b-p symphony
TRANSCRIPT
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CONTENT
1. Short Project Description
2. Business and strategy
3. Market and marketing strategy
4. Building and operation
5. Management and decision-making process
6. Finance7. Risk Factors
8. Applications
SHORT PROJECT DESCRIPTION
TERRAKS Ltd is a property development and investment company, based in Odessa,
Ukraine in 2004. The company was created to develop the Sea Symphony - Resort Hotel and
Luxury Residential Complex on the shore of the Black Sea.The concept of the Complex was developed. It was two different buildings: twenty-and ten-
storey. A unique family - recreation Complex located in paradise of Odessa Arcadia district. Inthe most prestigious district of the city - and close to the best beaches and coast restaurants in thecity.
Demand on this Project was created on the base of high solvency of the population, demand
on apartments in the coastal zone, development of the lending, and the absence of such projects on
the territory of Ukraine. TERRAKS Ltd showed a positive financial results. However, the trends
of nowadays have brought changes into the Project.
Odessa touristic city. Every year more than 1,000,000 tourists come here. Odessa is one of
the most popular resorts on the Black Sea shore with itsprivate beaches, yacht clubs, restaurants,
night clubs and social events. Arcadia is the summer capital of Ukraine. Its one of the most prestigious districts of the city where local and international elite prefer to buy apartments and
houses. The low level of the hotel services, the lack of the hotels in the city, that work under the
auspices of the global brands, the demand on leisure medium to medium-high, led to a changing in
the Project-concept: a ten-floor building has been projected to develop as a hotel 4 +, 5-stars with
extra add-on two floors. Two different structures on the idea of Architects will be connected by the
recreational infrastructure, namely: wellness, Spa-center and gym in a single complex. Outdoor
summer pool, private beach long on 195 meters, 2 restaurants and a restaurant for special guests at
the 12th floor - all of these would be available for the residents of the Complex, and for the guests
of our city.
Today 20-storey building has been finished on 80%. Facade works are on the final stage, laidengineering communications, negotiations about buying the engineering equipment are in the
process. The Hotel-building is ready on 50%. In the terms of additional financing finishing of the
building works and commissioning of the Project into operation is planning for the first half of
2013.
TERRAKS now offers a comprehensive, professional investment, development, project
management and real estate consultancy throughout Ukraine. The Company was created as the
Limited Liability Company with 2 co-founders: Stanislav Stukalskyy and Alexandr Zalevskyy with
the stake in business 90,77% and 9,23%. Director of the Company is Andrey Medvedev. According
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to the Charter of the Company he has the right to sign Contracts maximum of 50 000 UAH. All
other decisions makes by general meeting. Charter capital is 111 000 UAH.
TERRAKS Ltd was created in order to build a Luxury Residential Complex on the sea-
shore. This allows us to develop the infrastructure of the city of Odessa, to attract more tourists and
improve the services that are provided by the hotel sector, which would positively affect to the
image of the Ukraine and to Odessa city on the international level.
The Complex is a unique according to the construction technology. The most modern and safe
materials have used for construction. At the same time in the complex was used exceptionallynatural and forced ventilation system. Traditional for the elite complexes autonomous power and
water supply has a number of features and benefits as well. In particular, all the equipment for these
systems has been not only bought into specialized companies, but also has been established with the
help of highly qualified specialists.
Special attention was paid to the riverbank to protect the Complex, beach and surrounding
area. Search for materials and modern technologies for their construction had began long before the
signing of all necessary technical documentation and execution of works to strengthen the shoreline.
It had been entrusted to professionals of the highest class. This Complex - the only one in Ukraine,
and therefore a unique design, technologies, construction corresponds are to not only domestic but
also the Western norms of construction.
Short Project Description
Project: Resort Hotel and Luxury Residential Complex
Address: Arcadia District, Odessa, Ukraine
Buildings: Two plus ancillary linking structures
Gross area: 57,500 sq.m.
Residential: 40 000 sq.m.
Apartments: 256
Hotel: 17 500 sq.m.
