1. Agenda
• Market analysis
• Project introduction
• Target audience analysis
• Location analysis
• Q&A
• Financial projection and risk analysis
Cotel@Dubai
• BackgroundPart one:
Business project
Part two:
Feasibility study
Part three:
1
2. Demand is expected to outgrow supply by 2.8%. There is a
growing need for mid-market hotels.
0
5
10
15
20
25
30
Roomnights(millions)
Supply Demand
Supply and demand for hotel rooms
CAGR 9.2%
CAGR 6.4%
Five star: 10.0%
Mid-market: 2.5%
Inventory mix of hotel rooms
City Mid-market : luxury keys
Los Angeles 90:10
New York 89:11
London 88:12
Hong Kong 76:24
Paris 66:34
Dubai 51:49
32%
22%
20%
10%
16%
Five star and above
Four star
Three to one star
Deluxe serviced apartment
Standard serviced apartment
• Hospitality investment remains attractive even with economic stability and liquidity risks.
• Mid-market hotels could be the trend for future hospitality investment.
Source: Dubai Statistics Center; PwC “The Great Mid-market Hotel Debate”.
2
Demand is expected to outgrow supply by 2.8%. There is a
growing need for mid-market hotels.
0
5
10
15
20
25
30
Roomnights(millions)
Supply Demand
Supply and demand for hotel rooms
CAGR 9.2%
CAGR 6.4%
Five star: 10.0%
Mid-market: 2.5%
Inventory mix of hotel rooms
City Mid-market : luxury keys
Los Angeles 90:10
New York 89:11
London 88:12
Hong Kong 76:24
Paris 66:34
Dubai 51:49
32%
22%
20%
10%
16%
Five star and above
Four star
Three to one star
Deluxe serviced apartment
Standard serviced apartment
• Hospitality investment remains attractive even with economic stability and
liquidity risks.
• Mid-market hotels could be the trend for future hospitality investment.
Source: Dubai Statistics Center; PwC “The Great Mid-market Hotel Debate”.
2
3. We assume Dubai Millennials are different from their
counterparts and a limited two-step social research was taken.
Diverse ethnicsHigh turnover rate
Huge Millennial
population base
STEP1
Snowball sampling
interview
• 21 face-to-face interviews
covering 8 regions
• Each takes 0.5h- 1h
• Mar.27- Apr.17
STEP2
Random sampling
survey
• 145 questionnaires
• Online and offline
• Apr.24- Apr.27
Source: Dubai Statistics Center, Gulf Research Center, Cost of Living UAE Survey 2013/2014
3
We assume Dubai Millennials are different from their
counterparts and a limited two-step social research was taken.
Diverse ethnicsHigh turnover rate
Huge Millennial
population base
STEP1
Snowball sampling
interview
• 21 face-to-face interviews
covering 8 regions
• Each takes 0.5h- 1h
• Mar.27- Apr.17
STEP2
Random sampling
survey
• 145 questionnaires
• Online and offline
• Apr.24- Apr.27
Source: Dubai Statistics Center, Gulf Research Center, Cost of Living UAE Survey 2013/2014
3
• Dubai Millennials expect more.
5. Leveraged and unleveraged IRR as 16.5% and 14.1%
exceeding WACC of 11% indicates the financial feasibility of
this project.
Valuation
Initial investment 163.7 million AED
Financing
structure
Bank loans
14-year bank loan of
40% initial investments
Others Crowdfunding, VC, PE
WACC 11%
NPV 48.1 million AED
IRR
Leveraged 16.5%
Unleveraged 14.1%
Investment payback
period
10 years
(200)
(100)
-
100
200
300
400
500
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
MillionAED
Cash flow
FCFE FCFF
• Financial projection and valuation results support the financial feasibility of
this project.
Construction
period Renovation Exit
Note: We assume there is no corporate tax in the coming 15 years. 5
Leveraged and unleveraged IRR as 16.5% and 14.1%
exceeding WACC of 11% indicates the financial feasibility of
this project.
Valuation
Initial investment 163.7 million AED
Financing
structure
Bank loans
14-year bank loan of
40% initial investments
Others Crowdfunding, VC, PE
WACC 11%
NPV 48.1 million AED
IRR
Leveraged 16.5%
Unleveraged 14.1%
Investment payback
period
10 years
(200)
(100)
-
100
200
300
400
500
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
MillionAED
Cash flow
FCFE FCFF
Construction
period Renovation Exit
Note: We assume there is no corporate tax in the coming 15 years. 5
• Financial projection and valuation results support the financial feasibility of
this project.
6. Special thanks to
His Highness Sheikh Mohammed bin Rashid Al
Maktoum, Vice President and Prime Minister of the UAE
and Ruler of Dubai
6
