u capsule hotel

Business Plan

U Capsule Hotel

The E.N.D Team

2012/3/7

U Capsule Hotel Business Plan

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I. EXECUTIVE SUMMARY ................................................................ 3

II.PRODUCT AND SERVICE ............................................................ 5

1. PRODUCT .............................................................................................. 5 (1) Product Description .......................................................................... 5 (2) Reserve .......................................................................................... 5

2. SERVICE ............................................................................................... 5 (1)Basic Service ................................................................................... 5 (2)Outplacement Services ...................................................................... 6

3. OUR ADVANTAGES .................................................................................... 6

III.MARKET DEMAND ANALYSIS .................................................... 7

1. INTRODUCTION OF MARKET ......................................................................... 7 2. EXTERNAL ENVIRONMENT ANALYSIS AND TARGET MARKET ANALYSIS ........................... 7

(1) External environment analysis（PESTLIED analysis method） ................ 7 (2) Target market analysis ................................................................... 11

3. CERTAIN TARGET MARKET ANALYSIS (HANGZHOU) ............................................. 12 4. CONSUMPTION LIMITATIONS ...................................................................... 13 5. SIMILAR INDUSTRY ANALYSIS ..................................................................... 14 6. INDUSTRY OPERATION ANALYSIS .................................................................. 15 7. THE SUMMARY OF THE MARKET PROSPECT ....................................................... 17

IV.MARKETING AND SALES .......................................................... 18

1. MARKETING PLAN ................................................................................... 18 2. MARKETING STRATEGIES .......................................................................... 18

(1)Product positioning ......................................................................... 18 (2)Multi-tiered marketing strategies: ..................................................... 18 (3) Marketing Methods ........................................................................ 19

3. COOPERATIVE PARTNER ............................................................................ 21 4. MARKET CONNECTIONS ............................................................................ 22 5. SOCIAL ASSESSMENT .............................................................................. 24

V.BUSINESS ORGANIZATION AND MANAGEMENT ........................ 25

1. ORGANIZATIONAL STRUCTURE .................................................................... 25 (1) Introduction of the organizational structure ....................................... 25 (2) Function of each Department .......................................................... 26

2. OWNERSHIP INFORMATION ........................................................................ 27 3. MANAGEMENT MODEL .............................................................................. 27

VI.SWOT ANALYSIS ..................................................................... 29

1. ANALYSIS OF STRENGTH & WEAKNESS .......................................................... 29 (1) Strength: ..................................................................................... 29 (2) Weakness: .................................................................................... 30

2. ANALYSIS OF OPPORTUNITY & RISK .............................................................. 31 (1) Opportunities: ............................................................................... 31


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(2) Risks: .......................................................................................... 32 3. ASSESSMENT OF THE OVERALL RISK SITUATION: ............................................... 34

VII.FINANCIAL PLANNING .......................................................... 35

VIII.APPENDIX ........................................................................... 38

1. QUESTIONNAIRE (ENGLISH VISION) ............................................................. 38 2. QUESTIONNAIRE (CHINESE VISION) ............................................................. 39 3.REFERENCE .......................................................................................... 40


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I. Executive Summary

Purposes and business models

The purpose of our company, U capsule hotel is: insist on the people-based

concept of service and establish the people-based service environment, to

the unique capsule hotel for U.

U of our “U capsule hotel” means: 1.unique 2.you(r) 3.useful 4.unparalleled

Our “U capsule hotel” is a limited liability company in the start-up phase. Our

ideal address is Huanglong in Hangzhou.

Product and Service

A capsule hotel is a type of hotel that features a large number of extremely

small capsules intended to provide cheap and basic overnight

accommodation. Our new-type capsule hotel concentrates on the innovation

of capsule design and high quality of comprehensive service. Each capsule is

designed by different designers and has different style. In addition, there

are quilt, mini TV and desk, light, air conditioning, disposable washing tools,

ventilation system, fire protection system in each capsule (but it will differ

from designers). Our basic service includes: bath, dry cleaning, morning

wake up, deposit guests' luggage for free, etc. Besides, we will provide

moving capsule hotel for special occasions and we receive reserve.

Target Market

Our market position is to develop a new-type capsule hotel in bustling big

cities. At present, China's market has not well developed, only a few capsule

hotel companies operating in different regions of China. The main targets of

costumers are those who are not very wealthy, including employees who are

overtime, backpackers or travelers, floating population (in tourism center),

fans or event participants. We are prepared to open a capsule hotel in


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Hangzhou’s Huanglong sports centre considering the beneficial location.

Management

The organizational structure of our company has four levels. It has 11 basic

departments.

We choose to use the combination of Maslow theory and Herzberg theory to

manage our Capsule Hotel. Besides, we decide to apply PRE-PASS

management model into management.

Marketing and Sales

Our marking methods includes Concept marketing, Service marketing,

Experience marketing, Emotional marketing and Differentiated marketing.

