260 kilometres north-west of Melbourne and 165 kilometres west of Ballarat.

The region is set in the second largest National Park in Victoria, The Grampians. The town

has developed significantly since the Grampians was declared a National Park in 1984 and

now Halls Gap hosts the majority of visitors to the park (4, p. 28).

       Grampians National Park is the third largest in Victoria. Its breathtaking scenery,

colourful displays of wildflowers and wide range of opportunities for outdoor recreation have

also made it one of the State’s most attractive holiday destinations. The park is home to

almost a third of Victoria’s plant species, and a large percentage of its animals – therefore,

natural environment is well developed.

       The park offers some of the best sightseeing opportunities in the State, with a strong

network of roads and a comfortable central base in the fully serviced township of Halls Gap.

There are excellent short walks available, some easy and others more demanding. Away from

Halls Gap, in natural bush settings, many camp grounds have been developed. There are also

challenging day and overnight walks for those who like it.

       The facilities of the park are main camping areas, including Halls Gap, Stapylton,

Smiths Mill, Plantation, Borough Huts, and Jimmy Creek.

       Possible activities are camping, hiking, picnicking, sightseeing, driving, cycling, and

rock climbing. Besides, swimming, angling, and boating on Lake Wartook are offered.

Nature study is another attraction for those interested with superb wildflowers, many birds,

and kangaroos and koalas easily seen from many popular areas.
       Many of the walking tracks start in Halls Gap, which adds to its appeal to visitors to

the area. Some of these walking tracks include Clements Falls, Venus Baths and Mackeys

Peak. Other walking tracks start a short drive from the town (5, p. 3).

       Halls Gap is home to five festivals throughout the year, The Grampians Jazz Festival

in February, The Halls Gap Rotary Art Exhibition in March, The Halls Gap Spring Art

Exhibition in September, Halls Gap Wildflower Exhibition in October and the Halls Gap

Film Festival in November. These festivals are fairly popular in the area.

       The Halls Gap and adjacent areas are rich with art and craft with many small galleries

and shows open to the public all year round. Over two thirds of Aboriginal art sites in

Victoria are here, and Aboriginal people carry on their strong association with the area.

       Halls Gap is situated just off the Western Highway, which is the principal linking road

between Melbourne and Adelaide. It is approximately 2.5 hours from Melbourne and 4 - 5

hours from Adelaide by car. The Mt. Victory Road runs through Halls Gap and onto

Horsham. From Mt. Victory Road there is access to roads going to Reid Lookout, Zumstein,

Wonderland turntable, Boroka lookout, the McKenzie Falls and Lake Wartook.

       There are over twenty entrances to the Grampians National Park providing ready

access to Halls Gap. Therefore, we can draw a conclusion that the location is favorable for

building a hospitality facility.



Target market

       Definition of target market. The target market for hospitality facility in Halls Gap is

mainly the visitors to the Grampians from Victoria. International visitors are few, and they

represent only 5% of the visitor demand.

       The target market is not really differentiated by age because this recreation spot is

suitable for families, married couples, groups of young people and senior citizens alike. The
activities provided by Grampians Park and the surrounding area, which were listed in the

previous section, are sure to accommodate the needs and wishes of every age group.

However, as it is primarily eco-tourist location focus should be made on groups of young

people interested in hiking.

        There is also no differentiation by occupation as it is a tourist spot. The customers

may be employed in various industrial and agricultural sectors, and may also be retired or on

maternity leave.

        The reason for visit of the target customers is primarily recreation: that is, visiting

Grampians national park, attending arts and crafts galleries and festivals, camping and hiking.



Financial outcome

        ROI projected for the next five years is the following:

        2001 – 0,03

        2002 – 0,02

        2003 – 0,03

        2004 – 0,03

        2005 – 0,03

        As we can see, ROI stays stable in the course of 2001 – 2005 with a slight fall in

2002.

        Projected cash flows are going to be different, starting from $146 265 in 2001. In

2002 cash flow will amount to less, only $132 110. However, in 2003 it is going to be

restored to the value of 2001, that is, to $146 265. In 2004 we are going to observe another

fall, the cash flow is going to amount to $141 547. In 2005 the cash flow will return to it

original value of 2001, $146 265.
       As for projected payback period, hotels are usually the slowest to produce it because

many costs are incurred in the course of their startup and operation. Large hotels usually have

a payback period of about thirty years. However, as the hospitality facility, which is the

subject of this feasibility study, is rather small, with only 51 rooms, we would set its

projected payback period to be fifteen years. Still, much depends on the cash flows and

operating costs, and fifteen years is a long time to make accurate forecasts. But for the

purposes of this study we are going to stop on this number.



