Accommodation and Tourism Facility in Motherwell – A Business Plan

November 2007

Contents

1. Summary of Feasibility 2

2. The Aim of this Business Plan 2

3. Market Analysis 2

Tourist Numbers and Growth Forecasts 2The Hotel and Backpacker Markets in Nelson Mandela Bay 3The Competitive Advantages of the Motherwell Eco-Lodge 4

4. Product Description 6

The Motherwell Eco-Lodge and Chalets 6Sustainable and Eco-Friendly Characteristics 6Staffing Requirements 7Set-up Timeframes 8Marketing and Sales Strategy 8

Marketing Campaign up to and Including Opening 9Marketing Campaign aimed at 4 Target Markets 11Conclusion 12

5. Risk Analysis 12

Cost of Construction and Setup 12Department of Trade and Industries Subsidy 13Will Income Targets be met by the Eco-Lodge and Chalets? 13Can Expenditure be kept at Budget Levels? 13

6. Conclusions 13

1

ACCOMMODATION AND TOURISM FACILITY IN MOTHERWELL

Business Plan

1. SUMMARY OF FEASIBILITY

The Feasibility Study for the Motherwell Eco-Lodge and Chalets development suggests that this development is feasible under certain conditions:

The Eco-Lodge must include a conference facility which could seat possibly 280 guests per day: a 20% usage here is anticipated (20,440 guest days per year) at R100 per day = minimum conferencing income of R2,044,000.00 per annum

Catering income to the Eco-Lodge would be R102,200.00 per year, which is a rental of 10% of turnover on an estimated turnover of R1,022,000.00 which would accrue from the restaurant, the bar and teas, to the catering concessionaire.

Accommodation income of a 70% occupancy of 20 chalets at R500 per chalet per day which gives an accommodation income of R2, 555, 000.00 per annum.

The above would result in an annual income of R4, 701, 220.00. Operating expenses are calculated at R1, 696,000.00, which would leave a surplus before debt servicing of R3,005,000.00.

2. THE AIM OF THIS BUSINESS PLAN

The aim of this Business Plan is to establish the process whereby the Motherwell Eco-Lodge and Chalets will become established and achieve the following:

20,440 guest-days of conference delegates at a billable cost of R100.00 each, per year.

R102, 200.00 income from catering, which is a 10% turnover rental on a catering, bar and tea income of R1, 022, 000.00 per annum.

A 70% occupancy rate on 20 chalets at an average of R500.00 per chalet per night. Expenses held at R1, 695, 000.00 per annum.

3. MARKET ANALYSIS

3.1 TOURIST NUMBERS AND GROWTH FORECASTS

From Annexure A we can draw the following figures:

Nelson Mandela Bay played host to 405,600 foreign tourists in 2006, and 2,015,710 domestic tourists. These groups spent R2, 3 billion each, giving a total value to the NM Bay economy of around R4,6 billion (pg 25).

It is estimated that these numbers will have increased to the following figures by 2010: foreign tourists, 488,000 spending R5, 3 bilionl; domestic tourists, 2,270,000 spending R3, 8 billion. Total tourism spending: R9, 1 billion (pg 25).

These figures suggest a rapidly growing tourism market, particularly in numbers and spend of foreign tourists.

It has been estimated that an additional 233 hotel / resort rooms are needed in the NM Bay area by 2010, and a further 487 by 2015 (these numbers are over and above new building projects underway).

These growth forecasts suggest a healthy and growing industry, requiring new entries into the market in the short term. Plainly, new entries have to satisfy the requirements of their target market in order to be successful.