Hotel keys: 200 (minimum)
Conference facilities:Over 800 sq.m.:
y 500 sq.m. ballroom and conference hall;y Breakout areas and syndicate rooms
Food & Beverages:
y Main restaurant for 200+ people;y Special roof-top restaurant for 100+ people;y Lobby bar and lounge;y Pool and fitness bar;y Beach bar and cafe
SPA & Wellness:
Over 2 000 sq.m.;
y Fitness suite;y Healthy and beauty therapy;y Indoor and outdoor swimming pools and tennis courts
Beach facilities: y 195 meters private beach;
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y Full service infrastructure.Parking:
y 200 car-places for Residential Complex$y 100+ car-places for the Hotel
The Scheme of the Management linear functional.
Credit founds for the Project realization was not attracted.
This Business-Plan was created with the aim to attract the credit founds for the Project endingand commissioning into operation Resort Hotel and Residential Complex on the shore of the Black
Sea.
Credit time: Resort Hotel 10 years.
Residential Complex 5 years.
Required time for delay at credit-body payment is 1,5 years.
Required in credit founds is $...., inc. $... on the Resort Hotel and $ ... on the Residential
Complex.
BUSINESS AND STRATEGY
TERRAKS Ltd is a property development and investment company, based in Odessa,
Ukraine in 2004. The company was created to develop the Sea Symphony - Resort Hotel and
Luxury Residential Complex on the shore of the Black Sea.
The Company was created as a Limited Liability Company with 2 co-founders: Stanislav
Stukalskyy and Alexandr Zalevskyy with the stake in business 90,77% and 9,23%. Director of the
Company is Andrey Medvedev. According to the Charter of the Company he has the right to sign
Contracts not exceeding 50 000 UAH. All other decisions makes by general meeting share
holders? ?. Charter capital is
111 000 UAH.TERRAKS Ltd was created in order to build a Luxury Residential Complex on the sea-
shore. This allows us to develop the infrastructure of the city of Odessa, to attract more tourists and
improve the services that are provided by the hotel sector, which would positively affect to the
image of the Ukraine and to Odessa city on the international level. TERRAKS now offers a
comprehensive, professional investment, development, project management and real estate
consultancy throughout Ukraine.
At first time the concept of the Complex included two different buildings: twenty-and ten-storey. A unique family - recreation Complex located in paradise of Odessa Arcadia district. Inthe most prestigious district of the city - and close to the best beaches and coast restaurants in thecity.
Demand on this Project was created on the base of high solvency of the population, demandon apartments in the coastal zone, development of the lending, and the absence of such projects on
the territory of Ukraine. TERRAKS Ltd showed a positive financial results. However, the trends
of nowadays have brought changes into the Project.
Odessa touristic city. Every year more than 1,000,000 tourists come here. Odessa is one of
the most popular resorts on the Black Sea shore with itsprivate beaches, yacht clubs, restaurants,
night clubs and social events. Arcadia is the summer capital of Ukraine. Its one of the most
prestigious districts of the city where local and international elite prefer to buy apartments and
houses. The low level of the hotel services, the lack of the hotels in the city, that work under the
auspices of the global brands, the demand on leisure medium to medium-high, led to a changing in
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the Project-concept: a ten-floor building has been projected to develop as a hotel 4 +, 5-stars with
extra add-on two floors. Two different structures on the idea of Architects will be connected by the
recreational infrastructure, namely: wellness, Spa-center and gym in a single complex. Outdoor
summer pool, private beach long on 195 meters, 2 restaurants and a restaurant for special guests at
the 12th floor - all of these would be available for the residents of the Complex, and for the guests
of our city.
Resort Hotel:
y Square: 17 500 sq.m.y 11 floors with possibility to make roof-top restaurant with summer terrace.y Hotel keys: 200+.y The main restaurant on 200+ quests, launge-caffe, lobby, Conference-hall on 300+
sq.m., 2 swimming pools, Spa- and fitness-center, beach bar and cafe.
y Private beach long on 195 m., with development infrastructure.y Car-parking on 100+ car-places.
Luxury Residential Complex:
y Square: 40 000 sq.m.y 20-storey building.y 256 Apartments.y Possibility of using the hotel infrastructure.y Car-parking on 200+ car-places.