Besides, we will find manufacturer, designer, decoration company, travel

agency and government as cooperative partner. We will also look for sponsor

and venture capital. In addition, the different methods of advertising will

also be developed.

(Because the capsule hotel is a new industry in the world, we cannot

find many figures and information to make a perfect Business Plan.

If you have any questions, please contact us. Thank you!)


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II.Product and Service

1. Product

(1) Product Description

A capsule hotel is a type of hotel, developed in Japan that features a large

number of extremely small "rooms" (capsules) intended to provide cheap

and basic overnight accommodation for guests not requiring the services

offered by more conventional hotels. Each capsule is reduced in size to a

modular plastic or fiberglass block roughly 2 m by 1 m by 1.25 m, providing

room to sleep. Facilities range in entertainment offerings (include a

television, an electronic console, and wireless internet connection). These

capsules are stacked side by side and two units top to bottom, with steps

providing access to the second level rooms. Luggage is stored in a locker.

Privacy is ensured by a curtain or a fiberglass door at the open end of the

capsule.

(2) Reserve

• Guests can Oder by telephone, email and internet.

• We are online all day and willing to answer guests’ questions.

2. Service

(1)Basic Service

• Washrooms are communal.

• There are vending machines around the capsules.

• We provide dry cleaning and morning waking up.

• Simple meals are available during the day.

• We order train and airline tickets for guests.

• We deposit guests' luggage for free.

• We recommend places of interest and provide more traveling


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information.

• Disposable washing tools are provided.

• Hot water and electricity is available for 24 hours every day.

(2)Outplacement Services

• Airport Service: Providing moving capsules in airport for people to

have rest

• Company Outsourcing: Providing capsules to needed companies

• Capsules (more than 5) can be transported outside, and we will be

responsible for transportation.

3. Our advantages

• Every capsule has different styles, concluding styles of sea beaches,

pirates, cartoon and so on. We will invite famous designers to help

design our capsules in the future.

• We will take photos of guest with permission to make souvenirs that

guests can bring back.

• When our guests check out, we may request guests’ advice and

suggestions to perfect our service.

• We charge fewer fees but provide more considerate service.

• We advocate environmental protection, so if guests bring their own

washing tools, there will be a discount.

• In order to meet more guests’ needs, we plan to expand our business.

There will be a chain of capsule hotels in the near future.

• We have professional employees to maintain the best condition of

capsules.

• Some interesting activities will be held for special festivals.

Our capsules are fireproofing and soundproofing. We make every effort to

ensure guests’ comfortable rest.


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III.Market demand analysis

1. Introduction of market

We hope to participate in the service sector of the residential services

market analysis and competition. We believe that the future trend of this

domain is toward the development of environmentally friendly, low-cost,

innovative, miniaturized and high-quality product.

We predict that the competitive situation of the market can sustain develop.

The main force of the impact of this change includes the urbanization of the

population, the increasing gathered occasions of people, increased mobility

of the population, overtime culture, rising prices of houses, traffic

congestion, the development of financial center and tourism. In the field of

residential services, development prospect of the most extensive region is

the new-type capsule hotel.

Our market position is to develop a new-type capsule hotel in bustling big

cities. In the past few years, this market has been developing in our country.

« We will use a questionnaire to do the market research. The

questionnaire is in the appendix part.

2. External environment analysis and target market

analysis

(1) External environment analysis（PESTLIED analysis method）

• Politics Factors:

For:

1. The Government of China has focus on the encouragement of new

environmental protection industry. This will be a good chance for the


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found of Capsule Hotel.

2. Traffic control (car policy) in big city is to limit the number of car on

the road. This policy makes it difficult for workers who live far away

from their companies to go to work. Therefore, workers may want to

look for a cheap hotel to spend the night.

3. Extra fuel tax also makes driving more expensive. Many people

may would rather to find a place spending the night than driving

home.

Against:

1. Price Control Policy (on housing) is a chance for people who cannot

afford a house before to buy a house. Having a fixed place to live in,

they may not like to stay in Capsule Hotel.

• Economic Factors:

For:

1.

Inflation and pickup in rice (house and traffic) makes people


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consciously to save money. Besides, the rental cost of house rising up

also gives Capsule Hotel an opportunity to get more customers.

2. Demand exceeds supply in lodging industry also appears in tourist

cities and big cities.

Against:

1. The prices of raw materials go up. More expensive to manufacture

Capsules and purchase other related goods.

• Society Factors:

For:

1. Centralization of City financial centre makes and overtime cultures

in China the markets of overtime workers bigger.

2. The emergence of the backpacker and the like of cheap travels

make Capsule Hotel more attractive.

3. The development of traffic hinge makes railway station, airport and

bus station big markets in lodging industry.

4. The emergence of” ant tribe” in China

Against:

1. Chinese are hardly to accept new things

2. Public expense reimbursement may drive people choosing big

hotels rather than capsule hotel.

3. Chinese people’s backward ideas may affect them to think living in

capsule hotel is losing face.