Sensitivities

       Halls Gap is the crucial point for tourism in the Grampians region. The majority of

building activity in Halls Gap has been occurring since 1984 when the Grampians were

declared a National Park. The reason for it is that Halls Gap is the primary location for

tourists to stay while visiting the park and therefore, the principal part of the building activity

has been tourism oriented.

       The tourism industry in fact dominates the district, and retail and conservation are

other large contributors. The economic value of recreational use within the Grampians is

estimated at $55 million per year 13, with tourism directly employing 7% of the workforce.

This accounts for $4 billion annually to Victoria’s economy. The Department of

Conservation Forests and Lands is the biggest public sector employer within Halls Gap (7, p.

22).

       Therefore, employment is primarily tourist orientated with 7% of employment directly

related to tourism and a considerable proportion benefiting from the tourism sector. The

major public sector employer as previously mentioned is the Department of Conservation

Forests and Lands. The major place for tourism-related operations is the Visitor Centre

located in Halls Gap (7, p. 22).
        Such focusing on tourism in the area means that the hospitality facility will have its

competitors. They are Two Flags Over The Grampians, The Boronia View and The Flagstaff

Inn. Two Flags Over The Grampians are primarily aimed at business visitors and is equipped

with good conference facilities. The Boronia View has no direct targeting, and The Flagstaff

Inn is oriented at family recreation. Therefore, in planning the new hospitality facility

emphasis should be made on groups of young people coming for recreation, as this target

group is not specifically addressed by any of the competitors.

        As for customer average income, results of the Grampians Tourist Survey from 1991

show that of the respondents who answered this particular question most were from the

greater than $40000 range (10, p.1).

        The local community is generally supportive of tourism development; however, they

insist that the protection of environment is taken into account. The plans for development in

the Halls Gap region include the following:

        •      Better signposting and creating tour routes throughout the Grampians

        •      Linking The Great Ocean Road, Ballarat and the Grampians as a promotional

tour route called the Great Southern touring route. The touring route to become a bookable

tour.

        •      Increase tourism promotion of the area as a whole

        •      Improve visitor facilities to Halls Gap

        •      Allow for coach access where currently there is none

        •      Increase transport between Melbourne, Adelaide and the Grampians

        •      Video of Halls Gap to be made

        •      Large conference centre to be built in Stawell

        •      Gaming machines and entertainment venue to be built

        •      Proposed new sports training centre
       •       Brambuk expansion:

       •       Upgrade Visitor Centre

       o       toilet facilities

       o       display areas

       o       meeting facilities

       •       Hall of Fame in Stawell to be redeveloped

       •       Great Western Winery Village to be developed.

       We can also observe interest rate fluctuations, with peak of 7 per cent in 1999. Then

the rates went down and amounted to 6 per cent in 2000 and then during 2001 – 2004 they

went even lower – to 5 per cent. In 2005, however, the rates amounted to 6 per cent, and there

is a tendency towards their further growth.

       It is necessary to note that visitor flows to the Grampians, although still affected by

seasonal variations are not as affected as some other parts of Victoria. The off seasons are the

winter months of July and August, and February is also mostly slow. Figures from the

Domestic Tourism Monitor Survey, indicate that peak seasons are January, March, and April.

September, October and November are also busy months (4, p. 28).

       The major factors influencing the seasonality of the Grampians region are school

holidays, rainfall and the months the wildflowers are in bloom (4, p. 10)

       Recent figures indicate that average occupancy rates in the Shire of Stawell have

declined from a high of 51.3% in 1990 to 42.8% in 1994. The number of hotel rooms in the

Shire of Stawell in 1990 was 156, compared with 179 in 1994 33. Therefore, the cash flow is

also going to fluctuate according to these seasonal patterns.

       The turnaround in the world economy has its sharpest reflection in Australia. Only last

November, the government was revising its economic growth forecast upwards. However,
now financial markets are anxiously awaiting publication of national accounts data that is

expected to show low growth in the December quarter, and possibly even a contraction.

        The principal falls were in business capital expenditure, down 5.2 percent. Falls were

also exhibited in home building - 12.8 percent, and exports - 2.2 percent. Retail sales rose 1.8

percent, but a 3.3 percent decline was observed in the September quarter. A recent survey on

job advertisements conducted by the ANZ bank showed a 10 percent decline—comparing to

previous data, it is the biggest since the 1991 recession.

        Generally, in the globalized world economy three types of jobs are emerging: those

are routine production, in-person service, and symbolic analysis. In Australia, routine

production is still the largest category, females outnumber males in service, and only one in

five are symbolic analysts, predominantly male. Vocational education and training needs to

change focus and emphasize a dynamic perspective that stresses generic skills, adaptability,

and problem solving. These factors need to be taken into account while developing the new

hospitality facility.