2

3.2 THE HOTEL AND BACKPACKER MARKETS IN NELSON MANDELA BAY

Page 24 of Annexure A lists the main large accommodation establishments in Nelson Mandela Bay, and supplies their 2004 room rates and average occupancies. We have brought this up to date with research done for this report, and the results of this research are in the following table:

Hotel Price per night for

single roomBreakfast included

Phone Significant Facts

Number of Rooms

Beach Hotel Sea-facing: R995Not s-f: R810

No – R90 extra

041 583 2161 En-suite rooms 58

Brookes Hill R595 Yes 041 584 0444 Suites – 2 bed, 1 bed, bachelorIncl bathroom,Kitchenette / kitchen

68

Chapman Manor R520 Yes 041 584 0678 En-suite rooms 24City Lodge R630 No – R65 041 584 0322 En-suite rooms 147Courtyard Room: R870

Suite: R995No – R78 extra

041 583 4655 Suites / rooms.Suites: bathroom + living room

80

Edward Hotel R530 Yes 041 586 2056 En-suite rooms 97Formula One R229 041 585 6380 Bathroom in the

room88

Holiday Inn R699 No – R83 extra

041 582 3720 En-suite rooms 280

Humewood Hotel R479.10 Yes 041 585 8961 En-suite rooms 67Kelway 4 star R820,

3 star R660Yes 041 584

0638/9En-suite rooms 65

Kings Tide Boutique B&B

R500, R735, R1135 Yes 041 583 6023 En-suite rooms 12

Paxton Hotel R699 No – R78 extra

041 585 9655 En-suite rooms 83

Pine Lodge R555 No – R69 extra

041 583 4004 Chalets 70

Protea Hotel Marine R895 No – R120 extra

041 583 2101 En-suite rooms, some suites

98

Road Lodge R338.35 No – R34 extra

041 583 4404 Bathroom in the room

92

Summerstrand Hotel R650 No – R80 extra

041 583 3131 En-suite rooms 237

Windermere Hotel R1300 Yes 041 582 2245 En-suite rooms 15Willows Chalets: R270 – R730

Cottages: R495 – R850Rondawels: R205 – R850

Chalets, Cottages, Rondawels

50

TotalAverage Occupancy

163070%

Backpackers AccommodationLungile Lodge(Humewood)

Dorm – R70 ppDouble – R250

No 041 582 2042

PE Backpackers(Central)

Dorm – R55Double – R150 Twin – R150

Yes 041 586 0697

Jikeleza Lodge (Humewood)

Camp – R40ppDorm – R65 – 70ppDouble – R180-200 p/rm

041 582 2597

1 Cora Terrace(Central)

Dorm – R75Private:Single – R180

Yes – cereal

3

PP sharing – R90Tanaqua Lodge(Humewood)

Camp – R45ppDorms – R75ppDouble from R200 p/rmTwin from R200 p/rm

041 582 4304

Rooftops From R150pp Self-catering 041 585 1655Willows Dorm (own bedding) R40-

R60 per person.

The above is a reasonably thorough analysis of the hotel and backpacker market. The Secondary Market (see Pg 24 of Annexure A) has not been included, as they are not, with respect, competitive establishments.

3.3 THE COMPETITIVE ADVANTAGES OF THE MOTHERWELL ECO-LODGE

As we have noted (see Feasibility Study, section 5), almost all of the successful hotel and B&B establishments in Nelson Mandela Bay are clustered in the Humewood / Summerstrand beachfront strip. The attraction of this area is obvious (again, see FS Section 5).

What do we have to do to get to a 60% room occupancy of 20 rooms for the Motherwell Eco-Lodge, and to meet our goals of convention numbers and catering usage?

3.3.1 The Four Key Markets for the Motherwell Eco-Lodge

A. The Motherwell Community

The Eco-Lodge will have to advertise itself to the following markets here:

Accommodation – it must inform, and regularly remind, Motherwell Business and the Motherwell middle class, of its services – direct mail, email, phone calls, etc. Another possible customer is the NM Bay Municipality.

Backpackers – an 8 bedroomed unit, rental at R500.00 for the night, is a very competitive backpackers product (R62.50 per person). And each unit has two bathrooms, a kitchen and linen – a backpackers heaven! Regular mailings, calls, etc to Schools, Churches, Sports Clubs etc.

Catering. Special Sunday lunches and Wednesday evenings will draw support, and Friday evening happy hours will do likewise. Possibly a kiddy playpack will be an added attraction.