• Technological Factors:

For:

1. The advance technology makes high-tech product much smaller

and can be equipped into Capsule Hotel


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2. Make a capsule hotel more cheap and convenient

3. Make network marketing possible

Against:

1. Solar energy is still very expensive and energy supply may be a

problem

• Legal Factors:

For

1. It is possible to have Start-up capital loans

Against:

1. It may be a problem to apply for business license

2. Patent law

3. Safety law in service industry is strict

• International Factors:

For:

1. After reform and open, China has more communication with foreign

countries and the international design concept can be used to design

a capsule hotel

2. Have a good experience for reference the capsule hotel abroad.

Against:

1. There will be more competition

• Environmental Factors:

For:

1. Environment, Performance, Style and Easy

2. Space saving

3. Efficient


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• Demographic Factors:

For:

1. The urbanization of population

2. The mobility of population

3. Population Trends Obviously

4. The emergence of” ant tribe”

(2) Target market analysis

Our market position is identified for the new capsule hotel. At present,

China's market has not well developed, only a few capsule hotel companies

operating in different regions of China.

The typical customers of our capsule hotel are looking for comfortable,

affordable accommodation in a short period. We can inspire their passion of

the living in capsule hotel by low price, high quality, and unique design.

Main Market Orientation:

[Positioning 1] Financial centre

[Positioning 2] Tourism center

[Positioning 3] Transportation center

[Positioning 4] Cultural exchange center

Main Customer Type:

[Client 1] Employees who are overtime

[Client 2] Backpackers or Travelers

[Client 3] Floating population (in tourism center)

[Client 4] Fans or Event participants


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For now, the company's disadvantage limited to the shortage of capital. Now

we take the following steps to alleviate these problems: asking for venture

capital, bank loans, angel fund and financing.

Environmental threats (such as the shrinking of the market, consumer

orientation, the vagaries of the economic situation) and other external

factors that impact on us reflects in the price, market share, number of

wholesale.

In addition, there are well-known specific factors, such as: the legal system

did not build the full, government policy is not transparent.

3. Certain target market analysis (Hangzhou)

We are prepared to open a capsule hotel in Hangzhou’s Huanglong sports

centre.

(LOCATION MAP):

Advantages:

(1) The location is near the scenic spot West Lake. (West Lake was made a

UNESCO World Heritage Site in 2011, and was described as having


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"influenced garden design in the rest of China as well as Japan and Korea

over the centuries" and as reflecting "an idealized fusion between humans

and nature.") Therefore, there is a growing number of visitors coming to

Hangzhou and it would be a large market.

(2) The location is in the traffic hub (Huanglong Bus Station).Therefore;

there is a large amount of floating population.

(3) It is located in the city centre. Due to the traffic jam and overworking,

many workers may like to stay in Capsule Hotel.

(4) It is near the stadiums, concert hall, and cultural exchanges centre.

Hence, the fans going to concert in the night can live in Capsule Hotel.

(5) It is near the Zhejiang University.

(6) It is round by many related services such as catering services, and

entertainment services (KTV).

Disadvantages:

(1) The rent in that place is very high

(2) Competition of similar industry is cruel

(3) Not easy to rent a house for us

4. Consumption limitations

Base Services:

• Object oriented mainly in low-income people rather than high income

people.

• Service costs of the capsule hotel are divided into two parts: the basic

service fee (including cleaning fee, service charge, etc.) hour fee

(including using fee, electricity, etc.).

• In order to improve the flexibility of the capsule hotel, we can make a

few double capsule luxury capsules and president capsule.


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• All kinds of other services (such as food, massage, bathing,

recreation, etc.) can be divided into different consumption level.

• Consumption is not strictly limited. The size of the space may affect

some customer choice and our interior design innovation may also

attract customers.

Outplacement services:

• Consumption limitations of Airport Service

（1）Mainly aimed at the people in high position, who do not hope in

waiting in the lounge

（2）In peak time, when the airport lounge is full

（3）When the plane is delayed or people want to stay at the airport in

night

• Consumption limitations of Company Outsourcing:

（1）Mainly aimed at the company group

（2）Fees calculated depends on outsourcing time and amount of capsule

（3）Outsourcing expenses should be higher

5. Similar industry analysis

(1) Ordinary hotel

Advantages: Well-equipped, good service, a larger space, neat and clean,

the management of large-scale

Disadvantages: Low space utilization, higher cost, lack of innovation,

maintenance is poor for some hotels, re-decoration may not have high

plasticity, furniture is hard to move, etc.

(2) Youth hostel

Advantages: Relatively inexpensive and appropriate space


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Disadvantages: Management model needs to be improved, services and

equipment may not be complete, may not neat and clean, location may not

be good

(3) Ordinary capsule hotel

Advantages: Very cheap, neat and clean, the management of large-scale

Disadvantages: small space, Service and equipment may not complete

(4) Our U capsule hotel

Advantages: Very cheap, clean and tidy, management of large-scale, each

capsule is unique (innovative design), complete integration into the innovation,

well equipment and services, a form of outsourcing

Disadvantages: small space

6. Industry operation analysis

(1) Foreign operation analysis

• Japan:

The first capsule hotel to open was the Capsule Inn Osaka, designed by

Kisho Kurokawa. It opened in 1979.

