Luxury Boat Charter Company - Widhadhwidhadh.com/wp-content/uploads/2011/10/proposal.pdf · Luxury Boat Charter Company 1 Contents 1. ... Marketing budgets are low or non-existent

Luxury Boat Charter Company

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Contents

1. Introduction 2

1.1 Nature and Scope of Planned Activities and Operation 2

1.2 Profile 3

1.3 The Boat 4

2. Strategic Marketing Plan 5

2.1 Introduction 5

2.2 Market Research 6

2.3 Target Markets 6

2.4 The Marketing Mix: ‘4P’s of Marketing’ 8

2.5 Marketing Strategies and Budget 10

3 Financial Feasibility 11

3.1 Overview 11

3.2 Financial Summary 11

3.3 Income and Expenditure Statement 12


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1. Introduction 1.1 Nature and Scope of Planned Activities and Operation The luxury cruise and safari market has seen a large growth in Maldives. More than 90 vessels are registered as Safari

boats in Maldives. Most these boats concentrate on the scuba diving clientele. A great many of the vessels do not have air-

conditioning and are very old and not well attended to. Many of the resorts are high end but do not always provide the level

of privacy that a client might need and expect. Most of the Safari boats rely on third party marketing strategies such as tour

operators. The rental rates are usually for 3-days or more and are exorbitantly high for a meager amount of comfort. There

are very few truly luxury boats in the market that offer top-notch service.

To cater to the demand for luxury high-end private vacations in Maldives we would like to develop a new safari company

starting with one boat. To reduce the dependency on one avenue of client acquisition we will not only use the traditional

avenue of the tour operator but also rely on our own marketing expertise.

Leveraging surf clubs, dive clubs as well as exclusive yacht clubs as marketing venues we will acquire a wider range of

clientele. By offering jet skiing, water skiing and other water sports we provide a greater range of activities than any other

safari boat on the market.

As the proposed project is based on a well-proven model, we will differentiate ourselves by creative marketing methods as

well as superior service. Our aim is to find a formula that is effective and efficient in the Maldivian context.


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1.2 Profile

Introduction

Having started and run many companies the founders of LussoYachts Private Limited have the experience to tackle any

market. With advisors from international shipping companies such as Osman Shipping in Dubai, Indian Ocean Charters

in Maldives, Deep Blue Divers in Maldives, Asenyo Inc. a marketing firm in California and many other companies this

venture has no lack of expertise.

Widhadh Waheed

As CEO of Asenyo Inc. Widhadh has worked with companies such as Yahoo! Inc. (Yahoo Travel is the 5th largest travel

website in the US), NBC, CostPlus World Market, Photobucket, Hearst and more including another of the top 10 largest

travel companies in the United States. Widhadh has direct connections to the CEO of Arzoo.com to capture the Indian

market. She has also helped build one of the top 20 social networks in the United States (per comScore, May, 2009)

with 5.5 million visitors a month currently.

Jeffrey Salim Waheed

As a graduate of Stanford University Jeffrey has worked with NGO's, in the political arena, and has connections to the

best high-end hotels in Nepal. He was on the board of directors of Actually Marketing Inc a California based marketing

company. Jeffrey also has connections to many potential clients.

In the pursuit of creating and running a luxury Safari yacht, LussoYachts will maintain a strong commitment to

providing exceptional service and experiences..


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1.3 The Boat

Lusso1

The Lusso1 is a 11-year-old Fairline Squadron 65. It is in tiptop shape for it's size and has been inspected by our

mechanic.

Cabins: 4

1 Master Suite

1 VIP Suite

1 Cabin with two twins

1 Cabin with two twin bunks

Heads: 3

Fully Stocked Kitchen with Dishwasher

3 Dining Areas

1 Sitting Room

Air-conditioned


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2 Strategic Marketing Plan

2.1 Introduction The following marketing plan is researched and developed for the sole purpose of marketing the luxury safari boat.

There are three main avenues for marketing the luxury safari. We will evaluate the best approach to penetrate to the

existing market. We have concluded that the best way to enter the market is through a small luxury charter. To this

effect we have identified a 4-cabin luxury yacht in Dubai at a very reasonable offer. Fairline Squadron 65 is a great

long lasting boat with a very good Man engine whose spare parts are readily available in Maldives.

The following sections in this marketing plan aim to address all the marketing issues in order to make the company a

success. The strategy starts with research, analyzing what the market has, needs and is looking for, and then this

section continues to identify the exact market for this type of boat following the 4 P’s of marketing, the product, the

price, the promotion and the place of operation. Finally this summary plan outlines the strategy to be used for the

luxury boat and the budget it requires to promote the charter to the targeted market.


