Business Plan for a Golf Resort

11 November 2018

Executive Summary

The all new Marriott’s Golf Club Shanghai is first of its kind in Shanghai where there are already 15 other franchises of Marriott present. The 200 room hotel resort will consist of a 32 storey building with a modern design, a golf course which will stretch on 160 acres of land, spa treatment facility and a number of finest dining restaurants. The hotel resort will be located in the suburbs of the city Shanghai near the Longhua Temple with beautiful scenery.

There are three local owners who are setting up this business venture with the legal structure being Limited Liability Company (LLC). The target market will be the businessmen looking for a luxurious but affordable stay in Shanghai, families who want to spend their vacations in a resort and couples looking for hotels for romantic nights. The hotel has a pretty strong customer base as it will inherit many guests from its parent company Marriot International Inc.

Business Plan for a Golf Resort

This is a business plan for a golf resort which is to be constructed in the suburbs of Shanghai, China. This resort will be a franchise of Marriott and will have approximately 200 rooms, a golf field, spa treatment facility and a number of fine dining restaurants. The plan consists of the description of the business strategy, marketing strategy, advertising campaigns, market analysis and target audience analysis. The plan also covers the organizational chart, job descriptions and a sample menu.

Statement of Purpose Marriott has always been hospitable towards its customers and introduced reward program for its regular customers and in 2004, there were more than 20 million members of Marriott Reward program. The purpose of the business is to provide the valued customers one more resort which will have a 160 acre golf field. Marriot is a great place to spend vacations, stay for the entire business trip and to take the family for exploring new regions of the world. The core values of Marriott have always been its customers and the company has strived to provide the customers with superior service. The resort will follows the adage that “the customer is always right”, therefore the management will give attention to everything the customer has to say. Great restaurants are a part of every Marriott hotel so that the guests do not have to step outside for having their favorite meals. There is no Marriott’s golf resort in the country of China; therefore this will be the first of its kind Marriot’s hotel in the country which inhibits one-third of the world population. Foundation of the company took place when Willard Marriott and his wife Alice Marriott set up their root beer stand in 1927 in Washington.

Within two to three years, the business started expanding with food items being added to the menu. The company gained a corporate status in 1953 when its stock became public. Before that the company continued the expansion of its food-services in airports, defense industry and opened up its branches in other parts of the country. In 1957, Marriott inaugurated its first 365-room hotel in Virginia. In the 1960s and 70s, Marriott opened up a series of international hotels and theme parks and acquired come restaurant chains and resort properties. On the 50th anniversary of the company, the company had topped sales of US$1 billion. In the mean time, the company was working for the society and on of the examples is Marriott Foundation for People with Disabilities. At the end of the nineteenth century, 2000 hotels had been owned by the company and the sales had reached US$8 billion.

This resort intends to follow the lead of its parent company and the owners and management will strive to provide the best service to the customers. Marriott has always been open to creativity and innovation in serving the guests at the best level. In return, the customers count on Marriott’s unique quality, culture and personalized service, no matter where they travel. The purpose of the new hotel resort that is to be built is to provide the guests with a complete entertainment on the resort with an 18-hole golf field, a playground and spa treatment and a number of quality dining restaurants. The reason for providing these facilities is that the 200-rooms hotel’s guests get a complete leisure package on their holidays in this Marriot hotel. They will not need to visit the city for superior dining restaurants, as they will be available in the hotel. Name and Legal Structure

The name proposed is ‘Marriott’s Gongshan Golf Club Shanghai’. Here Gongshan is a word in Chinese (Simplified), which means Description of the Business The addition of Gongshan Golf Club Shanghai to the 2,400 Marriott resorts in more than 70 countries around the globe is as unique as the other 2,400 counter parts in the world. Although each resort and hotel is unique according to the local culture and has been designed with the perspective of social responsibility and community engagement, but in each of them there is a Marriott way about serving the associates and the customers. The core principles that were established by the Marriot family in 1929 have inspired every associate in the 2,400 hotels administrations. And the new Gongshan Golf Club Shanghai to be developed will also continue to serve upon the principles laid by the Marriott family.