Background:1979,Overtime culture (workers missed the evening's final

train departure) and raising fare ( boosted by ¥50 to ¥380.) for taxis cause

that "capsule hotel" represented a sensible alternative to taking a taxi home

after the last train stopped running.. For ¥1,900 per night, a stay in the

Capsule Inn was a sensible and thrifty alternative — though in those days it

was a men-only option.

Difference between now and 1979: The first thing is that the numbers

identifying each capsule are now illuminated, making one's cubbyhole easier

to locate in the dim corridor. In addition to an alarm clock and radio, each


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capsule now comes with a 12-inch color TV. Among the other amenities are

Washlets (bidet-type commodes) down the hall in the shared loo — a

product that was just a gleam in its designer's eye in 1979.

• Russia:

Capsule hotels come to Russia. Fashion trend, which several years ago

captured the global hotel market, today found its continuation in Moscow.

Architectural firm Arch Group designed the first capsule hotel in Russia.

Concept was called Sleepbox. The hotel is designed for short-term staying.

Its rooms are very compact, thus offers its guests the latest innovations,

such as WiFi and a plasma TV.

Background: With the advent of the 21st century, capsule hotels have

become more relevant than ever. The financial crisis has spurred the hotel

chains to find new low cost accommodation. The fact that the capsule hotels

in the world have a bright future is backed by the success of the network of

micro hotels Yotel, which opened its micro hotels in airports in London and

Amsterdam. Not so long ago, on the Spanish hotel market the concept of

prefabricated capsule hotels was presented by Lookotels company. To a

certain extent analogous capsule hotel can be considered opened in 2009 in

the Sheremetyevo Airport "Air Express" Hotel, where the area of

the numbers ranged from 7.5 to 22 square meters.

Breakthrough: In the Russian capsule hotel concept Sleepbox were taken

into account the experience of world analogues. Capsule rooms are

equipped with comfortable beds and modern system of ventilation and air

conditioning.

(2) Domestic operation analysis

• Shanghai


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A capsule hotel located in the northern square of Shanghai Railway Station

will open soon. According to an employee of the hotel, the capsule hotel has

a total size of over 300 square meters and is arranged into three areas. The

hotel includes 68 tailor-made beds which are 1.1 square meters wide and

2.2 meter long. Each room is also equipped with a separate power plug,

clock, adjustable wall lamp and flat TV. Air conditioner and wireless

broadband network is also available.

• Beijing

A capsule hotel has popped up in Beijing. Unlike the direction 9 hours takes,

Mr. Huang Rixin, a 78-year-old kind-hearted retired engineer, has a more

socially benevolent philosophy. He saw a calling to provide affordable

accommodation to fresh graduates who have little in their pockets – who are

known as ‘Ants.’ However, recently, the capsule hotel was forced to close

because of the policy of the government.

7. The summary of the market prospect According to this analysis, capsule hotel is still a new industry for China. External environment analysis and similar industry analysis shows that capsule hotel industry has a great opportunity and a large market. However, the problems that the legal system did not build the full, government policy is not transparent and capital is hard to collect should still take into great consideration. Besides, the success of foreign operation of capsule hotel can be a good model for us. The challenges they met and experience they get in Beijing and Shanghai can also be a reference for us. With new product designing and service providing, good management and organization, effective marketing and sales, the market prospect of our new capsule hotel will be better.


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IV.Marketing and Sales

1. Marketing plan

The marketing plan of capsule hotel is based on the following marketing

methods:

We will take Concept marketing, Service marketing, Experience marketing,

Emotional marketing and Differentiated marketing in to consider

synthetically to manage hotel and make a revolution in existing hotel

industry. We can decrease the price based on making full use of space, in

order to contain the trend of the rising fees in accommodation.

2. Marketing strategies

(1)Product positioning

Capsule hotel focuses on travelers, population who work overtime and

those who stay briefly. It attracts customers and receives their high

evaluation through the novel and different style, perfect equipment, low

cost and considerate services.

As for marketing positioning, we can satisfy the different customers’

demands by different price and style of “capsules”.

(2)Multi-tiered marketing strategies:

First is the market penetration, attract customers to have a try for the first

time by using their curiosity about new products and plenty of

advertisements.

The second step is to pay attention on tour groups. Young people and fixed

customers is our customer base.