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2.2 Market Research The following section highlights the research and analysis made in order to study the market, the potential penetration

as well as expansion to the target market. It is highly important that the market is studied before investments are

made in order to minimise risk of market failure and to avoid competitive disadvantages.

Current Safari Offerings

2002 2003 2004 2005 2006 2007 2008 Registered Bed Capacity

Safari Vessels 1,475 1,636 1,676 1,789 1,599 1,923 2,094 No. of Vessels Safari Vessels 96 113 113 121 116 133 143 Of these only a small percentage cater to the luxury safari market. None of the boats offer a wide range of water sports activities. Marketing budgets are low or non-existent due to the heavy reliance on tour operators. The first 5 months of 2007 the live aboard occupancy rate was 70% according to MTPB.

2.3 Target Markets In order to market the luxury boat, it is firstly important to identify and analyze existing target markets and potential new

target markets and niche markets before entering these markets in the Maldives. The following highlights the exciting target

markets and potential new target markets and niche markets.

Existing Target Markets

The existing target markets available are as follows.

a) Clientele from tour operators


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b) Clientele from resorts

The above markets are identified as existing established markets that can be entered fairly easily with the aid of an

appropriate and affective marketing strategy.

Potential New Target Markets and Niche Markets

Although there is a viable and growing existing market for the luxury boat the potential new market could be even more

attractive and vast. With the development of effective online systems that connect various corners of the globe these

potential markets are becoming more and more accessible.

In order to exploit these potential new international markets, considerable time and resources have to be applied in order to

establish contacts and affective networks.

The potential new markets:

a) Direct web sales through our network of sites.

b) Direct marketing to exclusive clubs around the world.

c) Web sales through a network of affiliated sites.

In order to reach the potential markets, long-term commitment and dedicated work is required.


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2.4 The Marketing Mix: ‘4P’s of Marketing’ The 4P’s of marketing will identify and analyze four critical elements within any marketing plan. These four elements are

‘Product’, ‘Price’, ‘Promotion’, and ‘Place (Distribution)’. In order for any marketing plan to be affective and successful, (1) a

product portfolio needs to be developed, (2) a pricing policy needs to be derived, (3) a promotional strategy needs to be

formulated, and finally (3) a distribution system needs to be identified.

Product (in this case Service) Portfolio

This subsection will provide a service listing for the different products that are going to be marketed.

Service Portfolio

Luxury Yacht Packages

• 3 Day Cruise • 5 Day Cruise • 7 Day Cruise • Daily Rental • Dinner Cruise • Surf/Dive Cruise

Pricing Policy

1) The price of a service is formulated and derived based on various factors such as the nature of the service, market

demand, supply and demand trends, its various cost elements, level of competition etc which will have to be considered

while service pricing is conducted.


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2) It must be taken into consideration that market price of some services have been highly fluctuating to the extent that it

is difficult to find a common trend. Therefore, our pricing policy will be directly linked to these fluctuations in the

markets.

3) It is also important to note the fact that in order to deal with competition and price wars, the products identified can be

priced and marketed as ‘luxury’ experience with special emphasis being placed on the concept of extraordinary service.

4) Finally this pricing policy will take into consideration that, in order to sell the identified services at competitive and

premium prices in the market today, focus has to be placed on efficient methods of operation to cut costs, reduce

overheads, and create a positive image of the service in the customers’ mind.

Promotional Strategy

The promotional strategy will be dealt mostly within the marketing strategies section. But within this section there are a few

points that need to be highlighted regarding the promotional strategy that is going to be utilized for this marketing plan.

Firstly from a promotional perspective, in order to compete affectively with local competitors, different products will be

marketed differently according its type of product and quality. We will offer water sports and well-rounded options for any

potential needs a client may have while aboard.

Secondly it is also important to always promote the underlying reason or intention behind the project and the benefits

received by the clientele.

Place

In terms of location the Safari will be run mainly in and around Male' and the southern atolls. Our divers have already

located the best locations for diving, surfing and snorkeling. We will cater our trips around the interests of our clientele.


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2.5 Marketing Strategies and Budget

This marketing strategy is formulated to meet the strategic marketing goals that have been identified in this marketing

plan. In order to address each market and to effectively communicate and penetrate to these markets, we will be selecting

our marketing tools very carefully according to the exposure levels.

The table below shows the marketing approach we will be using for each target market. The table also details out the

budget for each of these approaches.