The international Hotel Operators are interested in managing the Complex, like Starwood,
Wyndham, Hilton Corporation, Accor, Rezidor Hotel Group etc.The Complex was created by Mihail Povstanyuk, First Project author, General Director of
ARCHPROJECT-MDM
Mihail Povstanyuk is a member of the Engineering Academy of Ukraine ( academic), member
of the International Academy of Sciences Housing and Communal Economy (academic),
corresponding member of the International Engineering Academy, member of the Ukrainian
National Union of Architects.
He was awarded on Odessa municipal action Person of the Year and had a badge of honor
Crystal Pearl (Odessa, 2003), in the result of Rating of popularity - 2009 was awarded by the
diploma in the nomination Architect of the Year (Odessa, 2009).
His firm ARCHPROJECT-MDM is engaged in the design and renovation of residential andpublic buildings, interior design. The firm was designed and participated in the construction of more
than 350 projects in Odessa and other Ukrainian cities.
The firm was awarded by the number of diplomas and certificates, including:
y Letters of the Odessa Regional State Administration, the Executive Committee of theOdessa City Council, the Odessa regional organization of the Ukrainian National
Union of Architects, State Committee for Construction and Architecture;
y Diploma of the winner of the nationwide competition Highest Grade;y Diploma DENKMAL 2000 European exhibition for the Conservation of
Monuments and Urban Renewal (Leipzig, Germany, 2000);
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y Awarded the first prize Golden Professional in the Architecture (designer of theyear) (Kiev, 2003).
The Complex of private apartments on the seafront - creation by Mihail Povstanyuk, chief
architect of the project. He was the first who proposed to erect ?
? )))
))))))) an absolute aesthetic sun and sea. He did not create a complex of
buildings, but naturalness and simplicity, that was blend in space has already been created - created
by sea, air and unique Odessa's climate.According to the changes in the 10-storey building appointment, changes into the Project was
made by Yuriy Belikov, Head of the architectural group Beletage.
Yuriy Belikov is the winner of government grand, the winner of the Ukrainian competitions
Inter-year (2000, 2001, 2002, 2003) and Creation (2002, 2003), winner and multiple nominee
of Architectural Prize.
Participation in the Project of Yuri Belikov and architectural group Beletage will adapt the
project to the needs of nowadays.
We can realize this Project with the help of Alec Colbeck, International Consultant to design
and develop a strategy, BUREAU Director.
A Swiss based consultant for real estate developments, he has an excellent understanding ofdesign and development properties across a wide range of project types and works with
international clients on feasibility studies and development strategies, project briefing and concept
design.
An award winning architect, technical director of real estate developer Midia Group and
consultant for Austin-Smith:Lord LLP, one the UKs leading architects, he has over twenty years
experience creating new urban spaces and innovative building solutions.
Recent projects include 3 Piccadilly Place, 20,000 square metres of high quality offices and
flagship of a 100,000 square metres master plan for commercial development in Manchester, UK,
which was bought by the Argyle Group from developer Argent prior to completion.
There are national and international architecture in an award winning portfolio awards
including RIBA Awards for Architecture, Civic Trust Awards and Commendations:
yThe Manchester Evening News Arena, the worlds most successful music venue andwinner of an International Olympic Committee IAKS Bronze Award.
yThe National Media Museum.yThe Foundation for Art and Creative Technologies.yManchester Airport Station, which also received the Brunel Award for the worlds best-
designed station.
yThe National Museum of Science and Industry in Manchester.yAldham Robarts Learning Resources Centre, Peter Jost Centre and Avril Robarts LRC
at the Liverpool John Moores University.y Ilijina Glavica Sports Hall and Public Car Park, Dubrovnik received the International
CEMEX Building Award for best infrastructure building.
General Contractor of the Project TV-SERRUS LLC. Selection of the Contractors is based
on the tenders for execution of the certain types of work, relationships are supported by the
Contracts with clearly defined time frame.
According to research conducted by HVS, a leading consulting company in the service
industry and the hotel and restaurant business organization, in October 2011, because of falling
profitability of the hotel business and opaque, ever-changing market conditions, investment in the
hotel business in the CIS countries are fascinating. However, potentially risky. Despite the irregular
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and quite expensive air transport, as well as the long procedure of issuing visas, the number of
tourists annually to the CIS countries increased by an average of 3% per year. According to the
forecasts, this figure will stand on this level next few years. The first places based on the tourists
attracting occupy the Russian Federation, Ukraine and Kazakhstan.