Conferencing. The Municipality, and local business etc, will be a potential base of support.

The support from the Motherwell Community will be encouraged if the Eco-Lodge runs a publicised and efficient “Creative Tourism” programme, in which guests are encouraged to stay at the Lodge, and to involve themselves in creative tourism programmes co-designed by the Lodge, the Municipality’s department of Economic Development and the local community (see next section).

B. Coega Industrial Development Zone

The Coega IDZ is undoubtedly the potential market for the services of the Motherwell Eco-Lodge. As we have already noted, the Coega Development Corporation is about to occupy its newly-constructed office block in the IDZ – this will be the first major grouping of permanent workers to be domiciled in the IDZ, and this will happen in December 2007.

Should the NM Bay Municipality agree to build the Eco-Lodge, or to commission a process that allows a developer to build such a facility, it would probably only come on-stream in late 2009 or in mid 2010 (see Gantt Charts in next section). By then a number of major factories will be in construction, and other office buildings and commercial businesses will be on-stream. This will create a large reservoir of senior and middle managers working on construction or in factories or

4

office buildings in the IDZ by early 2010. Plainly, they will need conference and recreation facilities; restaurants and bars and accommodation opportunities. The proposed site of the Motherwell Eco-Lodge is closer to the IDZ than is any part of the NM Bay Metro except Bluewater Bay, and will thus be in an excellent position to get some of this business.

Conferencing Business

The Coega IDZ will create considerable opportunities for conferencing, training, board meetings, breakaways, retreats, etc, etc. This will be core-business for the proposed Eco-Lodge, and as such a strategy must be developed to “catch our share” of this business (see next section).

Catering and Beverages

As with the previous note on conferencing, the executives domiciled in the Coega IDZ will be making use of restaurants, bars and recreation facilities generally – the Eco-Lodge must promote itself to get a significant section of this business (see next section). Accommodation

The ongoing development of the IDZ should see a steady stream of highly skilled workers (engineers, machinists, finance people, etc.) coming to the IDZ for short and long stays while establishing production, financial and general business systems in the plants that will be built. The small chalet, which has a lounge, a bedroom, a kitchenette, a workstation with an ADSL connection, and a private bathroom (all of this with a view and with access to a restaurant, a bar, a river-front and conference facilities) will be the ideal unit to accommodate such executives. The suggested rate of R500.00 per night, is very reasonable by hotel standards, and there is no reason why a good chunk of this business should not be available to the Eco-Lodge. This should be the main target market for the accommodation services of the Eco-Lodge.

[While the IDZ is the obvious target market, it must be remembered that nearby Markman Township is also a thriving industrial zone, with considerable requirements for conferencing, catering and accommodation, and must be worked intensively in this regard also].

C. The General Growth in the Tourism Market

As we have noted in the Feasibility Study, a shortfall in tourist-based accommodation is anticipated in the NM Bay area (between 230 and 480 rooms by 2015). Should the Eco-Lodge market and advertise itself appropriately, some of this will be available.

Further, intensive marketing with governmental and parastatal organisations (the NM Bay Municipality; Government generally; Telkom and Transnet and Eskom, etc.) could see conference usage develop in this market for the Eco-Lodge, with attached catering and accommodation takeup.

D. Eco-Tourism and Cultural Tourism

The NM Bay area has a very limited number of tourism accommodation establishments that cater for eco and cultural tourists. Most local hotels are just that – traditional concrete hotels, set on the urban strip of Summerstrand / Humewood. The game-parks of the hinterland do offer eco-tourism opportunities, which are very successfully promoted and much used, but in the Metro environment the Eco-Lodge will be a unique development – a township based eco-lodge, with sustainable technologies (solar panels, etc) and links into cultural

5

activities that would be encouraged to start in adjacent Motherwell (see section 4.5.2.1).

The design of the Eco-Lodge is possibly the only such institution in the Metro, with many small buildings (rather than one or two big, environmentally overwhelming ones) spaced widely around a big site to make them as unobtrusive as possible.