Market Marketing Approach Marketing Tools Budget (USD)

1 Local Networking, Direct Marketing, Advertising

Billboards, Flyers, Meetings, Radio, Websites 500.00/month

2 International

Networking, Direct Marketing, Advertising, Print Media, Web Media

Flyers, Brochures, Websites, Affiliates, Tour Operators 2300.00/month

TOTAL 2800.00/month


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3 Financial Feasibility

3.1 Overview This section of the Business Plan covers all the financial projections and forecasts proving the viability and profitability

of the business. The first section below summarises and provides an analysis of the feasibility of the project. The

feasibility is continued on the detailed Proforma Financial Statements, which then leads to the final section providing

the key overall assumptions of the project for the medium term.

3.2 Financial Summary As detailed in the Proforma Financial Statements later in this section, based on the proposed costing and pricings, the

project is highly viable. Our safari venture provides a very attractive outlook for investors.

This planned business activity gives a positive Net Present Value (NPV) of USD 2,611,331 and also gives an Internal

Rate of Return (IRR) of 59%, which is a much higher return than the Cost of Capital of 13%. With the assumptions

stated below this investment will have payback period of 4 years.


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3.3 Income and Expenditure Statement

PROJECTED PROFIT AND LOSS STATEMENT (YEARLY) Year 1 Year 2 Year 3 Year 4 Year 5 INCOME Room Rental Income 729,900 818,415 901,710 947,250 963,315 Gross Sales 729,900 818,415 901,710 947,250 963,315 Less: DIRECT

EXPENSES

Guest Food Expenses 25,963 29,252 32,243 33,847 34,508 House Keeping

Expenses 4,327 8,126 8,956 9,402 9,586

Laundry Service Exp 1,442 1,625 1,791 1,880 1,917 Fuel 31,938 40,062 49,637 53,974 55,648 TOTAL DIRECT EXPENSES

63,670 79,065 92,627 99,104 101,659

GROSS PROFIT 666,230 739,350 809,083 848,146 861,656 Add: OTHER INCOME Extras (Income) 94,527 98,726 108,820 114,234 116,465 Less: Extras

(Expenses) 49,489 51,687 56,972 59,806 60,974

Contribution 45,038 47,039 51,849 54,428 55,491 Less: Overheads (Expenses) 98,039.29 101,322.89 104,811.66 108,519.64 112,461.84 Staff Salaries

(Expenses) 85,700.00 87,325.60 88,982.83 90,672.31 92,394.68

TOTALEXPENSES 183,739.29 188,648.49 193,794.49 199,191.95 204,856.52 EBITDA 527,528.83 597,740.33 667,136.84 703,382.25 712,290.74 FINANCING EXPENSES 235,684.96 235,684.96 235,684.96 235,684.96 Bed Tax 10,892 11,376 12,539 13,163 13,420


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Corporate Tax (7.5% annually) 21,071.39 26,300.96 31,418.47 34,090.09 52,415.32 PROFIT & LOSS APPROPRIATION

ACCUMULATED PROFITS (beginning)

259,880.48 584,259.04 971,753.49 1,392,197.90

Add: Net Profit for the Year

259,880.48 324,378.57 387,494.45 420,444.41 646,455.59

Less: Dividends ACCUMULATED PROFITS (ending)

259,880.48 584,259.04 971,753.49 1,392,197.90 2,038,653.48

Purchase price: 700,000 Loan amount: 560000 3 year term APR 13% 3 month forbearance requested, Balance at start of payment term: 578200 Repayment amount: 653366 Year 1 738303.58 Year 2 834283.0454 Year 3 Total to be repaid: 942739.8413 Year 4 Monthly Payment: 19640.41336 Yearly payment 235684.9603


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3.4 Assumptions ASSUMPTIONS Currency, USD Year 1 Year 2 Year 3 Year 4 Year 5 High Season - Days 131 131 131 131 131 Shoulder Season - Days 81 81 81 81 81 Low Season - Days 153 153 153 153 153 Total No. days 365 365 365 365 365 High Season - Occupancy 60% 65% 70% 75% 75% Shoulder Season - Occupancy 50% 55% 65% 65% 65% Low Season - Occupancy 40% 48% 52% 55% 58% Average Annual Occupancy 50% 56% 62% 65% 66% No of Rooms 4 4 4 4 4 No of Beds 8 8 8 8 8 No of Guests High Season 629 681 734 786 786 Shoulder Season 324 356 421 421 421 Low Season 490 588 636 673 710 guests / year average 1,442 1,625 1,791 1,880 1,917 Bed tax ($ per head) 8 8 8 8 8 Room Rates - 4 cabin luxury charter High Season Rate ($ per room per night) 4500 4500 4500 4500 4500 Shoulder Season Rate ($ per room per night) 4000 4000 4000 4000 4000 Low Season Rate ($ per room per night) 3000 3000 3000 3000 3000