Marriott Vacation Club has a philosophy of “Spirit to Serve”, as it is mentioned by the Marriott Vacation Club website. Therefore the guests who will come to stay in the hotel resort will have a feeling of being privileged. The vision of the business is to become one of the unique hotels of the Vacation Club division in the area. It is also the vision of Marriot Gongshan Golf Club Shanghai to serve all types of customers and attract customers from diverse background into the hotel. The hotel, its golf course, its spa treatment edifice and the whole property ahs been insured and business protection is given to the owners and managers of the hotel (Nichols, 2008). The golf course workers and spa workers are provided insurance protection for any injuries at the job. The hotel insurance includes coverage of any of the natural disasters including earthquake, flood, and wind and against any crime. Insurance for builder’s risk, interruption of any sort, machinery and liquor liability is not covered in the insurance policy for Gongshan Golf Club Shanghai (Nichols, 2008).

Description of the Concept

The hotel building will be of 32 stories with 12 lifts for the guests, 3 lifts being reserved for the Club Suite guests. The hotel is located in the suburbs of the city Shanghai and on 15 minutes drive, Grand Theatre of Shanghai, Art Museum, Shanghai Museum and some fine dining places is accessible to the guests. All kinds of rooms will accommodate only two people and will have a standard working table, fridge, mini bar, cupboard and locker. All the rooms are equipped with luxury bedding, LCD television, Surround Sound Technology, wireless and DSL internet access and DVD players. These rooms have been designed with international standards which are ready to adapt to any needs of the guests.

Three types of rooms will be available for the guests which are described below – Club Suite: These are the top of the line rooms which have a king size bed and a sofa set which can be converted to a bed and are largest in the area covered. These rooms will have a complementary supply of alcoholic drinks and cocktails in the room mini bar. The guests who choose to live in this type of room will have access to executive level and private lounge located on the first floor of the building with complementary breakfast and snacks in the evening. These rooms will be located on the three top floors giving the guests a view of Longhua Temple. The guests for Club Suite will also have a special access to the golf course, swimming pool, one spa treatment during the stay by our unique Thai missus.

The maximum number of occupancies in a Club Suite is two people.

– Duplex Suite: These rooms will consist of 2 bedroom Bi-level suite and are an ideal choice for families which come to Shanghai to spend a week or two in the city. The special feature of the room is the dining area within the room where the whole family can have meals together. Special rates are given to the guests who stay in this room for trips in the city and also for trips to the adjoining cities of Shanghai. The maximum number of occupancies in a Duplex Suite is five people.

– Premier Room: This room consists of a double queen bed or two single beds and has a sitting area connected to it. The room has access to the swimming pool and newspapers are delivered to the rooms on request. There are grab bars in the bathrooms and has 24-hours room service. The maximum number of occupancies is two people. The rooms are designed to provide a spectacular view of the nearby suburbs of Shanghai and the traditional town. The access to the city center is very easy as it is just a 15 minutes drive from the hotel. There are many entertainment facilities that are available in the hotel which includes the swimming pool which will be accessible everyday from 7 a.m. in the morning to 8 p.m. in the evening. The Spade Bar at the pool side provides alcoholic and non-alcoholic drinks to the guests and its timings are the same as for the pool. On Saturdays there will be a live belly-dance on the pool side and the pool and Spade Bar will be open the whole night till 4 a.m.

The Golf Course will be free for the guests who are staying in the Club Suites and its timings will be from 9 a.m. till 7 p.m. The Golf Course will cover and area of almost 150 acres of land which will be planted with trees and grass which will consume 10 billion liters of water every day. The Golf Course will be of the international standard and approved by Golf Course Superintendents Association of America (GCSAA) and National Golf Foundation.

The Mini-Golf Course will be open at the night time from 7 p.m. till 4 a.m. and has no minimum age. Children can enjoy the Mini-Golf game and it is free for the all the guests. There will be a number of restaurants with different themes and other chains of fast food and ice-cream like McDonalds, KFC, Burger King, Baskin Bobbins and Cold Stone Creamery will be allowed to open up their franchises in the vicinity of hotel at different location. Licenses and Lease Every hotel that opens up in China needs to obtain a license from the Chinese government organization CNTA. Before starting the construction of the hotel and even before leasing the land for the construction of hotel and golf resort, this license needs to be obtained from the government of China.

