Hotel SPA 4* - Investor Wanted

Opportunity Summary

The aim of this project is to create the place where training groups could relax, integrate and enjoy themselves. This will be achieved by building a recreational complex which will comprise the main building, infrastructure, a garden along with the area development, and appropriate equipment.

village of Stare Jabłonki which is known for the World Beach Ball Championships. This localisation is characterized by a magnificent landscape which only to a small degree has been changed by man.  Both the charming location of the facility and its closeness to Warsaw essentially contribute to the competitiveness of the project. Moreover, one should stress:

§         Tourist aspects of the picturesque Mazury Lake District which attract a great number of tourists in summer,

§         Clean waters of surrounding lakes,

§         Increasing popularity of short-time trips in the area of the Mazury Lake District,

§         The fact that the project is supported by local authorities since the building of the facility will contribute to the increased tourist attractiveness of the Ostróda commune.

The facility will be located on the slope of the gorge with a stream. The gorge and the stream meanders make this place exceptionally charming. Nowhere else in Mazury can you find a place that could compete with it. 250 m from the hotel building one can see the shore of Szeląg Wielki Lake which is the starting point of a very important sailing route of the Mazury Lake District. From the highest points of the plot we can admire the view of the lake and neighbouring hills. There is also an old wood called Las Taborski in the nearest vicinity. This natural feature makes the active relaxation and integration meetings more attractive.

The floorage of the designed building is 1500 m2 and will comprise 26 rooms for 55 guests. Despite its small size the building houses a swimming pool, a SPA, and a restaurant. All the rooms are air-conditioned. The architectural style found here refers to the style of the XIXth century final period health resorts. This can be seen in the elevation and perspective drawings. As the hotel will be situated on the slope, its front elevation has two storeys and the rear one three. Typical materials for the Prussian area such as stone, brick and wood in the form of half timber wall (so called Prussian Wall) will be used for the construction of the elevations.

The differentiation strategy will be implemented by:

§         The interior design which significantly differs from the contemporary three and four star hotel standards; we will use an old-mansion style characterized by rough plaster and a great deal of wood and red bricks;

§         deviation from the commonly used solutions regarding the furniture in the rooms; the furniture will be made from heavy solid wood,

§         the SPA design, regarding both its function distribution and the interior design, will be characterized by very high aesthetics which will refer to the architectural solutions used in the building elevations,

§         the proper arrangement of the nearest surroundings of „Srebrny Szeląg” which will allow the guests to spend time in a nice way,

§         employing in the SPA people coming from the Far East (e.g. Indonesia, Thailand, India).

Additionally, the SPA offer rating will be emphasized by the highest standards of recreational services for the most demanding customers providing them with an opportunity to improve their health and looks in the ideal conditions and unique surroundings.

The value of the land and the value of the project expenditures have been estimated to be PLN 2 mln. On the day of obtaining the building permit it constitutes half of the necessary own capital. Once the shareholder has paid PLN 2 mln (the Company Ltd is the preferred solution) the company’s own capital will amount to PLN 4 mln. This is the optimal level of one’s own capital enabling the application for an investment bank credit in the amount of PLN 5-6 mln. At the moment of the operational activity the asset debt would beRespond to this opportunity%. The amount of PLN 7-8 mln (cash) will be sufficient to execute the undertaking in the expected style and range. Of course, it will be very important to control the project cash liquidity because of the VAT settlement (much longer time period of receiving a tax refund which is calculated on the basis of the zero tax in the investment period).

The project profitability, namely IRR, has been calculated to be 24,7% and NPV = PLN 7 mln (discount rate = 12%).

The presented financial model in its basic version may be modified via the financial structure change. The basic model assumes financing the investment in a traditional way: the owners’ capital (50/50) + a long term bank’s capital. Other alternatives are as following:

§         Alternative II – the present owner’s capital + the other shareholder’s capital (e.g. private equity) in the amount of PLN 8 mln (ownership structure 20/80),

§         Alternative III - the present owner’s capital + the other shareholder’s capital amounting to PLN 2 mln (the ownership structure 50/50) + a long term loan from the other shareholder ending up with a final zero cash balance.

The presented alternatives do not affect the project investment profitability, but they significantly regulate the ownership relationships in the Company and the repayment policy of the capital necessary for the realization of the project.

One has to emphasize the project development possibilities in subsequent years. The project will be carried out only on a portion of the property (about 15%). The remaining area may be used for other hotel buildings and/or creating the additional infrastructure. The remaining non-developed land will provide great opportunities in future – in case of the investment realization according to the assumed profitability and project liquidity, there will be a possibility of the unlimited development of the hotel activity. The project additional value is the lack of barriers for the further development once the assumed market and financial parameters have been achieved.