The third is to develop the relationship with cooperation partners, such as


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large-scale concerts and Sport Competition

(3) Marketing Methods

• Concept marketing: in the information society, the customers’

attention has become a scarce resource. It is crucial for a company to

attract customers’ attention. It is a marketing strategy based on

certain tangible or intangible product with modern media technology

to extend a new concept of consumption, attract customers’ attention

and raise the customers’ demand of new product ultimately. Capsule

hotel in China as a new type of hotel concept, not only provides

customers with the more convenient and cheap service, but also

attract customers through their curiosity of new product. The

advantages and disadvantages analysis: the advantages of the

concept of marketing are that make customers know and accept a

new product, and expand the sales and reputation of a company, by

means of a new concept. However, some companies usually do not

know how to define their own enterprise products and how to use the

new concept to exchange with the demand of customers. They always

overestimate products’ profits, and cause dislocation of marketing

and concept, and untimely make enterprise in passive in the

marketing activity.

• Service marketing: capsule hotel provide catering, entertainment,

leisure and other services while we provide accommodation. In

addition, we set a special laundry room for customers and have

attendants to change and clean bedding at intervals. Letting

customers experience the warmth of home is our object. The

advantages and disadvantages analysis: advocate service marketing

is significant to improve employees’ service consciousness and


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service capacity. However, the key is the selection and training of

employees; otherwise, it is easy to affect the hotel image.

• Experience marketing: capsule hotel can launch customers

experience activities, such as a two-hour lunch break experience at

half price in the early opening and off-season. These activities not

only can use the idle resources of the hotel, but also can attract new

customers and grasp old customers for the hotel. The advantages and

disadvantages analysis: with the increase of the proportion of

customer sensibility, experience marketing can help close the

distance between customers and hotel. However, if these activities

are taken too much, it will bring a large of loss to hotel.

• Emotional marketing: the personal emotions differences and

demand of customers is the cure of brand marketing’s strategy.

Enterprise achieves business objectives by means of emotional

packaging, emotional promotion, emotional advertisement,

emotional reputation, and emotional design. In the capsule hotel

we intend to provide single room, double room, the room for

family and others according to the different demand of. Each

"capsule" has its own design style. Because our "capsule" is

removable, if a group of people book different style “capsule” in

advance, we can put them together in the same area, providing

convenience to their communication. The advantages and

disadvantages analysis: emotional marketing is beneficial to

build a better marketing environment, improve customers’ brand

loyalty and beat other similar hotels in competition, but it may

also cause the waste of resources.

• Differentiated marketing: the real differentiated marketing is

based on understanding the product characteristics, circulation


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channel, efficacy technology and the promotion of information

resources. Afterwards centralize superior resources, avoid

mainstream methods and create product concept and sales channels

in a special way, achieving the unexpected effect. It is mentioned

above that each "capsule" has different styles, different sizes, and

even different prices, which is the pretty important creative of our

capsule hotel. According to differentiated marketing, capsule hotel

not only can meet different levels of customers’ demand, but also can

attract them to experience different styles of “capsule”, increasing

repeat customers. The advantages and disadvantages analysis:

Differential marketing strategies greatly improves the

competitiveness of the hotel, improves customers’ loyalty and

increases occupancy rate. Diversification of advertisement,

multi-channel distribution, a variety of market research expenses and

administrative expenses are barriers to entry of other similar hotel.

However, the variation has its own limitations; the biggest drawback

is the high cost of marketing, because general productions are small

batch, making the unit cost of production relatively rise, which is

uneconomical. In addition, market research, sales analysis,

promotion plan, sales channel, advertising, logistics and distribution,

and other many aspects of the costs will no doubt increase greatly.

This is the reason why many enterprises have done differential

marketing, the market share has expanded, sales have increased, but

profits decrease.

3. Cooperative partner

• Manufacturer for equipment: looking for sponsor, purchase

equipment from one manufacturer, establishes long-term cooperation


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relations with it, and advertises for it in multimedia devices and hotel

inner magazine, in order to decrease cost.

• Designer: we intend to employ new designer who is newly graduated,

and engrave their name on the “capsule” they designed, helping them

improve reputation, and paying less for their designs simultaneously.

• Decoration Company: decrease cost by competitive bidding

• Travel agency: establish long-term cooperation relations, ensure that

passengers, achieve win-win

• Government: another creative is that we tend to provide “moving

capsule hotel”, which is a large vehicle with several “capsules”. However,

this type of vehicle has not existed in China yet, so it is important for us

to get the support of governments in aspect of the vehicle’s safety and

gate pass.

• Looking for sponsor, venture Capital

4. Market connections

We know how to manage a hotel successfully, so expanding customer base

is necessary.

In order to expand customer base and Grasp Market Trends, we need make

connections with other companies or organizations, and build good

relationship with them.

• Hotel fair

Specifically show the object and service of capsule hotel from all 360

degrees.

Make customers understand the superiority of our hotel and the

convenience we provide. In addition, capsule hotel can be further


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popularized by means of hotel fair.

• Hotel seminar

We plan to hold a seminar with other hotels at intervals. These seminars

can promote our communication and develop relationship with them,

acquire latest information and technology, and stay the top of hotel

industry constantly.

