Business Plan: Golden Sands Hotel, Jeddah

Abstract

The Golden Sands Hotel (GS) will be a 150-room hotel investment in Jeddah, Saudi Arabia. High-quality services will be provided in its facilities to meet the expectations of targeted segments. The GS will be categorized as an upscale hotel in the market, obligated to offer rooms and other services depending on the reason for the stay to its guests as products. The development of the project is estimated to start construction in March 2023 and be delivered in November of the same year, costing £18,925,225. The GS is expected to start receiving reservations in January 2024. Business Concept The GS will be located in the Al-Marwa district, which is currently under development by the government of Saudi Arabia to be prepared for expected projects. The location is considered one of the most strategic areas in Jeddah and has projects that will encourage tourism in the city. The GS is planned to take advantage of the fast-emerging tourism sector that enhances hotels across Jeddah, driven by three demand types: leisure, tourism, and religious visitors (Savills, 2019). Meanwhile, a limited number of hotels that are available near the location and provide limited services regarding the reasons for guests' visits. Therefore, in order to add value to the market, the GS will offer special services other than accommodation related to the purpose of visit. The GS aims to add value to the customers' experiences to gain closer interaction, which helps the company to stand out in Jeddah's competitive hotel market (González-Mansilla et al., 2019). All of these services will be offered online and in-person before and during the stay. In addition, four different types of modern rooms will be equipped with the latest features on the market, with a 24/7 concierge to make the stay of visitors as easy as possible for them, which will help the GS to fulfil the mission. “Deliver high standard hospitality services to its guests and makes their stay as easy as possible by providing all necessary services and tools in the perfect location at the right time.”. Market The market analysis indicates that the macroenvironment of GS has great advantages when considering the improvement of the hotel industry in Saudi Arabia. Also, the industry analysis indicates that there is a great chance for the GS to enter the market as the customers in Saudi Arabia prefer the upper class and higher for stay. The attitude towards a new hotel investment in Jeddah is overall expected to be positive. However, few threats were identified that needed to be considered. Furthermore, the competitor's analysis shows that the GS will be able to successfully position itself among selective competitors due to the various services offered and the reasonable pricing strategy. Marketing Jeddah has a high-demand hotel market and is forecasted to have higher demand in the next few years. Visitors tend to prefer hotels to other types of accommodation. The wide range of segments the city has due to the multiple places of interest. Therefore, the GS targets a higher range of segments. The GS mainly considers couples and small groups that come as solo travellers, couples, or small groups for leisure, religious purposes, and business, whether domestic or international travellers. In order to reach the targeted group, the GS will establish an effective marketing plan that mainly focuses on online presence, with occasional offline presence at some events. Also, a brand strategy will be applied to increase the awareness of the brand. Also, the marketing team will build relationships with other corporations to build a stronger brand image. Operation and Resources: The GS will count mostly on human resources to operate, with few technological platforms for check-in/out and reservations for other services. The GS will develop an effective HR structure and plan that includes all personnel aspects of the business, from recruitment to training and development, with competitive salaries. Also, the departments of the GS have been divided into: 1-HR and Administration; 2- Rooms; 3-Accounting; and 4-Sales and Marketing, managed by skilled managers that have at least 5 years of experience in the field. In addition, the GS will have other resources such as physical, financial, information system resources, and security. All of these resources will be utilized to create the best possible journey for guests according to a clear operational procedure. Financial Projection: The Golden Sands Hotel is proposed to be a private limited company. It seeks to be funded by the Saudi Finance Ministry. The total cost of development is estimated to be £18,925,225. The government provides £22,046,000, which will allow the company to increase the cash flow for the GS during the start-up. Thus, the founder, Mr. Mohammed Alsulami, would possess 55% of the shares/equity, and Mr. Abdullah Alsulami would possess the other 45 % as a landowner. The sales of GS are estimated to reach more than £4 million and are projected to increase slightly more in the first 4 years. The room department is expected to contribute 85% of sales, with F & B accounting for 5%, transportation accounting for 4%, ticket commissions accounting for 4%, and MOD accounting for 2%. The P&L Statement forecasted a GOP of £2.4 million, with forecasted increases in the first 4 years. Based on the financial analysis, the break-even point is 14,556.5 units (rooms sold) or £1,346,474.9 sales. The investment is forecasted to deliver profits from year one, and the capital gain is expected to be £4,327,785 after five years.