According to HVS, the hospitality sector in the region has great potential to attract investors -
now and in the future. It is expected that demand will grow and expand the market, which will get it
many more players. The risk profile is acceptable in the region not for all investors, but if they
focusing on the growth opportunities - they are definitely. Capital in this case should be put in asafe location, product and professional operator, relying ultimately on competent advice to help
unlock the potential of their investment.
Odessa is a city promising not only to finance such projects, but also for the hotel operators.
Airport transfer to private hands, the work on the formation of the city's image at international
arena, the planned development of the region's infrastructure - all this makes us one step closer to a
quality project completion The Resort Hotel category 4+ stars under international hotel operator and
The Residential Complex.
To complete the Project and putting it into operation we need $ 26,821,945. Such investments
in the completion of the object and putting it into operation will allow for 5 years to get the total
revenue from the sale of the apartments more than 25.5 million U.S. dollars, as well as a netoperating income from the hotel during 9 years, according to the hotel operator forecasts, more than
U.S. $ 37,340,625 (excluding VAT).
MARKET AND MARKETING STRATEGY
Sea Symphony is located in Odessa, southern Ukraine, about 440 kilometers to the south
of the capital city Kyiv and located on the shore of the Black Sea. Odessa is one of the main
economic centers of Ukraine, with three major sea ports, highly developed manufacturing sector
and transportation industry, extensive tourism and recreation facilities, established financial and
social infrastructure as well as a rich historical and cultural heritage.
With a population of about 1 million people, Odessa is the fourth largest city of Ukraine and
accounts for approximately 4,6% of countrys GDP. Odessa benefits from a favorable geographic
location. The city is situated on the north-western shore of the Black Sea and lies on trade routes
from Central Europe to the Middle East and Asia. The major seaport (largest in Ukraine), the
Odessa International Airport and a well-developed railway system make Odessa an important
transport junction of Ukraine.
Every year 1,000,000 tourists come to the city. With its private beaches, yacht clubs,restaurants, nightclubs and social events, the city is one of the most popular resort destinations onthe Black Sea. According to the Feasibility Study conducted by PKF-hotelexperts, the pros and con
of location is in Odessa SWOT-analysis:
SWOT analysis Odessa
Strengths Weaknesses
y administrative centrey favourable geo-strategical location on the
shore of the Black Sea
y one of the main industrial cities ofUkraine
y one of the main ports of Ukraine
y rather limited international awarenessy strong seasonality (especially outside the
city centre)
y high dependence on domestic markety lack of destination managementy no marketing budget to improve city's
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y attractive historic city centrey diverse cultural offerings (e.g. Odessa
Opera, various museums)
y diverse gastronomic, shopping andentertainment facilities
y popular cruise line destinationy good accessibility by plaine, train and
car
y well-developed public transport networky balanced guest mix in the city centrey major business and political centres of
Ukraine
y well-known summer resort with a longhistory in the CIS
popularity
y lack of internationally branded hotelsy absence of congress and conference
facilities
y lack of qualified staff
y expansion of direct flight connections toand from Odessa International Airport
y extension of season by focusing on newguest segments (e.g. MICE segment)
y development of facilities which help toprolong the season (e.g. conference andcongress facilities, spa facilities, etc)
y improved international promotion of thedestination
y development of internationally brandedhotels in all categories
y delay in various infrastructuredevelopments
y high dependence on industry sectorsrelated to the port
y failure to enhance the internationalpromotion and thus the awareness ofOdessa
y increasing competition by otherdestinations
y competition for qualified staff (furtherintensified with each hotel opening)
y general economic, natural and politicalthreats
Opportunities Threats
On the one hand, the city is negatively affected by the seasonality of demand (especiallyoutside of the city centre). Further weaknesses of Odessa are the lack of internationally brandedhotels and the absence of qualified staff. But on other hand, Odessa mainly benefits from itsfavorable location on the shore of the Black Sea. Due to its location, it became one of the majorindustrial cities in Ukraine with the sea port as its main economic driver. Furthermore, the culturalofferings and the wide-ranging entertainment and gastronomic offerings attract guests from theleisure segment which leads to a relatively balanced guest-mix within the city centre. But we canchange it with the help of Ballroom facilities (we can make weddings, press-conferences and other),special roof-top restaurant and SPA-facilities with attractive view to the sea side.