        Nevertheless, growth projections are fairly reliable, because there is a demand present

among target customers regardless of competitors and Australian economy downward

tendencies. However, these projections cannot be called 100 per cent accurate as the payback

period has to pass by before we can objectively define growth projections. According to

primary estimates, growth tendencies will emerge and develop in about five to seven years

after the hospitality facility startup.



Pricing

        The room rates for the new hospitality facility are going to be the following:

        -   Doubles - $50;

        -   Deluxe - $80;
       -    Suites - $85.

       -   Executive suites – $120.

       -   Family rooms – $120.

       The reasons for pricing are the following: lower rate has been chosen for doubles,

because the hospitality facility is primarily oriented towards groups of young people traveling

with recreation purposes; average rate in the region is chosen for deluxe and a slightly lower

rate for suites to gain a competitive edge; average rate is chosen for executive suites because

the facility will not be targeted towards these customers; and there is a lower rate for family

rooms to attract customers arriving for a family holiday.

       The price is relatively inelastic as the tendency towards demand decrease and supply

increase is observed. However, with the implementation of effective marketing activities the

elasticity of the price can be increased.



Conclusion

       The configuration of the facilities built is going to be the following: hotel rooms,

indoor facilities and outdoor facilities. Total number of rooms is 51, including 18 doubles, 9

deluxes, 10 suites, 5 executive suites and 10 family rooms.

       The other non-room facilities in the hotel are going to include a pool, a heated pool, a

public spa, a restaurant, a BBQ spot, direct dial phones, a golf course, in room videos and a

tennis court.

       The hospitality facilities are going to be built in the region of Halls Gap. The region is

set in the second largest National Park in Victoria, The Grampians. The recreation activities

offered are camping, hiking, picnicking, sightseeing, driving, cycling, rock climbing,

swimming, angling, and boating. The natural habitat is well developed. Halls Gap is also a

centre of aboriginal culture offering arts and crafts galleries and holding five festivals a year.
       Target market is comprised primarily of Victoria inhabitants. There is no specific age

or occupation differentiation. The major reason for visit is recreation.

       ROI for the next five years stays relatively stable, and projected cash flows will be

subject to change, with some falls but consequent restoration to the previous level. Cash flow

growth is also projected. The payback period is estimated to be fifteen years.

       Tourism industry is a major focus of the area, and it is also the main sector of

employment. Tourism is well developed and three major competitors are present, with

orientation at different target market segments.

       Many developments are planned for the region, of which local community are

supportive but they insist on preserving natural environment.

       Interest rates fluctuate, however, there is a tendency towards their growth in the years

to come.

       There are seasonal fluctuations and respective fluctuations in cash flow, depending on

such factors as school holidays, amount of rainfall and the period of wildflowers blooming.

       Changes in world economy negatively impact Australian economy, which is also

subject to the influences of globalization.

       The room rates applied depend on the policies of competitors so as to gain the

competitive edge. The price is fairly inelastic because increase in supply and decrease in

demand is observed. However, there is a possibility to increase price elasticity.
                                       References

1. Priestly I., Gillespie, M. and Norman, A. TouriSIM: A Tourism Management

   Business Simulation. (2005) Melbourne: Victoria University of Technology.

2. Baker K., Project Evaluation and Feasibility Analysis (2000), Hospitality Press.

3. Tourism Victoria, The Grampians Victoria Australia (brochure) p 8.

4. Victorian Tourist Commission, 1990. Background Paper, Tourism and the Grampians

   Region p 28.

5. Department of Conservation. Grampians National Park (brochure)

6. National Parks Service, Victoria, 1984, Grampians National Park inventory of

   resources and uses. p 76-77.

7. Victorian Tourist Commission, 1989, Victoria’s Grampians: A Tourism Overview p

   22.

8. National Parks and Services, 1984, op.cit., p 6.

9. Read Sturgess and Associates, 1994, The Economic Significance of Grampians

   National Park. p i

10. Stawell and Grampians Development Association Grampians Tourist Survey,

   Summary Results January-December 1992.

11. Brambuk brochure, printed Jan 1992.

12. Wescott, G. & Williams, C. Ecotourism in Victoria: A comparison between two

   regions based on significant national parks. p 206.

13. Wescott, G. & Williams, C. op.cit., p 206.

14. Datab Pty. Ltd, Industry and Economic Consultants A Regional Tourism

   Development and Promotional Strategy for the Stawell and Halls Gap Area. March

   1995, p 30.

15. Wallaroo Wildlife Park brochure.

				
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