This license will enable the owners to start the construction of the hotel. The golf course, spa treatment facility and the restaurants will need to obtain separate licenses to operate in the hotel vicinity. The 160 acres land will have to be leased from the government on special rates with the collaboration of some local bank. Market Analysis and Strategy Marriott’s Gongshan Golf Club Shanghai focuses on the international tourists from around the world, who have an interest in playing golf and want to enjoy their stay in Shanghai. The hotel targets those tourists and local golf players who have a desire for spending their holidays in a fun filled resort and a fascinating atmosphere. China has approximately 7,500 hotels; the industry has faced growth of 20 per cent since 2000 (Access Asia Ltd., 2002).

The hotel industry in Shanghai has boosted in particular with the help of growing number of exhibitions and conferences (Access Asia Ltd., 2002). The market in Shanghai has also witnessed a general rise in the local travelers using hotels (Access Asia Ltd., 2002).

Largest number of tourist visit China from Asia followed by U.S.A. and Europe and within Asia the main countries from where the tourists visit China are Japan and Korea. The suburbs of the city Shanghai are less developed than the city center; therefore the suburbs offer more opportunity for the hotels.

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SWOT Analysis

Strengths Weaknesses
– The suburbs of Shanghai offer more opportunities for the hotels as there is not much development there
– The Golf Course will be a major attraction for the tourists and locals too
– The fast food chains and dining restaurants offer dining facilities and meals of every type which will permit the tourists to spend in the hotel instead going outside to dine
– Spa treatment will make the guests spend more and hence the revenue will rise
– 200 rooms will make sure that there is always accommodation available hence there will be less lost customers
– The hotel is a franchise of a major international chain Marriott which has 2,400 hotels and resorts around the world
– Any shortfalls in the funding will be covered by Marriott International
– The regular customers of Marriott and those who have joined the Marriot Reward club are sure to stay in Marriott’s Gongshan Golf Club
Shanghai whenever they visit Shanghai
– The golf resort will inherit the loyal customers of the company Marriott International which is a major advantage
– The hotel is not present in the city center which makes it isolated from the night life, shopping centers and restaurants in the city
– There is no other recreational activity nearby other than what the hotel offers which makes the hotel and easy choice out for the guests
– Only three types of rooms are available which gives the guests less variety to select from
– No recreational activities are available in the hotel in which the whole family can get involved
– The restaurants present in the resort are very expensive in comparison to the dining cafés in the downtown
– Most of the fast food chains in the hotel are American, Italian and Indian fast foods are not made available
– Spa treatment and massage facilities are only carried out Thai workers
Opportunities Threats
– Expenditure by the tourists in China is expected to reach US$ 85 billion till 2011
– The tourist sector is booming in China
– China has a strong and unique culture that the tourists from around the world want to experience
– Shanghai is among the top three cities of China which receive the major tourists from Hong Kong, Macau, Taiwan and foreigners (Research In China, 2007)
– Shanghai attracts the most number of foreign tourists than the other cities of China (Research In China, 2007)
– International conferences and exhibitions are taking place in Shanghai at an increasing rate for example Shanghai World Expo
– The law and order situation in China is usually under control and there are no records of any terrorism activity in the country
– There are chances for excessive expansion of the hotel industry as it took place in the 1990s and the industry suffered from its negative consequences
– There is global recession in the world which is holding back many of the tourists in many countries and has reduced the expenditure of
the foreigners in China
– Most of the hotel rooms are occupied by the businessmen who visit China for business purposes and it the recession does not improve,
the hotel room occupancy will fall

Location Analysis

The hotel will be located in the suburbs of the city if Shanghai, near the Longhua Temple. The temple and the surrounding atmosphere provide a perfect view of the culture of the city and country. In the spectacular view, the far stretched Golf Course on160 acres, owned by the hotel resort, is also incorporated. The major setback of the location is that the hotel is far from the city center which will cut from it the major amnesties of the Shanghai city like the Grand Theater of Shanghai. The hotel is also cut off from the restaurants in the city and local dining facilities and shopping malls of the city.

Competitive Analysis

The lodging industry in Shanghai is highly competitive as there are more than 2,000 hotels in the city and suburbs of the city. The key player in the city of Shanghai as well as China is Shanghai Jin Jiang International Hotels. All the major international chains of hotels are trying to make their position strong in the country as tourism industry is booming. The Marriott alone has 15 hotels in the region of Shanghai and the Marriott’s Gongshan Golf Club Shanghai will have to compete with its own franchises as the presence of Marriott in Shanghai is gaining.

