Odelia – Center for Therapy, Rehabilitation & Recovery from Breast Cancer

Arad, IsaralEconomic Model – Main Assumptions- Establishment:

- Public hotel construction in accordance with standards (Fire, HFC, environment, accessibility, etc.)- Construction and development at a better than reasonable level - Infrastructure: Including electrical room, sewage pumping station & basic restoration of the access road- Duration of design and construction: 2 years- Obstacle: Zoning yet to be approved

- Operations:- Price for accommodation (basic scenario): NIS 750 per room, B&B- Number of guests/room: average of 1.5

- Separate payment for meals: NIS 100 per person per meal (lunch or dinner)- Average annual occupancy (basic scenario): 60%- Business:

- The hotel operates as a limited company and pays taxes (based on its disposable income)- The basic scenario does not take into account the costs of the real estate transaction, for either the land

rights (a function of the results of the model) or taxes (improvement tax, purchase tax)- Revenue from the association for the use of dedicated activity space – covers relevant current expenses

and overhead- Financing /funding:

- The model is spread over 12 years, including one remodeling cycle. The prices are linked and do not include VAT (guest prices include VAT and adjustments were made)

- Construction grant (Ministry of Tourism): 20% of total investment- Financing of the project cost, net of grants:

- 70% - Bank loan for 7 years, repayment begins in the third year of operations, 4.5% interest rate- 30% - Equity / donations

January 2015 1

Economic Model - Principal Findings and Conclusions- Investment: about NIS 48.6 m, not including land- Financing needs / donations / equity: 30% of the total investment required- Basic scenario (60 rooms / NIS 750/room / 60% occupancy), not including the price of land:

- Economic viability data: IRR = 16.25%; ROI = 5 years- Partially dependent on a construction grant from the Ministry of Tourism / tax exemption - As noted, the plan does not include the price of the land. With the land (including taxes)

valued at NIS 10 m (for test purposes only): IRR = 9.4%; ROI = 11 years- A bridge loan may be required for the renovations

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Odelia – Center for Therapy, Rehabilitation & Recovery from Breast Cancer

Arad, Isaral

January 2015

Appendix - Program- Requirements for Construction & Development - for up to 150 guests, simultaneously:

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Use Area (m2) Notes

Rooms 2,400 60 rooms at 40 m2/room

Special public, activity spaces 600 10 rooms, average area: 60 m2 each, for activities, treatments, and other meetings,

including restrooms and showers

Conference hall 600 Approximately 200 people

General public areas 400 General, roofed areas, such as the entrance hall, service and reception, library, music room, tea corner, restrooms

Kitchen and dining 400Vegetarian kitchen for cooking: 240 m2; dining area for approximately 60 people simultaneously: approximately 160 m2 (More guests at one time will require dining in shifts)

Maintenance, storage logistics 150

Administrative offices 100 Shared by the hotel and the association

Total construction 4,650 m2

Exterior development to support activities

Approx. 3,000 m2 Intensive development, including paved areas, awnings, garden furniture, appropriate landscaping, background lighting; initial estimate

General development and parking

Approx. 6,000 m2 Extensive, combination of stone and concrete sidewalks; Initial estimate

Odelia – Center for Therapy, Rehabilitation & Recovery from Breast Cancer

Arad, Isaral

January 2015

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Appendix - Program

Management and Operations:- Self-management, “lean”, based on an experienced management core + recruiting and training of local staff- Organization: (in brackets is the number of jobs in for hotel only, excl. activities/content/treatments, etc.)

- Hotel manager (1)- Purchasing, organization, HR & administration manager (1)- Service and guest information supervisor– Reception and secretarial (3)- Rooms and cleaning, including public and open spaces (3)- Operations and maintenance coordinator (1)- Security (3)- Sales, marketing and PR, including conferences (1)- Accounting (0.5)- External services: accounting and payroll, computing, legal advice, technical maintenance

- Catering:- Chef (1)- Kitchen workers (3)- Waiters (3) to serve to 60 people at a time - Reinforcement as needed (conferences, special events)

- Total jobs: 20.5, including 7 for catering- Management, coordination and operation of the special activities and content will be based in the center’s

management offices (separate office space will be allocated for this purpose – an integral part of the model)- Marketing channels to be mapped separately - Emphasis on recruiting from Arad area and employing women

Odelia – Center for Therapy, Rehabilitation & Recovery from Breast Cancer

Arad, Isaral

January 2015