Sea Symphony is located in the most prestigious seaside area of Odessa the Arcadia
District. In the immediate vicinity of the Complex are private mansions of the citys elite, the citys
most exclusive yacht club, trendy restaurants and private beaches. Just five minute walk away isArcadia Beach, an area internationally reknowned for its vibrant night life. The citys historicalcenter is a 10minute drive away. The site can easily be reached by car from all parts of the city.
The area currently features three resort-like hotels (Hotel Palace del Mar, Hotel Arcadia Plazaand Hotel Grand Pettine), which also comply with international standards. However, except for theHotel Grand Pettine, which features 91 guest rooms, the capacities of the other hotels are ratherlimited (Hotel Palace del Mar: 35 guest rooms; Hotel Arcadia Plaza: 24 guest rooms). Nevertheless,given their proximity to the project site these hotels represent direct competition to the clientsenvisaged Project. At the frame of central part of the city attention should be paid to the end ofreconstruction works at the Krasnaya Hotel (Bristol) on 114 hotel-keys and estimated
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commissioning into operation the Hotel Bolshaya Moskovskaya on 200 hotel-keys at the end of
2012. But this Hotels stay at other segment Landmark Hotel.
Demand for the rest in the hotel is formed mainly due to the excellent location. Odessa is a
famous like a place of leisure of Ukrainian and Russian tourists, increasing number of tourists from
Western Europe and Eastern countries. Mild and dry climate attracts tourists which want to enjoyleisure and improve their health. The demand for wellness and Spa - the main factor for the tourismdevelopmentin the region. Furthermore, the Black Sea coast is a great opportunity to spend aclassical beach holiday during the holiday season from May to September. During the summerseason tourists are attracted by the various entertainment events, nightclubs, rave institution.Arcadia area, where the "Sea Symphony" located, attracted attention mainly of Kiev and Moscowresidents, as well as a representatives of the Middle East, the United States and Western Europe.
At the period from October to April we are planning to attract the tourists by Spa andConference- facilities, all kinds of celebrations and international conferences.
SWOT-analysis of Project location is:
Strengths Weaknessesy attractive location at the seafronty attractive view from the project site to
the east (unrestricted sea view)
y very good visibility due to the height ofthe residential complex
y high potential of micro destination due toland plot size
y attractive gastronomic and entertainmentfacilities in the immediate surroundings
y proximity of upscale yacht cluby no direct competitors
y rather remote location outside of the citycenter
y condition of access road (needs to berebuilt)
y large apartment tower might shade thehotel
y lack of demand generators (e.g. largecompanies) for business guests in the
direct vicinity
y entering the market with the firstinternationally branded hotel in Ressort-class
y reconstruction of the access roady further development of overall
infrastructure
y redevelopment and upgrade ofsurrounding area, including an attractive
beach promenade with gastronomic andretail outlets, leisure facilities as well as
a marina
y additional shopping, gastronomic andy entertainment facilities in the
surroundings
y proposed marina could offer shuttle-boatfrom and to Odessa
y neglect of upgrading of the surroundingarea
y development of new competitive hotelprojects, particularly in the upscalesegment
y general political, economic and naturalrisks
y general project-related risks
Opportunities Threats
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At the result of SWOT-analysis we see that the main strength of this Projects in unique
location that can help to put this Hotel in the first place among other hotels. However, theimportant role in it play Hotel Operator.