• Advertising

Advertising is the most common method to promote a new product. We

use several different methods to make and extend advertisements.

v Large posters: we can put different styles of capsule on the ad space

of a centre street.

v Experience activities: such as a two-hour lunch break experience at

half price in the early opening and off-season.

v Announce latest activities and news of hotel in company’s

website: we plan to build a website for our capsule hotel. So it can be

a effective way to advertise new activities and news of our hotel and

other relative business.

v Flyer, brochures: this type of advertisement is more useful in the

period before opening.

v Design an inner magazine of hotel: the inner magazine is not only

useful to make the advertisement for hotel and other cooperation

partners, but also a method for employees’ and customers’

entertainment.

• Put articles in travel magazine


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It is a useful way to increase exposure, drawing customers’ attention

constantly. It also can improve the position and reputation of our hotel.

Customers’ good comments are usually convincing.

5. Social assessment

The social assessments on product’s safety, effectiveness and strategies are

important sales tools. It can increase customers’ trust and brand loyalty to

hotel. Therefore, we will invite some industrial leaders, analysts, main

customers or university as the reviewers of our product. These reviewers

should publish their support to our hotel in public.


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V.Business organization and management

1. Organizational structure

(1) Introduction of the organizational structure

As the chart shown, the organizational structure of our capsule hotel

company has four levels. The highest level is Board of Directors, second

level is Executive Director, and the next is three directors: Director of Admin,

Director of Operation and d Director of Managing. In management of each

director, there is three or four department: (Director of Admin) Human

Resource Department, Information Technology Department, Quality


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Surveillance Department; (Director of Operation) Financial Department,

Sales Department, Marketing Department, Public Relations Department;

(Director of Managing) Security Department, Service Department, Purchase

Department, Cleaning Department.

(2) Function of each Department

Human Resource Department: Manage our company’s workforce and is

responsible for the attraction, selection, training, assessment, and

rewarding of employees, while also overseeing organizational leadership

and culture, and ensuring compliance with employment and labor laws.

Information Technology Department: Manage information of company

and costumes (make service and review easier). Make website of our

company and using it to show every unique capsule (including the designer

and photo of the capsule) and to propaganda.

Quality Surveillance Department: Evaluate the quality of service,

products, company operating, etc.

Financial Department: Make financial planning, financial accounting,

financial audit, etc.

Sales Department: Planning and hold some activities for sales.

Marketing Department: Do the marketing research and promotion of our

capsule hotel

Public Relations Department: Manage the flow of information between


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an organization and its publics, provides an organization or individual

exposure to audiences using topics of public interest and news items that do

not require direct payment. Persuade the public, investors, partners,

employees and other stakeholders to maintain a certain point of view about

the company, its leadership, products or of political decisions.

Security Department: Guarantee the property security of each costumer;

Guarantee personal safety of each costumer; Prevent the accident happens

Service Department: Manage and provide services, including the basic

services, outplacement services, after-sale service

Purchase Department: Ensure the reserve of each goods related to our

service to ensure the costumers’ needs.

Cleaning Department: Make the hotel clean and do some maintenance

2.Ownership information

• The ownership will belong to the founders of the company,

Co-partnership Company.

• In encouraging employees, we will also motivate them with partial

ownership.

• The percentage of ownership depends on the extent of involvement

with the company.

• The form of ownership will be common stock.

3. Management Model


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We choose to use the combination of Maslow theory and Herzberg

theory to manage our Capsule Hotel.

Belonging is very important in Chinese people’s motivation. Concentrating

on meeting the motivation of employees can make them more loyal to our

company. In addition, employee training (depends on every employee’s

personality) is also an important part of our management model. Promoting

the innovation of the employees and making for a cohesive and effective

organisation is rather important.

Besides, because capsule hotel is still a new industry, we can also apply PRE-PASS management model into management. PRE-PASS includes P（problem）——finding and define problem、R(reason)——looking for reason、E（essence）——reveals essential、P(project)——establish ways、A(action)——put into effect、S(self-criticism)——review feedback and S(step by step)——improving and enhancing. These seven parts form an integrated cycle to better management.


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VI.SWOT Analysis

1. Analysis of Strength & Weakness

(1) Strength: 1. U Capsule Hotel is a very competitive organization. Our founders are

often quoted as saying that 'Business is a war without bullets. U Capsule

Hotel has a healthy dislike of its competitors. So it pursuits better

location (ideal address: Huanglong, Hangzhou), promotion (skill

training), management (according to Maslow’s hierarchy needs theory

and Herzberg’ two factors theory), personalization (different design

styles) and financing capability (moderate loan), suitable price (includes

basic fees and extra fees according to disparity use of each customer),

the most quality products and services in Chinese market.

2. The organization has strong ethical values and an ethical

missionstatement as follow, U Capsule Hotel is committed to be

responsible to environment and society '.

3. U Capsule Hotel has been advanced in management system. It does not

tie up cash in buildings and workers. It hires normal apartment to set

capsules and every worker holds shares working for themselves. And it

provides a series of practical or financial help for its workers, for

example, additional rewards for working overtime. Another focus is that

U Capsule Hotel invests time and money on excellent staff training and

builds their loyalty because outstanding talents are a key to success in

business.