Target Market

The target market for Marriott’s Gongshan Golf Club Shanghai will bee the business travelers who want to stay in executive rooms without paying too much and want leisure in their free time. Also the target market includes the families who are looking for extended stay in two joined rooms with their kids and enjoy their vacations. The locals of China are also the target market who want to enjoy playing golf at their doorstep.

Pricing Strategy

The pricing strategy to be used for Marriott’s Gongshan Golf Club Shanghai is Skim Pricing. This is because the concept of Golf Course is relatively new in the city of Shanghai which inhibits numerous hotels and resorts. Through this strategy, the hotel will attempt to skim the market by setting high prices for the hotel accommodation. Those customers will be sold targeted who are not priced sensitive and want to be the first ones to live in the resort which is one of its kind in the city. The demand of the hotel is expected to be relatively inelastic; therefore, in the beginning, those customers only should be sold the services who can afford to pay more. One more reason for selecting skim pricing as the pricing strategy is that the owners want to recover as much investment as possible in the beginning because of the heavy initial investment on the resort and its far stretched 18-holes grand Golf Course.

Food Services Menu and Beverage List Pricing

There will be different categories of foods available at the room service including American, Continental, Italian, Indian, Thai and Chinese cuisines. The food products will be of the finest quality and prepared with care and pure hygienic conditions. The chefs will focus on the presentation of the food with creative ideas and the portions of meals will be modestly sized. The food items will be priced with a margin of 130% above the cost of the food item. This inflated rate is kept in consideration of the cooking costs and salaries of the chefs.

The room service will also provide the finest beverages in the town, sensational cocktails and alcoholic drinks. The wines list includes wines from France, Argentina, England and New Zealand. The beverage list also includes a selection of finest beers from around the globe, the best vodkas and scotches. These exotic drinks will be priced at a margin of 220% above the cost price for a single serving and the whole bottle will be priced at a margin of 200% above the cost.

Hotel Room Pricing

The hotel rooms pricing is the most difficult part when making the plan for a new hotel resort. In this particular case however, we are considering the pricing strategy of market skimming. Hence the prices for the rooms will be more than perceived for the first few months of the opening and only the exclusive, loyal customers will be invited first to spend their vacations in the hotel. The inflated pricing for the first four months of the opening are mentioned below according to the room type:

1 Club Suite: US$ 1200 / night inflated rate, US$ 600 / night normal rate

2 Duplex Suite: US$ 1000 / night inflated rate, US$ 480 / night normal rate

3 Premier Room: US$ 600 / night inflated rate, US$ 300 / night normal rate

Advertising and Promotional Campaign

Communication

The major medium that will be used for marketing is the television; international channels such as CNN, BBC, Espanol, and National Geographic will be chosen for broadcasting the commercials of Marriott’s Gongshan Golf Club Shanghai (Farrell, 2007). Other media that will be used in the advertising campaign will be in-flight television channels of international airlines such as Air China, Cathay Pacific, PIA, Japan Air Lines and Qantas (Farrell, 2007). In addition to this the campaign will include print media, the magazines that are viewed by the professionals and families around the world such as the Economist and Business Week (Farrell, 2007).

Target Audience

The target audience for these messages and commercials are the tourists who are heading towards Shanghai for their business trip and who identify the veracity of business tour. These people know that the business tour can cost a lot and their hotel choice can help them accomplish to reduce the expenditure as much as possible with enjoyment of all the luxuries and services during their stay. The target audience also includes the family heads that are responsible for planning out a family trip to some foreign country or a vacation in another country. Other target audience is the people who have the love for the game golf and can travel a thousand miles to play on a world class grand golf course in Shanghai.

Financial Data Source of Funding

The sources of investment consist of the equal amount of capital from each of the three investors who are also the owners of this LLC hotel. The rest of the funding will be made by the Marriott International Inc, which is the parent company of the resort.

Balance Sheet

Assets (000s of US$)
Current Assets
Cash 135.0
Account Receivables 899.0
Inventories 1,901.0
Other Current Assets 435.0
Total Current Assets 3,368.0
Total Net Fixed Assets 1,443.0
Land and Building 4,090.0
Total Assets 8,903.0
Liabilities and Equity (000s of US$)
Current Liabilities
Accounts Payable 704.0
Short-Term Debt 120.0
Other Current Liability 1709.0
Total Current Liability 2,533.0
Long-Term Debt 4,990.0
Total Liability 7,523.0
Owner’s Equity
Jin Quinn’s Equity 460.0
Xing Huang’s Equity 460.0
Loews Jiao’s Equity 460.0
Total Equity 1,380.0
Total Liability and Owners Equity 8,903.0

Break-Even Analysis

In the analysis, we are going to assume the selling price to be equal to the average rent of the hotel rooms for a night (US$ 1000/night). The variable cost per unit is assumed to be US$ 700.