Evaluation of the project location can be represented as follows:
Criteria Assesment
Name -- - + ++
Visibility *
Accessibility by car **
Accessibility by means of public transport
General transportation coverage
Image
View from the Project site
Quality / sightlines of surroundings
Environmental situation
Security
Cleanliness
Tourist attractiveness
Shopping facilities in the vicinity
Gastronomic facilities in the vicinity
Entertainment facilities in the vicinity
* considering the visibility of the adjacent residential tower** considering potential for improvement in light of the redevelopment
The following table describes the suitability of the project to different guest segments:
Guest segmentSuitability of Project site for demand by
particular guest segment
Travel purpose Category -- - 0 + ++
Business
Business travellers
Fair / congress attendees*
Conference / seminar attendees **
Participants of incentives
Airline crews
Leisure
Individual tourists
Group tourists
WeddingsMiscellaneous Long-stay guests
* attendees of events which do not take a place in the Hotel
** attendees of events in the Hotel
The project site will be appealing to individual and group tourists alike. This is attributable tothe projects status as being one of the first upscale hotels of a particularly international standard.
Due to the limited presence of significant companies in the immediate surroundings, businesstravelers are likely to account only for a small percentage. However, we believe that providing the
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right infrastructure (also in terms of conference and meeting facilities), conference attendees will
play a major role for the clients envisaged resort. Taking into account its location directly at theseafront and the foreseen wellness facilities, the project will most likely also cater to participants of
incentives. Long-stay guests might be attracted by the residential units, which could be subject to aserviced apartment concept.
The following chart illustrates the suitability of the project site for different hotel types:
Hotel type Suitability of Project site for particular hoteltype
Type Category -- - 0 + ++
City hotel Five stars (deluxe)
Four stars (upper class)
Three stars (economy)
Two stars (budget)
One star (low budget)
Motel
Holiday resort
Serviced apartmentsAll suites hotel
PKF-hotelexperts have recently completed a short feasibility study and valuation for theproposed Hotel Project. The study supports the development internationally managed upscale resorthotel with state of the art conference and SPA facilities on the project site. In the consultantsopinion, the proposed resort (has) the possibility to become one of the qualitative leaders on themarket. A superior positioning compared to the existing hotels in terms of quality of facilities andservices offered should be easily achieved.
Internal marketing analysis performed by The Registry Collection, the worlds leadingmarketer and operator of luxury fractional ownership properties, also supported the complex
positioning in the luxury category and underscored high demand potential.
4. PRODUCTION AND MAINTENANCE
As noted in previous sections, for Project realization of the Resort Hotel and the sale of theapartments, business needs to be restructured. It is very important to control the rebuilding part of
the Project and its need less than 1 year due to possible difficulties with repayment of the loan.The following chart illustrates schedule of ending works for the Project and commissioning of
the Project into realization.
Works 1 2 3 4 5 6 7 8 9 10 11 12Project works
Stage 1 (initial concept planning)
Stage 2 (design concept and style)
Stage 3 (detailing plans)
Installation of heating units
Installation and Commissioning
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Sewerage
Design documentation
Ground works
Cutting the floor
Installation of lifts and ladders
Parking (20-storey building)
Design documentation
Ground works and concrete
pouring
Pruning and installation of a rock
retaining wall
SPA
Project
Ground works and concrete
pouring
Parking (10-storey building),
with a retaining wall
Design documentation
Ground works and concrete
pouring
Ballroom and outdoor pool
Design documentation
Ground works and concrete
pouring
Additional 2 floors
Design documentation
Pouring concrete and masonry
walls
Facade work
Design documentation
Installation
Engineering
Interior work
Furniture and Interior Design
Roof
Accomplishment of adjoining
territoryBeach accomplishment
Access Roads
Schedule was created with additional time with the purpose to prevent risk factors, like delaysin delivery of materials and equipment, delivery in works.
On this stage of Project work was obtained by all necessary building permits, were reachedagreements about water-, energy- and gas-supply, in the process are negotiations about the abovetypes of works, preparing of the tender documents for the selection of service providers andcomponent equipment. City authorities are also interested in the faster completion of the Project
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because it will improve infrastructure of the coastal zone (parking lots, roads and communication
networks, the creation of promenade area).Today facade works in the 20-storey building are completed. The construction of parking and
access road is preparing. The part of the communication is ready, and running vertical transport isworking. For 10-storey building has been prepared concrete structure and there are in the process:
projects of construction of parking, Spa and Ballroom and project of adjoining territory.