4. U Capsule Hotel’s Ever-improving service quality. U Capsule Hotel will


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set up a Group customer service center for group order to solve network

access demand and a service hotline, complaint hotline to provide

interactive services.

5. Another core competence is that U Capsule Hotel puts emphasis on

advanced IT system and international communication. For example,

under the support of the IT system, every capsule’s operating condition

and logistics information can be clearly seen. IT also strengthens hotel’s

efficient procurement and maintenance process. Moreover, we visit

domestic and foreign enterprises in this field to learn lessons every year.

(2) Weakness: 1. The conflict of Strategic Management and Strategic Development. On

the one hand, the corporate decision-making of our hotel is only

concerned about the current tactics and strategies, ignoring the

long-term strategy and losing in the daily operations of things. On the

other hand, the lack of talents with abilities to respond to the complex

and changing environment of business operations is the core issue in the

current implementation of sustainable development and maintain

long-term competitive advantage.

2. Internal contradictions of innovation and development. The functions of

the planned management model, organizational model will gradually

become the main factor restricting enterprise to participate in global

competition. ERP, management and organization model of reform and

innovation, as well as the construction of the enterprise features of

human environment should be considered as the focal points.

3. Visible liquidity of workers in the service sector creates risk of high

investment of human training.


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4. The organization of U Capsule Hotel has a strong presence in Hangzhou

and needs seed money. It is often argued that they need to look for a

portfolio of companies, in order to spread business risk, which is

different to overcome.

5. The majority of U Capsule Hotel’ income is derived from renting. In

another word, profit tends to get squeezed because of the low price

competition pressure, the rising cost and population movements.

6. Each guest staying at the capsule hotel must consciously abide the

"contract": protect public facilities, keep silent and respect the

privacy of others or it will lead to pressure on maintenance and create

benign atmosphere for rest.

2. Analysis of Opportunity & Risk

(1) Opportunities: As an enterprise with new concept, U Capsule Hotel is exposed to a wide

variety of developments described in this report and the company’s overall

situation.

1. Policy opportunities: More space distribution on the set of public facilities,

reasonable limits to minimize private sleeping space and cost savings

consistent with the sustainable development strategy in China. As WTO

brings world-class competitors to Chinese companies, faced with

increasing market competition, strive to improve the technological

content and quality level of every capsule is the mainstream.


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2. Economic opportunities: The adverse effects of the financial crisis and

world economic fluctuations and the high price of living in China, boost

the growth of demand for the capsule hotel.

3. Social opportunities: With the improvement of living standards and

economic conditions, people’s ideas and patterns of behavior also began

to change, tending to be receptive to new things. The mobility of talents

in services sector brings vitality to our hotel.

4. Technology opportunities: With the development of electronic

information technology, marketing and communication channels are

widened. Completion of the information superhighway greatly improves

the labor productivity of enterprises, while changing the traditional

business model. At present, the application of IT in design and decoration

improves beauty of our hotel.

(2) Risks: As a company birth with new concept, the U Capsule Hotel is exposed to

numerous risks. Significant risks are outlined in the following sections. The

order in which the risks are listed is not intended to imply any assessment as

to the likelihood of their materialization or the extent of any resulting

damages.

1. Policy risk：Refers to the instability of policy. The policy can affect people's

needs, which limits hotel’s service and product.

2. Legal risks: We are exposed to numerous legal risks from legal disputes

or proceedings to which we are currently a party or which could arise in

the future, particularly in the areas of product liability and competition


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law, patent disputes, tax assessments and environmental matters. In

addition, the outsourcing service has been concerned in traffic laws. The

outcome of any current or future policy adjustments cannot be predicted.

3. Requirement risk: Sales of the U Capsule Hotel are subject to seasonal

fluctuations. This applies particularly in the Crop Science business, which

is also affected by factors such as weather conditions. The performance

of our Material Science subgroup is affected by cyclicality in customer

industries. A downturn in the business cycle, characterized by weak

demand may lead to price pressure and more intense competition.

4. Competing risks: The competition is another source of risk for we can

never imagine the rapidly increase rate of new-born companies or fully

understand the next step of competitors. Moreover, the low technical

content of hotel industry and service products which are easy to imitate

put pressure on companies development.

5. Management risks ： include the lack of coordination between the

functional departments and leadership, and the delay, low efficiency and

quality caused by sudden leave of team staffs. Errors of judgment of

consumers’ spending habits and tendencies led from the individual

consumer behavior as a consumer tendency to developed products and

service lead to money waste and loss of market opportunities.

6. Product development risks: The U Capsule Hotel’s competitive position,

sales and earnings depend significantly on the development of

commercially viable new products and services. We therefore devote

substantial resources to research and development. Because of the

lengthy development processes, technological challenges, regulatory

requirements and intense competition, we cannot assure that all of the


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products we will develop in the future or are currently developing will

actually reach the market and achieve commercial success as scheduled

or at all.