Annexure D notes how the Eco and Cultural Tourism markets are growing, and what opportunities they now provide. Plainly, the Motherwell Eco-Lodge is tailor-made to catch a section of this growing market.

E. Market Scan – Conclusions

The four market opportunities outlined in this market scan are, we believe, surely enough to support a small-scale Eco-Lodge as envisaged in this Feasibility Study and Business Plan – a 20 chalet resort, in a beautiful environment, with carefully controlled costs and a reasonable marketing and advertising budget.

4. PRODUCT DESCRIPTION

4.1 THE MOTHERWELL ECO-LODGE AND CHALETS

The proposed establishment is adequately described in section 10 of the Feasibility Study, and in the architectural drawings in Annexure E hereto. It is again noted that these drawings are preliminary, primarily for concept and costing purposes. They show an establishment that is:

An Eco-Lodge main building, with conference facilities, restaurant, bar, deck with sweeping views, and boma and entertainment areas.

20 chalets, 10 of which are two bedroom (max 8 sleepers) and 10 one bedroom (max 4 sleepers). They are approximately 70 m² and 45m² in size.

A Boardwalk down the steep cliff to a boathouse and recreation facilities on the river.

Parking, Guardhouses, etc., as required.

The estimated cost of building this is R42, 560, 000.00 (see Annexure F). However, the Feasibility Study suggests that considerable savings will have to be made,

and a maximum spend of R20 million is recommended.

4.2 SUSTAINABLE AND ECO-FRIENDLY CHARACTERISTICS

To optimize the ecological sustainability of the Lodge the following resource–saving technologies the following can be considered:

Energy Supply

Identify the range of different forms of energy for various needs and consider the viability of environmentally sustainable off-grid options: solar and wind. Explore means to conserve energy by insulating the facility, using of low energy appliances (energy efficient lights)

Water Supply

Alternative water supply methods like rainwater harvesting and ways of conserving water can be considered

Sanitation

6

Different sanitation options and the recycling of sewage for other uses and environmental benefits can be considered. Examples: Enviro-loo that uses little water and which can convert sewage into a substance that can be composted and used to improve the quality of soil and in vegetable gardens. Biogas systems that produce gas that can be used for domestic cooking, heating and lighting.

Wastewater management

Wastewater management is concerned with channeling, treating and even storing used household water in a way that does not damage services, facilities and the environment. Ways in which to recycle wastewater, how treated wastewater can be used for irrigation, fertilizer for gardens and even agriculture can be considered

Storm water management

Assess storm water management system with particular emphasis on storage such retention ponds. Consider ways to manage drainage of sites in case of local flooding, maximizing natural paths and flow into vegetated areas and vegetable areas

Solid waste management

Explore practical, affordable and acceptable solid waste management systems to prevent unsightly appearance of waste that is often dumped in an unregulated way

Explore community-based waste management and the employment creating opportunities associated with recycling and the benefits of re-use of products.

4.3 STAFFING REQUIREMENTS

It is estimated that the following would be the staffing requirements of the Eco-Lodge:

1 General Manager1 Marketing Officer2 Front Office Personnel1 Back Office Person (Bookkeeper)1 Driver / Gardener6 Housekeepers1 Maintenance Officer

Catering staff, and security staff, are not included as these services will be contracted out.

7

4.4 SET-UP TIMEFRAMES

Motherwell Eco-Lodge and Chalets: Set up Timeframe                                              

Activity 2008 2009 2010J F M A M J J A S O N D J F M A M J J A S O N D J F M A

Feasibility Report and Business Plan

- to committee            - to council              

Consolidation of Erf and Rezoning                          Decision on Lease or Sale of Site              Proposal Call for Developers                  Developer Appointed                    Contract Drafted                Agreed              Architect Briefed                Plans Drafted                    Professional Team Assembled                Bill of Quantities                  Building Tender                Builder Appointed                Contractual Period                      Building Complete                Furnishings, Pavings, Plantings, etc.                Hotel Opens              Key Staff Appointed                Balance of Staff Appointed                Staff Training                Marketing Programme                                                          

4.5 MARKETING AND SALES STRATEGY

The Motherwell Eco-Lodge will require a determined marketing campaign to establish itself, to become known and to become supported. This campaign should have two legs:

A general campaign, to promote the Eco-Lodge before and on opening. A specific campaign, tailored at the four key markets (see 3.3.1).