5. MANAGEMENT AND DECISION-MAKING PROCESS
TERRAKS was created as the Limited Liability Company with 2 co-founders: Stanislav
Stukalskyy and Alexandr Zalevskyy with the stake n business 90,77% and 9,23%. Director of the
Company is Andrey Medvedev. According to the Charter of the Company he has the right to sign
Contracts maximum of 50 000 UAH. All other decisions making by general meeting. Copy of the
Charter documentation you can find in attachments.
Managing structure of the Company is functional.
This Managing Structure gives a possibility to make fast decisions, the leaders ofdepartments are responsible for their decision-making, specialists from Departments professionally
solve the problems, they work systematically and purposefully as a result of interaction among
departments. Heads of departments have extensive experience in the realities of the Ukrainian
market and choose the best partners for cooperation.
The team management is crucial to business success. That is why owner of the business prefer
to attracts an international hotel operator with experience of implementing and working with such
projects. Coordination of management is in accordance with the Management Agreement.
Director
purchase department marketing departmentdepartment of
development
Financial Analysis
Department
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6. FINANCE
Financial Reports about the status of the company over the past 3 years you can find inattachments.
Credit funds for the Project realization were not involved.
This Business-plan was created to attract credit loan for the work ending at the Resort Hoteland the Complex of apartments in Odessa, Ukraine.
Time credit: Resort Hotel around 10 years.Complex of apartments 5 years.
The time need to delay payment of the loan: 1.5 years.
Approximate costs for work completion
The Resort Hotel
The Complex of Apartments
According to the PKF-hotelexperts, a leading international consultant at hotel business, for 10years income before interest, depreciation and amortization, and income taxes from the ResortHotel operation might be more than U.S. $ 50 million. Projected Income from the sale of theapartments is more than U.S. $ 20 million (not including taxes and fees). Price for the hotel key pernight set per year by under the influence of supply and demand.
Time of Projectrealization (years)
Income from the
Resort Hotel (bef.int., depr. and am.,
and inc. tax), $
Income from thesale of
apartments (bef.int., depr. and
am., and inc.
tax), $
1 3 150 000
2 3 008 600 5 250 000
3 4 702 600 4 375 000
4 5 167 400 4 375 000
5 5 364 800 3 500 000
6 5 546 800
7 5 657 400
8 5 758 200
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9 5 853 400
10 5 937 400
Total: 46 996 600 20 650 000
Critical period for the hotel is the first 2 years. Mortgage payments for the Resort Hotelduring the 1st year of the project realization will be through the sale of apartments.
Retrieval of the loan will be made within 1 year. These calculations are based on the forecastcash flow.
As a guarantee we offer object under construction of the Resort Hotel and part of the freeapartments in the 20-storey building.
7. RISK FACTORS
Technical risks:- Delay of construction site preparation and execution of a construction schedule;- Delay of suppling of equipment and accessories;
- Later start hotel due to unexpected stops;- Unexpected shutdowns during the commissioning and acceptance of the Commission;- Poor quality of delivered products;- The emergence of a new the same Project in Odessa.To avoid technical risks we should keep clearly stated plan for the project, pre-established
contacts with suppliers of materials, equipment, accessories and furniture, thought several optionsfor crisis management are hard to control the selection of suppliers, as well as monitoring theappearance of objects resort hotels of international level.
Under the financial risk of the company we understood the risk of adverse financialconsequences in the form of income and capital loses under uncertainty conditions of its financialactivities.
Financial risks are roughly divided into internal, related to the failures of staff, and external
(independent of the company, but a direct bearing on it): an increase of inflation in the country,exchange rate changes, political instability, directly affecting the conduct of business. Note that the
calculations for the development funds were made with 10% additional costs, which makes itpossible to avoid a shortage of funds for the project.
Organizational risks are minimized, because the project managers involved in theinternational class (in accordance with the Management Agreement).
Credit risk is compensated by an international insurance, minimizing the risks to monetarytransactions.
Legal risks, such as risks of loss related to the fact that the legislation or has not beenconsidered at all, or changed during the transaction, the risk of non-compliance of legislation indifferent countries, the risk of ill-prepared document, which the counterparty is not able to complywith the terms of the contract and other risks, compensated for by the involvement of lawyers
working on a project of international level. It takes into account the experience of international hoteloperator for the Project.