7. Financial risks: Management of financial and commodity price risks. U

Capsule Hotel is exposed in the normal course of business to credit risks,

liquidity risks and various market price risks that could materially affect

its net assets, financial position and results of operations. It is suggested

company use derivatives to minimize or eliminate the market price risks

associated with operating activities and the resulting financing

requirements.

8. Market risks: relate to the possibility that the fair value or future cash

flows of financial instruments may fluctuate due to variations in market

prices. Market risks include currency, interest rate and other price risks,

especially commodity price risks.

3. Assessment of the overall risk situation:

Compared with the previous year, the overall risk situation did not change significantly in the reporting period. The overall risk assessment is based on a consolidated view of all significant individual risks. At present, no potential risks have been identified that either individually or in combination could endanger the continued existence of the U Capsule Hotel.


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VII.Financial planning

Startup ExpensesU capsule hotel

Sources of Capital

Owners' Investment (name & % ownership)Founders 400,000¥ Employees 200,000 Copartners 400,000 Total Investment 1,000,000¥

Bank LoansBank 1 500,000¥ Total Bank Loans 500,000¥

Startup Expenses

Capital Equipment ListFurniture 25,000¥ Equipment 20,000 Fixtures 50,000 Machinery 100,000 Other 10,000 Total Capital Equipment 205,000¥

Location and Admin ExpensesRental 200,000¥ Other 30,000

Total Location and Admin Expenses 230,000¥

Opening InventoryHotel fair 5,000 Hotel seminar 20,000 Others 5,000 Total Inventory 30,000¥


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Advertising and Promotional ExpensesAdvertising 50,000¥ Signage - Printing - Travel & Entertainment - Other / Additional categories - Total Adv and Promo expenses 50,000¥

Other ExpensesTraining 20,000¥ Car rental 10,000¥ Total Other Expenses 30,000¥

Reserve for Contingencies 50,000¥

Working Capital 200,000¥

Summary Statement

Sources of CapitalOwners' and Other Investments 1,000,000¥ Bank Loans 500,000 Total Source of Funds 1,500,000.00

Startup ExpensesCapital Equipment 205,000 Location / Admin Expenses 230,000 Opening Inventory 30,000 Advertising / Promo Expenses 50,000 Other Expenses 30,000 Contingency Fund 50,000 Working Capital 200,000 Total Startup Expenses 795,000¥


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Security and Collateral for Loan Proposal

Collateral for Loans ValueReal Estate ¥ 120,000 Other Collateral -

Description

Residence at 199 Eastern Taikang Ave.The E.N.D Team

OwnersThe E.N.D TeamOther ownerOther owner

Loan Guarantors (other than owners)Loan Guarantor 1Loan Guarantor 2Loan Guarantor 3


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VIII.Appendix

1.Questionnaire (English vision)

Questionnaire about capsule hotel

Age Occupation Gender

Marital status

Married/Single/Divorced/ Confidential

Housing situation

Have house/Rent house/Others/Confidential

1. Have you heard of capsule hotel?

2. Do you think capsule hotel is necessary in contemporary society? Why?

3. What style do you think the capsule hotel should use?

4. What equipments and services do you think the capsule hotel should have?

5. What factors do you think can affect the people’s demand of moving capsule hotel?

6. What methods do you think the capsule hotel should use to charge customers?

7. Do you want to experience capsule hotel?

8. What response do you think the competitors will make after capsule hotel enter into the market?

9. Do you think it is necessary to make moving capsule hotel?

10. Where do you think the capsule hotel should locate?


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2.Questionnaire (Chinese vision)

胶囊旅馆问卷调查

年龄职业性别

婚姻状况已婚\未婚\离异\保密

住房情况拥有\租用\其他\保密

1. 您听说过胶囊旅馆吗？ 2. 您觉得现在的社会需要胶囊旅馆吗？为什么？ 3. 您心目中的胶囊旅馆的设计是怎么样的？ 4. 您觉得胶囊旅馆应有哪些设备，提供哪些服务？ 5. 您认为有哪些因素能够影响社会对可移动胶囊旅馆的需求？ 6. 您希望胶囊旅馆如何收费？ 7. 您希望体验胶囊旅馆吗？ 8. 胶囊旅馆进入市场后，您觉得竞争者会有什么反应呢？ 9. 您觉得胶囊旅馆有必要做成移动的吗? 10.您觉得胶囊旅馆应该建立在什么地理位置？


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3.Reference

1.http://capsulehotel-inn-osaka.com/

2.http://www.japantimes.co.jp/text/fl20110116x2.html

3.http://www.designboom.com/weblog/cat/9/view/8111/9-h-nine-hours-c

apsule-hotel-in-kyoto.html

4.http://house.ifeng.com/home/gj/detail_2009_11/20/195424_0.shtml

5.http://www.city-of-hotels.com/174/2010-0701/capsul-hotel-russia-en.ht

ml

6.http://www.flamingoshanghai.com/blog/2010/05/12/capsule-hotel-in-be

ijing/

u capsule hotel

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