Break-Even Point= Fixed Costs/(Unit Selling Price-Variable Costs per unit)

Break-Even Point= 5,533/(1,000-950)

Break-Even Point= 110 rooms

The business will have to fill 110 rooms for breaking even.

Appendices

Organizational Chart

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Job Descriptions of Management Positions

– General Manager: the job of General Manager is to supervise the tasks and performance of the managers of other departments. He is also responsible for dealing with any issues on a large scale and finding the best solution for the best solution for it.

– Front Office Assistant Manager: he will coordinate the activities of front office of the hotel and resolve any problems such as complaints from the guests etc. The person will also be responsible for assigning tasks and duties of the workers and observe the performance of the workers.

– Restaurant Assistant Manager: the person will be responsible for the daily activities of the restaurant and also for deliveries of the meals to the guests in their rooms upon request. The manager will also be responsible for defining the tasks for the workers, kitchen staff and the service waiters.

– Kitchen Assistant Manager: responsible for the maintenance of kitchen and ordering the suppliers and maintaining the correct amount of inventories. The person will also be responsible for assigning duties to the chefs and for managing the performance of the chefs. Any complaint from the guest or customer will be immediately dealt by the kitchen assistant manager.

– Housekeeping Assistant Manager: the job is to ensure clean and attractive rooms for the guests and supervise the cleaning activity and the performance of the workers. Ensuring the delivery of housekeeping supplies to the guest’s room upon request and assign duties to the personnel.

– Admin and Accounts Assistant Manager: responsible for the payments by the guests and the correct maintenance of their accounts. The person is also responsible for maintenance of all the records of the daily transaction of the hotel.

– Golf Course Maintenance Assistant Manager: to manage the cleanliness, maintenance and horticulture of the 160 acre land. Ensure that the correct amount of water is being supplied to the land and the guests have no problem while enjoying their game. Daily complaints of the guests and any issues are dealt by the assistant manager of golf course maintenance.

– Assistant Manager of Bars: responsible for the dress of the waiters, cleanliness of the bars, and performance of the workers. The job of the person will be also to ensure the supplies of the beverages are inventoried and any shortfalls are ordered at the right time by the procurement department.

Sample Menu

Today’s Special Business Lunch $31

Appetizer

  • Fried Meat Balls or
  • Tomato Curry Salad with Dip Entree
  • Beef or Lamb ribs, served with boiled rice and mashed potatoes with a barbeque sauce OR
  • Great Alabama Burger with double Cheese, served with French fries and a cocktail OR
  • Black Pepper Beef Steak with Red Shrimps, served with French fries, green leaves and pickled cucumbers Dessert
  • Egg Pink Pudding With Cherry popsicle or
  • Chocolate Lava With roasted white topping and dark chocolate sauce

References

Zahorsky, Darrell. (2007). Limited Liability Company 101. Retrieved August 8, 2009, from http://sbinformation.about.com/cs/ownership1/a/LLC.htm

Nichols, Lisa. (2008, March 20). Insurance for Hotels and Motels. Retrieved August 8, 2009, from http://businessinsurance.suite101.com/article.cfm/insurance_for_hotels_and_motels Access Asia Ltd. (2002, September).

Hotels in China: A Market Analysis. Retrieved August 8, 2009, from http://www.researchandmarkets.com/reports/42679

Research In China. (2007). China Hotel Market Report. Retrieved August 8, 2009, from http://www.researchinchina.com/Htmls/Report/2008/3143.html Farrell, June. (2007, November 29).

Marriott Launches Dynamic, Integrated Global Advertising Campaign. Retrieved August 8, 2009, from http://www.marriott.com/news/detail.mi?marrArticle=295788 Marriott. (2009).

Guest Room in Detail. Retrieved August 8, 2009, from http://www.marriott.com/hotels/hotel-rooms/shaqi-shanghai-marriott-hotelhongqiao/ Hoovers. (2009).

Marriott Balance Sheet. Retrieved August 8, 2009, from http://www.hoovers.com/marriott/–ID__56078,period__A–/free-co-finbalance.xhtml

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