Contents. 1. Introduction Nature and Scope of Planned Activities and Operation Profile The Boat Strategic Marketing Plan 5

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2 Luxury Boat Charter Company Contents 1. Introduction Nature and Scope of Planned Activities and Operation Profile The Boat 4 2. Strategic Marketing Plan Introduction Market Research Target Markets The Marketing Mix: 4P s of Marketing Marketing Strategies and Budget 10 3 Financial Feasibility Overview Financial Summary Income and Expenditure Statement 12 1

3 1. Introduction Luxury Boat Charter Company 1.1 Nature and Scope of Planned Activities and Operation The luxury cruise and safari market has seen a large growth in Maldives. More than 90 vessels are registered as Safari boats in Maldives. Most these boats concentrate on the scuba diving clientele. A great many of the vessels do not have airconditioning and are very old and not well attended to. Many of the resorts are high end but do not always provide the level of privacy that a client might need and expect. Most of the Safari boats rely on third party marketing strategies such as tour operators. The rental rates are usually for 3-days or more and are exorbitantly high for a meager amount of comfort. There are very few truly luxury boats in the market that offer top-notch service. To cater to the demand for luxury high-end private vacations in Maldives we would like to develop a new safari company starting with one boat. To reduce the dependency on one avenue of client acquisition we will not only use the traditional avenue of the tour operator but also rely on our own marketing expertise. Leveraging surf clubs, dive clubs as well as exclusive yacht clubs as marketing venues we will acquire a wider range of clientele. By offering jet skiing, water skiing and other water sports we provide a greater range of activities than any other safari boat on the market. As the proposed project is based on a well-proven model, we will differentiate ourselves by creative marketing methods as well as superior service. Our aim is to find a formula that is effective and efficient in the Maldivian context. 2

4 1.2 Profile Luxury Boat Charter Company Introduction Having started and run many companies the founders of LussoYachts Private Limited have the experience to tackle any market. With advisors from international shipping companies such as Osman Shipping in Dubai, Indian Ocean Charters in Maldives, Deep Blue Divers in Maldives, Asenyo Inc. a marketing firm in California and many other companies this venture has no lack of expertise. Widhadh Waheed As CEO of Asenyo Inc. Widhadh has worked with companies such as Yahoo! Inc. (Yahoo Travel is the 5 th largest travel website in the US), NBC, CostPlus World Market, Photobucket, Hearst and more including another of the top 10 largest travel companies in the United States. Widhadh has direct connections to the CEO of Arzoo.com to capture the Indian market. She has also helped build one of the top 20 social networks in the United States (per comscore, May, 2009) with 5.5 million visitors a month currently. Jeffrey Salim Waheed As a graduate of Stanford University Jeffrey has worked with NGO's, in the political arena, and has connections to the best high-end hotels in Nepal. He was on the board of directors of Actually Marketing Inc a California based marketing company. Jeffrey also has connections to many potential clients. In the pursuit of creating and running a luxury Safari yacht, LussoYachts will maintain a strong commitment to providing exceptional service and experiences.. 3

5 Luxury Boat Charter Company 1.3 The Boat Lusso1 The Lusso1 is a 11-year-old Fairline Squadron 65. It is in tiptop shape for it's size and has been inspected by our mechanic. Cabins: 4 1 Master Suite 1 VIP Suite 1 Cabin with two twins 1 Cabin with two twin bunks Heads: 3 Fully Stocked Kitchen with Dishwasher 3 Dining Areas 1 Sitting Room Air-conditioned 4

6 2 Strategic Marketing Plan Luxury Boat Charter Company 2.1 Introduction The following marketing plan is researched and developed for the sole purpose of marketing the luxury safari boat. There are three main avenues for marketing the luxury safari. We will evaluate the best approach to penetrate to the existing market. We have concluded that the best way to enter the market is through a small luxury charter. To this effect we have identified a 4-cabin luxury yacht in Dubai at a very reasonable offer. Fairline Squadron 65 is a great long lasting boat with a very good Man engine whose spare parts are readily available in Maldives. The following sections in this marketing plan aim to address all the marketing issues in order to make the company a success. The strategy starts with research, analyzing what the market has, needs and is looking for, and then this section continues to identify the exact market for this type of boat following the 4 P s of marketing, the product, the price, the promotion and the place of operation. Finally this summary plan outlines the strategy to be used for the luxury boat and the budget it requires to promote the charter to the targeted market. 5

7 2.2 Market Research Luxury Boat Charter Company The following section highlights the research and analysis made in order to study the market, the potential penetration as well as expansion to the target market. It is highly important that the market is studied before investments are made in order to minimise risk of market failure and to avoid competitive disadvantages. Current Safari Offerings Registered Bed Capacity Safari Vessels 1,475 1,636 1,676 1,789 1,599 1,923 2,094 No. of Vessels Safari Vessels Of these only a small percentage cater to the luxury safari market. None of the boats offer a wide range of water sports activities. Marketing budgets are low or non-existent due to the heavy reliance on tour operators. The first 5 months of 2007 the live aboard occupancy rate was 70% according to MTPB. 2.3 Target Markets In order to market the luxury boat, it is firstly important to identify and analyze existing target markets and potential new target markets and niche markets before entering these markets in the Maldives. The following highlights the exciting target markets and potential new target markets and niche markets. Existing Target Markets The existing target markets available are as follows. a) Clientele from tour operators 6