8

4.5.1 MARKETING CAMPAIGN UP TO AND INCLUDING OPENING

This campaign is summarised in the next two tables:

MARKETING MEDIUM AND ATTEMPTED USAGE – GENERAL GOALSMEDIUM USAGEDirect Contact

Websitee-mail lists

Snail MailBrochuresPosters

A comprehensive website is necessaryCreate as extensive a list as possible – borrow from all national and even international lists – present all Eco-Lodge events early and powerfullyFor people without email facilities.Supplied to companies who place them in hotels, shops, etc. Also for Motherwell Supporters.For taxis and other opportunities, restaurants, etc – particularly for Supporters.

Direct & Personal Contact Tour Agents, Travel Agents – all people who can direct customers to the Eco-Lodge. They must have courtesy visits with Red-carpet treatment to the Eco-Lodge. Particularly TV, Radio and Press persons. Also, factories must be personally called on to encourage use of the Eco-Lodge facilities for corporate functions, and to bring them into the Eco-Lodge’s circle.

TelevisionSATVMNeteTVBBC NewsCNNOther Int. Media

Try for regular coverage, and occasional spots on Top Billing, Carte Blanche, etc. Try for daily spots prior to, and coincident with, the opening

Attempt to get coverage on opening.

RadioSABCRadio XhosaAlgoa FMUmhlobo WeneneEtc

Attempt for saturation coverage prior to and alongside the opening. Some advertising should be considered.

Newspapers – localsHeraldWeekend PostDie BurgerFreebies

RegionalG-R AdvertiserGrocott’sDaily Dispatch

WeekendsSunday TimesOthersMail and Guardian

NationalStar Cape TimesPretoria NewsCity Press SunArgus MercurySowetan

InternationalBritish, Swedish, USA, etc

Some advertising is necessary – daily programmes for Eco-Lodge events. Attempt to get two stories per day prior to opening and over opening period.

At least one story per edition prior to opening

Once weekly articles for a month prior to opening.

One or two stories per newspaper prior to opening.

One or two stories prior to opening – many international newspapers have South African offices or “stingers”.

MagazinesArchitectural and Art (Local and International)Home MagazinesOutdoors (Getaway)Financial Mail, etcPopular (YOU, etc)Ladies (Fairlady, etc)

South Africa is not short on magazines – contact can lead to good review articles.

9

Medium 2 months prior to opening Month prior to opening Week prior to opening OpeningDirect ContactWebsiteE-mail ListsSnail MailBrochuresPosters

Establish websiteCreate comprehensive marketing listAs for email - don’t overlapCreate Brochure Distribution list (BDL)

Put programme for opening on websiteBegin with weekly emailsMailings to those without internetPrint Brochures re Eco-LodgePrint Posters re opening - Distribute 2 weeks prior to opening

Daily emails and mails re opening programme and news.Distribute brochures through BDLRefresh damaged Posters

Update website daily with news itemsDaily emails and mails re opening, events etc.

Personal ContactsTour Agents, Travel Agents, Managers, PA's and Public Relations Officers from businesses in Coega, Markman, Motherwell,CouncillorsTarget Market in Motherwell - schools, sports groups, etc.NM Bay Tourism and Tourism bodies

Train staff in how to contact these vital people.

In the wisdom of the Marketing Manager, invite these parties personally to inspect progress on site, as and when developments occur.

When complex effectively complete, repeat invitation.

Invite all relevant persons to gala openings, with lunch and guided tour

TelevisionSATVMneteTVDSTVBBC NewsCNNOther international media

Attempt to get features (Top Billing, Carte Blanche, 50/50 etc) to do spots to coincide with opening.

