Within the context of the Strategy Course of the Ecole hôtelière de Lausanne, our team, composed of 3 students, had the chance to defend our investment project in Berlin, at the world famous International Hotel Investment Forum (IHIF) in 2012. We had to develop a project based in the resort industry, and after a deep analysis of the world economic and environment context, we chose to invest in China. Our project won the title of best investment strategy.

1. 5th IHIF Strategy Challenge

2. Did you know
that if the population of China walked past
you in single file, the line would never end
because of the rate of reproduction
?

3. Budget
Luxury
Resort industry in China
Water based
Mainland
National brands
Urban
International brands
Mountains

4. 114 million
Young
Middle class
Urban
(BCG, 2011 ; Euromonitor, 2012)

5. 33 million travelers
(Euromonitor, 2012)

6. 81 million non-customers

7. Evaluation of the potential market
China
Forecast annual growth of the GDP of 7.2% (IMF, 2012)
Forecast annual growth of the tourism:
+ 15% outbound tourism (UNTWO, 2011)
+ 16% domestic tourism (BCG, 2011)
Forecast to increase: 450 mio (2010) – 650 mio (2020) (Euromonitor, 2012)
Middle class
Young
CAGR disposable income 2008-2020: 8.1% (Thayer Lodging Group, 2011)
Shortfall of midscale supply (Deloitte, 2010)
The new generation lives in the now and does not save money (UNWTO, 2011)
Young travellers often spend more and are responsibility free (UNWTO, 2011)
Young Chinese have demonstrated a higher interest in leisure travel (TLG, 2011)
Urban
Accessibility to transportation infrastructures

8. What do they want?
A European experience

9. What do we offer ?
they want?
Design
The Place
to be
China
City
centres
Wellness
centre & activities
Wine Bar
& wine
activities
Banquet
facilities

10. we offer ?
What do they want?
Design “A relaxing and trendy European
City centres
The place to be
oasis in the heart of city centres,
Wine bar and
at an affordable price”wine activities
China
Banquet
facilities
Wellness centre
&
activities

11. Budget
Luxury
Resort industry in China
Water based
Mainland
National brands
Urban
International brands
Mountains

12. Competitors
Price
Park
Plaza
++
Holiday
Inn
Aloft
Gloria
Jin Jiang
Inn
Silka
Ibis
---
Attractive to the Young segment
National brands
International brands
++

13. Criterias of a resort
(University of Memphis, 2009)
One signature amenity
Provide 5 secondary experiences
Provide one full-service F&B outlet
Short-term overnight lodging
Minimum of 25 rooms
Emphasize a leisure or retreatenvironment experience

14. Main challenge of a traditional resort
(Panel: Profitability of Resorts Hotels, 2011)
Seasonality

15. How do we overcome barriers in China ?
Local partnerships
Asian Investors
Management company

16. Development of the 50 resorts
Beijing
Yantai
Guangzhou
Chengdu
Ningbo
Shanghai
Qingdao
Xian
Shenzhen
Huangshan
Hangzhou
Guilin
Kunming
Dalian
Xiamen

17. Investment per resort
Land: 1’041’000 €
Building: 24’500’000 €
27’300’000 €
Equipment: 872’000 €
Liquidities: 890’000 €
90’000 € / room

18. Revenues (€)
10%
13%
Food
Beverage
Room
Wellness + activities
Wedding + banquets
10%
23%
44%
2013
Revenues
RevPAR
2014
2015
2016
2017
7,886,000
8,585,000
9,188,300
9,680,000
10,000,400
38
42
45
47
48

19. Profitable activities (in m2)
BANQUETS ROOM
2013
2014
2015
2016
2017
Operational profit for 16 rooms (€)
372,592
406,464
433,562
453,865
460,659
677,440
Operational wedding profit (€)
574,000
609,000
644,000
679,000
728,000
728,000
54%
50%
49%
50%
58%
7%
2013
2014
2015
2016
2017
100% TO
Operational profit for 4 rooms (€)
93,148
101,616
108,390
113,471
115,165
211,700
Operational wine profit (€)
274,939
286,272
297,158
307,519
316,927
316,927
195%
182%
174%
171%
175%
50%
% Variation
WINE BAR
% Variation
100% TO

20. Net Profit/Loss (€)
1,200,000
1,000,000
800,000
600,000
400,000
200,000
2013
2014
2015
2016
2017

21. Management Fees (€)
900,000
800,000
700,000
Reimbursable Fee
600,000
Incentive Fee
500,000
Base Fee
400,000
300,000
200,000
100,000
0
2013
2014
2015
2016
2017

22. Finance (€)
Dividends
Net cash position
2013
2014
2015
2016
2017
68,570
2,234,076
309,770
3,424,494
519,740
3,038,368
744,800
2,525,237
904,180
1,887,058
Total Equity
10,900,000
T
Internal Rate of Return
19 %
Expected ROE
WACC
16%
9.44%
Economic Value
31,399,000
- Net Asset
(27,262,000)
Net Present Value
4,063,000

23. Opportunities
Urban resort locations
•
Non captive customers
•
Few international competitors
•
Lack of qualified labour
•
European style
•
High taxes on imported wine
•
Growth of :
• Domestic tourism
• Chinese middle-class
• Wellness demand
• Wine demand
•
Entry barriers of Chinese
•
Government investment in favor
of domestic tourism
•
Lack of mid-scale supply
government
•
Entrance of international
competitors
•
Ease of access to Visas for
Chinese
Threats
•
Weaknesses
Strengths
SWOT

24. Thank you for your attention.

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