8 b) Clientele from resorts Luxury Boat Charter Company The above markets are identified as existing established markets that can be entered fairly easily with the aid of an appropriate and affective marketing strategy. Potential New Target Markets and Niche Markets Although there is a viable and growing existing market for the luxury boat the potential new market could be even more attractive and vast. With the development of effective online systems that connect various corners of the globe these potential markets are becoming more and more accessible. In order to exploit these potential new international markets, considerable time and resources have to be applied in order to establish contacts and affective networks. The potential new markets: a) Direct web sales through our network of sites. b) Direct marketing to exclusive clubs around the world. c) Web sales through a network of affiliated sites. In order to reach the potential markets, long-term commitment and dedicated work is required. 7

9 Luxury Boat Charter Company 2.4 The Marketing Mix: 4P s of Marketing The 4P s of marketing will identify and analyze four critical elements within any marketing plan. These four elements are Product, Price, Promotion, and Place (Distribution). In order for any marketing plan to be affective and successful, (1) a product portfolio needs to be developed, (2) a pricing policy needs to be derived, (3) a promotional strategy needs to be formulated, and finally (3) a distribution system needs to be identified. Product (in this case Service) Portfolio This subsection will provide a service listing for the different products that are going to be marketed. Service Portfolio Pricing Policy 3 Day Cruise 5 Day Cruise 7 Day Cruise Daily Rental Dinner Cruise Surf/Dive Cruise Luxury Yacht Packages 1) The price of a service is formulated and derived based on various factors such as the nature of the service, market demand, supply and demand trends, its various cost elements, level of competition etc which will have to be considered while service pricing is conducted. 8

10 Luxury Boat Charter Company 2) It must be taken into consideration that market price of some services have been highly fluctuating to the extent that it is difficult to find a common trend. Therefore, our pricing policy will be directly linked to these fluctuations in the markets. 3) It is also important to note the fact that in order to deal with competition and price wars, the products identified can be priced and marketed as luxury experience with special emphasis being placed on the concept of extraordinary service. 4) Finally this pricing policy will take into consideration that, in order to sell the identified services at competitive and premium prices in the market today, focus has to be placed on efficient methods of operation to cut costs, reduce overheads, and create a positive image of the service in the customers mind. Promotional Strategy The promotional strategy will be dealt mostly within the marketing strategies section. But within this section there are a few points that need to be highlighted regarding the promotional strategy that is going to be utilized for this marketing plan. Firstly from a promotional perspective, in order to compete affectively with local competitors, different products will be marketed differently according its type of product and quality. We will offer water sports and well-rounded options for any potential needs a client may have while aboard. Secondly it is also important to always promote the underlying reason or intention behind the project and the benefits received by the clientele. Place In terms of location the Safari will be run mainly in and around Male' and the southern atolls. Our divers have already located the best locations for diving, surfing and snorkeling. We will cater our trips around the interests of our clientele. 9

11 Luxury Boat Charter Company 2.5 Marketing Strategies and Budget This marketing strategy is formulated to meet the strategic marketing goals that have been identified in this marketing plan. In order to address each market and to effectively communicate and penetrate to these markets, we will be selecting our marketing tools very carefully according to the exposure levels. The table below shows the marketing approach we will be using for each target market. The table also details out the budget for each of these approaches. Market Marketing Approach Marketing Tools Budget (USD) Networking, Direct Marketing, Billboards, Flyers, Meetings, Radio, 1 Local Advertising Websites /month 2 International Networking, Direct Marketing, Advertising, Print Media, Web Media Flyers, Brochures, Websites, Affiliates, Tour Operators /month TOTAL /month 10

12 3 Financial Feasibility Luxury Boat Charter Company 3.1 Overview This section of the Business Plan covers all the financial projections and forecasts proving the viability and profitability of the business. The first section below summarises and provides an analysis of the feasibility of the project. The feasibility is continued on the detailed Proforma Financial Statements, which then leads to the final section providing the key overall assumptions of the project for the medium term. 3.2 Financial Summary As detailed in the Proforma Financial Statements later in this section, based on the proposed costing and pricings, the project is highly viable. Our safari venture provides a very attractive outlook for investors. This planned business activity gives a positive Net Present Value (NPV) of USD 2,611,331 and also gives an Internal Rate of Return (IRR) of 59%, which is a much higher return than the Cost of Capital of 13%. With the assumptions stated below this investment will have payback period of 4 years. 11