Attempt to get news spots to coincide with opening.

Attempt to get news and feature items about imminent opening

Attempt to get daily spots re major events - create newsworthy stories.Invite to gala opening with lunch and guided tour.

RadioSABC, Algoa FM, Radio Xhosa, etc.

Treat as for TV. Regular personal contact - attempt to get 2 x weekly stories.

Personal Contact - attempt to get daily story

As with TV.

NewspapersLocals: Herald, Die Burger, Weekend Post, FreebiesRegional: Grocott's, Daily DispatchWeekends: Sunday Times, etcNationalsInternational

Attempt to get weekly stories on new developments - personal contact is vital here.

As with Radio As with Radio. As with TV.

Magazines - All Mould stories to special interests(Architecture, art, natural world, etc)

Provide all possible information, phone calls etc.

Invite all to opening.

MARKETING CAMPAIGN UP TO AND INCLUDING OPENING - SPECIFIC ACTIONS

10

4.5.2 MARKETING CAMPAIGN AIMED AT 4 TARGET MARKETS

We have identified 4 key markets for the Motherwell Eco-Lodge (see 3.3.1). These must be intensively cultivated, often through personal contacts, phone calls, etc., from the marketing manager, etc.

4.5.2.1 THE MOTHERWELL COMMUNITY

The Motherwell community is fundamental to the Eco-Lodge, and, we believe, the Eco-Lodge will be fundamental to the Motherwell community.

CREATIVE TOURISM

As we have noted in section 6.4 of the Feasibility Study, “Creative Tourism” is a fast-growing part of the tourism market, and one which relates directly to the Motherwell Eco-Lodge. “Creative Tourism” provides opportunities to tourists to actively engage in local community activities. We noted that in Nelson, New Zealand, a network of businesses has been established which offers tourists creative experiences: bone carving, Maori language classes, weaving, felting, woodwork and cooking.Similar opportunities need to be created by the Motherwell Eco-Lodge, and “tutors” from within the Motherwell community need to be identified; suitable premises require identification, and the tutors trained to work in these premises to offer a fascinating and challenging experience for a cultural tourist, to involve himself/herself in.

Such activities could include:

o Learning how to make wire sculptures.o Learning how to make beaded sculptures.o Learning how to bead clothing.o Singing with a church choir.o Xhosa language classes.o Learning how to cook traditional dishes, and how to brew traditional beer.o And many other cultural activities.

It is not envisaged that these “lessons” would happen at the Eco-Lodge, but that community “tutors”, in suitable premises, would give visitors lessons in these types of activities. These visitors would stay at the Eco-Lodge, which would actively promote and support the above programme of activities. MOTHERWELL COMMUNITY SUPPORT FOR THE ECO-LODGE

The Eco-Lodge will provide a valuable facility for the Motherwell community, and, like all such facilities, it requires promotion and marketing to ensure that target markets are here:

o Regular emails and (where email does not apply) snail mails, supplemented by personal visits and phone calls, must reach the target communities (Motherwell Businesses, the local middle-class, schools and sport groups etc.) which emphasize the excellent and inexpensive services this Eco-Lodge has to offer – particularly emphasizing the backpackers facilities.

o Special community Saturday and Sunday lunches, assisted by watersports and kiddies playgrounds, etc., must be promoted.

o Conferencing facilities must be promoted for weddings and community functions, and for use by businesses, etc.

12

4.5.2.2 COEGA INDUSTRIAL DEVELOPMENT ZONE SUPPORT FOR THE MOTHERWELL ECO-LODGE

This Business Plan holds it as a key premise that support from the businesses of the Coega Industrial Development Zone, and the adjacent Markman Industrial Township, will be the key to the financial success of the Eco-Lodge, for these businesses could provide sufficient conferencing, accommodation and catering requirements to ensure the success of the Eco-Lodge – if they support the Eco-Lodge.