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Main Income Extras (Income Per Bed Night) Water Sports 50 50 50 50 50 Bar Sales 20 20 20 20 20 Laundry 5 5 5 5 5 Diving 50 50 50 50 50 Extras - Expenditure Water Sports 22% 22% 22% 22% 22% Bar Sales 25% 25% 25% 25% 25% Laundry 18% 18% 18% 18% 18% Diving 35 35 35 35 35 Guest food Expenses - Full Board ($pp/day) 18 18 18 18 18 House Keeping Expenses - $pp/day 3 3 3 3 3 Laundry Services - $pp/day 1 1 1 1 1 Fuel Consumption and Cost Boat, Generator, Dinghy, all fuel included 175 196 218 228 231 Total Fuel Expenditure - yearly 31,938 40,062 49,637 53,974 55,648


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3.5 Bed Nights Sold

4 cabin luxury yacht

High Season

Shoulder Season Low Season

Bed Rate 4500

Bed Rate 4000 Bed Rate 3500

Occupancy

Bed Nights Income

Occupancy

Bed Nights Income Occupancy Bed Nights Income

Total Booking Rental

Year 1 60% 131 353,700 50% 81 162,000 40% 153 214,200 729,900.00 Year 2 65% 131 383,175 55% 81 178,200 48% 153 257,040 818,415.00 Year 3 70% 131 412,650 65% 81 210,600 52% 153 278,460 901,710.00 Year 4 75% 131 442,125 65% 81 210,600 55% 153 294,525 947,250.00 Year 5 75% 131 442,125 65% 81 210,600 58% 153 310,590 963,315.00

Booking revenue Taxes Year 1 729,900.00 10,892.00 Year 2 818,415.00 11,375.84 Year 3 901,710.00 12,538.96 Year 4 947,250.00 13,162.80 Year 5 963,315.00 13,419.84


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3.6 Crew

Boat Crew

Nos Salary Scale Total Cost Cost per

year

1 Captain 1,500 1,500 18,000 1 Chef 1,200 1,200 14,400 1 Kitchen helper / Waiter 800 800 9,600 1 Housekeeper / Bartender 800 800 9,600 4 Total 4,300 51,600

MAINTENANCE

Nos Salary Scale Total Cost Cost per

year

1 Boat Mechanic 800 800 9,600 1 Plumber cum Carpenter 600 600 7,200 1 Laborer 400 400 4,800 3 Total 1,800 21,600

GRAND TOTAL 6,100 73,200


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3.6 Other Income OTHER INCOME 4 cabin luxury Year 1 Year 2 Year 3 Year 4 Year 5 No of Bed Nights 778 813 896 940 959 Cost of service % of

Guests Income $ Income $ Income $ Income $ Income $

Extras (Income Per Year) Water Sports 50 60% 23,340.00 24,376.80 26,869.20 28,206.00 28,756.80 Bar Sales 20 80% 12,448.00 13,000.96 14,330.24 15,043.20 15,336.96 Laundry 5 10% 389.00 406.28 447.82 470.10 479.28 Diving 150 50% 58,350.00 60,942.00 67,173.00 70,515.00 71,892.00 TOTAL 94,527.00 98,726.04 108,820.26 114,234.30 116,465.04 Extras Expenses % of

Income Expenditure $

Expenditure $

Expenditure $

Expenditure $

Expenditure $

Water Sports 25% 5,835.00 6,094.20 6,717.30 7,051.50 7,189.20 Bar Sales 22% 2,738.56 2,860.21 3,152.65 3,309.50 3,374.13 Laundry 18% 70.02 73.13 80.61 84.62 86.27 Diving 70% 40,845.00 42,659.40 47,021.10 49,360.50 50,324.40 TOTAL 49,488.58 51,686.94 56,971.66 59,806.12 60,974.00 Grand Totals Year 1 Year 2 Year 3 Year 4 Year 5 Extras Income 94,527.00 98,726.04 108,820.26 114,234.30 116,465.04 Extras Expense 49,488.58 51,686.94 56,971.66 59,806.12 60,974.00 Gross Margin 45,038.42 47,039.10 51,848.60 54,428.18 55,491.04


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Documents

Luxury Boat Charter Company - Widhadhwidhadh.com/wp-content/uploads/2011/10/proposal.pdf · Luxury Boat Charter Company 1 Contents 1. ... Marketing budgets are low or non-existent