13 3.3 Income and Expenditure Statement Luxury Boat Charter Company PROJECTED PROFIT AND LOSS STATEMENT (YEARLY) Year 1 Year 2 Year 3 Year 4 Year 5 INCOME Room Rental Income 729, , , , ,315 Gross Sales 729, , , , ,315 Less: TOTAL DIRECT EXPENSES DIRECT EXPENSES Guest Food Expenses 25,963 29,252 32,243 33,847 34,508 House Keeping 4,327 8,126 8,956 9,402 9,586 Expenses Laundry Service Exp 1,442 1,625 1,791 1,880 1,917 Fuel 31,938 40,062 49,637 53,974 55,648 63,670 79,065 92,627 99, ,659 GROSS PROFIT 666, , , , ,656 Add: OTHER INCOME Extras (Income) 94,527 98, , , ,465 Less: Extras 49,489 51,687 56,972 59,806 60,974 (Expenses) Contribution 45,038 47,039 51,849 54,428 55,491 Less: Overheads (Expenses) 98, , , , , Staff Salaries 85, , , , , (Expenses) TOTALEXPENSES 183, , , , , EBITDA 527, , , , , FINANCING EXPENSES 235, , , , Bed Tax 10,892 11,376 12,539 13,163 13,420 12

14 Luxury Boat Charter Company Corporate Tax (7.5% annually) 21, , , , , PROFIT & LOSS APPROPRIATION ACCUMULATED PROFITS 259, , , ,392, (beginning) Add: Net Profit for the 259, , , , , Year Less: Dividends ACCUMULATED PROFITS 259, , , ,392, ,038, (ending) Purchase price: 700,000 Loan amount: year term APR 13% 3 month forbearance requested, Balance at start of payment term: Repayment amount: Year Year Year 3 Total to be repaid: Year 4 Monthly Payment: Yearly payment

15 Luxury Boat Charter Company 3.4 Assumptions ASSUMPTIONS Currency, USD Year 1 Year 2 Year 3 Year 4 Year 5 High Season - Days Shoulder Season - Days Low Season - Days Total No. days High Season - Occupancy 60% 65% 70% 75% 75% Shoulder Season - Occupancy 50% 55% 65% 65% 65% Low Season - Occupancy 40% 48% 52% 55% 58% Average Annual Occupancy 50% 56% 62% 65% 66% No of Rooms No of Beds No of Guests High Season Shoulder Season Low Season guests / year average 1,442 1,625 1,791 1,880 1,917 Bed tax ($ per head) Room Rates - 4 cabin luxury charter High Season Rate ($ per room per night) Shoulder Season Rate ($ per room per night) Low Season Rate ($ per room per night)

16 Luxury Boat Charter Company Main Income Extras (Income Per Bed Night) Water Sports Bar Sales Laundry Diving Extras - Expenditure Water Sports 22% 22% 22% 22% 22% Bar Sales 25% 25% 25% 25% 25% Laundry 18% 18% 18% 18% 18% Diving Guest food Expenses - Full Board ($pp/day) House Keeping Expenses - $pp/day Laundry Services - $pp/day Fuel Consumption and Cost Boat, Generator, Dinghy, all fuel included Total Fuel Expenditure - yearly 31,938 40,062 49,637 53,974 55,648 15

17 Luxury Boat Charter Company 3.5 Bed Nights Sold 4 cabin luxury yacht High Seaso n Shou lder Seas on Low Season Bed Bed Rate 4500 Rat e 4000 Bed Rate 3500 Occup ancy Bed Night s Income Occu panc y Bed Nig hts Income Occupancy Bed Nights Income Total Booking Rental Year 1 60% ,700 50% ,000 40% , , Year 2 65% ,175 55% ,200 48% , , Year 3 70% ,650 65% ,600 52% , , Year 4 75% ,125 65% ,600 55% , , Year 5 75% ,125 65% ,600 58% , , Booking revenue Taxes Year 1 729, , Year 2 818, , Year 3 901, , Year 4 947, , Year 5 963, ,

18 Luxury Boat Charter Company 3.6 Crew Boat Crew Nos Salary Scale Total Cost Cost per year 1 Captain 1,500 1,500 18,000 1 Chef 1,200 1,200 14,400 1 Kitchen helper / Waiter ,600 1 Housekeeper / Bartender ,600 4 Total 4,300 51,600 MAINTENANCE Nos Salary Scale Total Cost Cost per year 1 Boat Mechanic ,600 1 Plumber cum Carpenter ,200 1 Laborer ,800 3 Total 1,800 21,600 GRAND TOTAL 6,100 73,200 17

19 3.6 Other Income Luxury Boat Charter Company OTHER INCOME 4 cabin luxury Year 1 Year 2 Year 3 Year 4 Year 5 No of Bed Nights Cost of service % of Income $ Income $ Income $ Income $ Income $ Guests Extras (Income Per Year) Water Sports 50 60% 23, , , , , Bar Sales 20 80% 12, , , , , Laundry 5 10% Diving % 58, , , , , TOTAL 94, , , , , Extras Expenses % of Income Expenditure $ Expenditure $ Expenditure $ Expenditure $ Expenditure $ Water Sports 25% 5, , , , , Bar Sales 22% 2, , , , , Laundry 18% Diving 70% 40, , , , , TOTAL 49, , , , , Grand Totals Year 1 Year 2 Year 3 Year 4 Year 5 Extras Income 94, , , , , Extras Expense 49, , , , , Gross Margin 45, , , , ,

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