The core promotional work will have to be personal contact – the marketing manager of the Eco-Lodge will have to be a “people’s person” who establishes personal contact with the people in each of the Coega / Markman businesses that can provide support for the Eco-Lodge, and must regularly and repeatedly contact this person offering specials, new promotions, etc., in order to encourage support. Mailings are also useful, but personal support is the key weapon here. As the number of businesses is not enormous now, but will grow over time, this type of personally solicited support is possible and should form the base on which a good level of support will grow.

4.5.2.3 THE GENERAL TOURISM MARKET

The general tourism market can be encouraged to support the Motherwell Eco-Lodge by good publicity (newspaper, TV and radio stories, etc.), advertising and hard work with tourism operators and their managers. See 4.5.1 for the broad matrix in this regard.

4.5.2.4 ECO-TOURISM AND CULTURAL TOURISM

This market can be reached by:

Good publicity (particularly in the large number of nature publications, from the very successful Getaway magazine and 50/50 TV programme, to the specialist publications like African Birds and Birding, etc.).

Personal promotion into the Eco-industry – there are many conservation bodies; and consultancies performing EIA’s etc. They need to be contacted and kept personally and regularly informed.

By running an outstanding Eco-Lodge, good word-of-mouth advertising will follow naturally.

4.5.3 CONCLUSION

It is our belief that the above, proposed marketing strategy – one half a general marketing programme, the other half being aimed at the four key markets of the Motherwell Eco-Lodge, will be sufficient, if properly and energetically run, to ensure a high enough level of support for the Eco-Lodge to meet the Aims of this Business Plan (see Section 2 above).

5. RISK ANALYSIS

This project has considerable risk. This includes:

5.1 COST OF CONSTRUCTION AND SET UP

The Feasibility Study showed that this project is viable at a construction and set up cost of R20 million. This is considerably lower than the estimate provided by the Quantity Surveyor who provided input into this project.

However, this estimate is high when compared to construction costs at a similar establishment, the Pine Lodge. Here, a 40 m² chalet is built, and furnished, for R175,000.00.

13

The redesign and determined negotiation can get the Motherwell Eco-Lodge and Chalets built at the budget estimate – but it will be hard work.

5.2 DEPARTMENT OF TRADE AND INDUSTRIES SUBSIDY

Over years now the DTI have provided tax-free cash grants to subsidise the construction of tourism accommodation (the SMEDP grants). These are at present under review, which review will be over in early 2008. Plainly, certainty is necessary regarding the nature and extent of these subsidies.

5.3 WILL INCOME TARGETS BE MET BY THE ECO-LODGE AND CHALETS?

This Business Plan has outlined strategies to obtain support, both generally and from the four specifically targeted communities, that should be sufficient to ensure support levels, and thereby income levels, are met.

5.4 CAN EXPENDITURE BE KEPT AT BUDGET LEVELS?

Expenditure targets are easier to meet than are income targets – all business crises are first met with reductions in expenditure first, while determined attempts are made, over time, to meet revenue targets. The same will be the case here – control over expenditure, and, if necessary, curtailing rising costs, are vital, and targets set can be met and maintained by determined management.

6. CONCLUSIONS

The Feasibility Study has, in considerable detail, outlined the conditions under which this project is financially viable (section 12.3). We believe these conditions can be met, and viability is genuinely possible.

The way forward is thus:

The NM Bay Municipality must identify and rezone the proposed site, large enough to accommodate the proposed lodge, and with additional land for expansion.

The NM Bay Municipality must decide on whether it will sell or lease the site. The site must then be sold or leased through a suitable public process, with

conditions as are felt necessary. The NM Bay Municipality should also:

o Clear up the entrance to the site, which is today filled with rubbleo Construct a suitable link road from Motherwell to the entrance to the site.o Put up suitable signage, to guide guests to the site from all over Motherwell

and the Addo Road.o Perform an EIA on the proposed development.o Bring the necessary bulk services to the boundary of the site.

Thereafter the developer can proceed, and, we believe, can succeed. Timeframes are in section 4.4.

14