Project & Business Plan - Hotel Construction & Development

1. Hotel
Investment
Mauritius
Investment Strategy
Case Study 1
June 2019

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Agenda
What we
are covering …
Key challenges
The Context
Gearing up for investment strategy

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The Context

4.  Mauritius is known as an attractive holiday destination, deriving most of its gross domestic product in the tourism sector.
 With continued growth in the value of property in the real estate sector, the demand for stabilised Mauritian property investments
has expanded over the past few years.
 The company intends to construct a hotel on the coast of Mauritius, suing a Greenfield investment approach.
 This predicates the viability of the company’s* business model. All things considered, the company is also cognisant of Mauritius as
an emerging market and developing economy (EDME), and plan to implement the project with the assistance of residents, locals and
tourists, to co-opt a successful project that boosts employment and tourism for the island.
 This case study provides key information in terms of company strategy, operations, products, prospects and market conditions,
structure, competitor analysis and financial information, taking into consideration the ESG principles.
*Note: Company refers to a fictitious private company
Hotel Investment in Mauritius

5.  A synchronised global economic slowdown appeared to have kicked in. Most multilateral organisations
including the IMF, World Bank, UN and OECD, have lowered their global growth projections for 2019 and
2020. Mauritius’ major trading partner countries’ output growth would be lower than initially projected.
Global inflationary pressures have been projected to be relatively contained in the near-term, aided by
the drop in energy prices in the last quarter of 2018.
 Despite pockets of economic and political uncertainty around the world, the global real estate capital
markets are still active. The tailwinds of job growth and rising corporate earnings are becoming stronger
than the headwinds of overall unemployment, rising interest rates, and government regulation and fiscal
policy. In correlation with the upturn in the real estate market, the global hotels and resorts industry has
also undergone a sustained recovery since the recent global economic downturn. Travel spending has
picked up quickly and the number of global tourist arrivals has grown.
 As a result of increased demand for hotel and resort accommodations, room rates have increased,
driving industry revenue. Consequently, the positive outlook for global tourism is expected to have a
domino effect on the Mauritian real estate and tourism industry. As a result of its emerging market
structure and as a developing economy (EDME), Mauritius is an excellent location for the business
operations envisaged by the company.
 According to Statistics Mauritius, there has been a growth of 4.3 percent from 2018.
Local Scenery of Mauritius – A brief

6. Signed investment promotion and protection agreements (a bilateral agreement between
sovereign states for the reciprocal promotion and protection of investments) with 37
countries out of which 22 are currently in force
Efficient and reliant channel of distribution providing Mauritius with a competitive
advantage over other destinations. These channels consist of tour operators, travel
agents and airlines companies
Multi skilled, trained, multi lingual and experienced labour force provides sustainable
competitive advantages in terms of accumulated intellectual capital and enhanced
productivity
Political and social stability
Mauritian economy is open to the world, with a more diversified economic base sugar,
world class tourism, manufacturing sector, financial services, offshore sector, BPO,
information technology and a large SME base contributing 37% to GDP. These segments of
the economy together offer various opportunities for developing the tourism industry, as
for example business tourism, or attracting investment into new sectors such as marinas
and eco-tourism
Dynamic private sector with a strong public/private sector synergy
Envied network of tax treaties with some 37 countries including India, China and other Asian
countries, countries in Africa and countries in Europe. This makes Mauritius an excellent
platform to structure both inbound and outbound investments between Africa and Asia
Mauritius’ competitive
advantages

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Gearing up for
investment strategy

8. Site construction as projected and no
significant delays
Plentiful supporting facilities &
Sustainable competitive advantage
against other hotels
Adoption of the ‘best practice’
policies of the industry &
Legal compliance
Securing the funds
required for the project
Experienced, knowledgeable and
qualified third party contractors for
high quality services
Rental Income Optimisation &
Effective Cost Management
OBJECTIVESDevelop fruitful business relationships with all stakeholders

9. BUSINESS
MODEL
• Mauritius attracts high-end leisure travellers in search of a tropical climate, beaches,
water sports and natural beauty.
• Mauritius relies principally on foreign leisure travellers thus any change in the global
economy plays an important role in tourist arrivals.
• The Group’s intention is to issue its Ordinary B Shares to fund the construction of the
hotel and finance the working capital. Consequently, The Group will not utilise any
additional external debt financing. Funds from the placing of shares will be used to
complete the construction of the hotel and thereafter manage the hotel operations for
the benefit of its shareholders. 70% of the proceeds will be used towards the
constructions of the hotel and 30% towards working capital.
• The Group has planned to build its first Self Catering Boutique Hotel. The hotel will be
operated by the Group’s subsidiary company who have extensive experience in both the
hospitality and conference industry.
• The hotel will focus on self-catering unit accommodation with the option of traditional
hotel facilities, including the restaurant, bar and leisure components. The hotels unit
configuration is accordingly designed to offer guests the option of self-catering or
traditional hotel accommodation.
• The hotel will offer conference and function facilities with seating capacity of up to 200
delegates. The hotel operators have extensive experience in conferencing and this

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Key considerations

11. SWOT Analysis

12.  The Group will not use debt to fund any aspect of its operations. It will utilise shareholders
funds in Escrow, for all capital expenditures incurred during the construction phase of
development.
 Strong management team
 Secured industrial site lease for 60 years, covering prime real estate between Port Louis and
Grand Bay.
 Building contractors have been secured through legal tender process and a large capital outlay
has already commenced on the feasibility and research and development of The Group’s
operations, a testament to the preparation and readiness of The Group Management
 All investors have demonstrated demand via letters of intent. In total investors have committed
MUR 500 million.
 Room prices will be lower compared to hotels and other self catering accomodation in
Mauritius.
 The hotel will offer fully fitted units, with car control access, CCTV monitoring, equipped with
DSTV, WIFI, electronic safes, air conditioning and all bedrooms will have en suites.
 The conference centre will offer a venue for weddings, an entertainment area, mini gym, spa
and a restaurant.
 The directors have had extensive experience with operating and managing other property and
hotel companies.
 The Group’s development management will be led by a renowned professional with more than
Strength

13. • Although the key management team have sufficient experience and skills to manage the
project, this is the first project for The Group in Mauritius.
• As The Group is new to operations in Mauritius, branding and reputational image will be
relatively unestablished until The Group has acquired a foothold in the Mauritian market.
Weaknesses
• Scheduled and unscheduled delays in construction
• Unforeseen natural disasters
• Other hotel groups in close proximity successfully running similar operating models.
• Increase of interest rates and slumps in global economic growth could put the tourism
industry under pressure.
• Unexpected inflation. Import costs and fluctuations in foreign currency in which raw
materials are denoted in. to counter theses effect, local currency financing and currency
hedging through the WBG’s IFC will be used
Threats
• Mauritius has an excellent range of supporting infrastructure (including a newly established
road from the airport, which bypasses Port Louis city centre), an efficient seaport, and a
modern international airport. There is an increase in demand for tourists wanting to be
centrally located and the hotel is well situated to retain business.
• The Group has opportunities to provide a self catering hotel, which caters well for business
travellers in the form of corporate accommodation.
• GDP is estimated to grow by 4.0% in 2019 according to the African Development Bank.
Opportuniti
es

14. Thank You
Ashwini Salabee
July 2019