Business Plan Template: Business Plan Motel



Swanton Motel

Business Plan

 

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Swanton Motel

112 Grand Ave

Swanton, VT 05488

Phone: +1-802-868-4284

service@

Revision 15 June 2015

 

1.0 Executive Summary 1

Chart: Highlights 2

1.1 Objectives 2

1.2 Mission 2

1.3 Keys to Success 3

2.0 Company Summary 3

2.1 Company Ownership 3

2.2 Company History and Improvements 3

Table: Past Performance 4

3.0 Services 5

4.0 Market Analysis Summary 6

4.1 Market Segmentation 6

4.2 Future Market Segment Strategy 7

5.0 Strategy and Implementation Summary 8

5.1 SWOT Analysis 8

5.1.1 Strengths 9

5.1.2 Weaknesses 9

5.1.3 Opportunities 9

5.1.4 Threats 9

5.2 Competitive Edge 10

5.3 Sales and Marketing Strategy 10

5.4 Sales Forecast 10

Chart: Sales Monthly 11

5.5 Milestones 12

Table: Milestones 12

6.0 Management Summary 13

7.0 Financial Plan 14

7.1 Assumptions 14

7.2 Break-even Analysis 14

7.3 Projected Profit and Loss and Cash Flow 15

Table: Profit and Loss and Cash Flow 16

1.0 Executive Summary

Swanton Motel

112 Grand Ave

Swanton, VT 05488

Phone: +1-802-868-4284

service@

Introduction

Swanton Motel is a family motel operating for over 60 years, and since June 2009 by Shelly Cunningham (Cunningham12, Inc.). The motel has a great reputation for being impeccably clean. It is a two diamond rating by AAA and the last AAA approved motel before the Canadian border in northwestern Vermont. In addition to the outdoor access strip motel, there is a 3-bedroom owner/managers home with office located on the property.

Location

Swanton Motel is located at 112 Grand Ave, Swanton, VT 05488. It is one-quarter mile south on Route 7 from the Swanton Village Park with the Royal Swans. It is 5 miles north of the new Walmart.

The Motel

The Swanton Motel offers superior quality lodging in the form of 6 single rooms with queen beds, 5 double rooms with double beds, a two-bedroom suite with two double beds in one room and two twin beds in another room, and a two bedroom suite/apartment with a kitchen. All 15 bedrooms have flat screen TVs with extra large screens in the suites. Each unit is equipped with half-height refrigerators, microwaves and Keurig coffee makers. The suite full kitchen is equipped with full size kitchen appliances including a dishwasher and all dishes, pots, pans and utensils.

Our Services

Swanton Motel will offer superior cleanliness and boutique rooms with a unique decorative style matching all the AAA requirements that assure travelers expectations are met. Prices are published on our web site for all seasons and for peak demand times with all discount options to assure guests they are treated fairly and not gouged like many summer travelers in Vermont.

The Market 

Swanton Motel is located in Swanton, Vermont in the northwest corner of the state. It is just a mile from Interstate 89 exit on busy route 7 just inside the village limits. It experiences approximately 70 sellouts per year with most being summer and fall. It is located close enough to the lake and has sufficient boat parking to attract several fishermen. It is 45 minutes from the closest ski mountains and thus attracts only a few ski enthusiasts each year. We also have many contractors and some commercial accounts who choose our motel when working in the area as our rates are much below the chain hotels. We attract many travelers passing through from western Canada to Maine, New Hampshire and the Canadian Atlantic provinces. We also attract many vacationers and travelers from Massachusetts, Connecticut and New York with northern Vermont destination and/or passing through to Canada.

There is only one other motel in Swanton that is also an independent family operated motel but does not have AAA approval. The closest chain motels are in St. Albans, 10 miles south of us. The Vermont market is very high priced in summer and fall which allows us to charge a very profitable rate while still being far below the chain rates.

Financial Considerations

The current financial plan for the Swanton Motel is to obtain a better financing package to allow the cash flow to grow additional business opportunity. The motel has had major improvements and stock additions during the first 6 years of Cunningham12, Inc. ownership and is poised to be a cash cow for several years. New financing will reduce the cash outflow and allow the profits to be reinvested to grow the dining option. The motel has a consistent history of providing a healthy gross income to the owners. It was the only area motel to weather the financial crash of 2009 without ANY loss of revenue. Revenue actually increased in 2010 under the current ownership.

1.1 Objectives

The objective of the Swanton Motel is to maintain the high occupancy and to provide travelers with a low cost superior quality establishment that provides comfortable lodging to all.

1.2 Mission

Swanton Motel aspires to maintain a loyal customer base by providing impeccably clean lodging with top quality amenities and comforts. The care of our guests is our primary concern. We aim to provide an environment that encourages and promotes an excellent rest and comforting experience for our guests.

1.3 Keys to Success

• Clean, clean, clean – this is most important key.

• Provide amenities above expectation – Keurig coffee maker, half-height refrigerator, large flat screen TV.

• Maintain pricing below chain hotels.

• Provide high quality bedding, furniture and decor.

• Provide good water pressure and hot water for showers.

• Full kitchen suite.

• Outdoor pool.

• Ample parking with outlets for boats.

• Free high speed and reliable Wi-Fi.

• Care more about people – do little things to make them feel special.

• Develop business relationships/accounts (add to Pike Industries, etc.)

2.0 Company Summary

The Swanton Motel is located at 112 Grand Avenue, Swanton, Vermont 05488. It is currently owned by Cunningham12, Inc., an S Corporation fully owned by Shelly Cunningham. It is now operated by Erin Moser, General Manager. The business was established in 1950 as an 11 unit motel with 5 single rooms, 5 double rooms, and 1 two-bedroom suite. It incorporated an owners quarters with an office on the north end. Later, a 3-bedroom home was built on the same property but detached from the motel. The motel strip owner’s quarters was converted into another single unit and a two-bedroom apartment to provide fully 13 units and a separate office located in the house.

2.1 Company Ownership

It is currently owned by Cunningham12, Inc., an S Corporation fully owned by Shelly Cunningham. Shelly acquired the business with the support of her husband, Karl, in June 2009 from Steve & Corinne Benham, who had operated it for 11 years.

2.2 Company History and Improvements

The Swanton Motel has had consistent ownership in its 60+ year history with only 5 owners.

The Swanton Motel did not suffer any downturn during the worldwide recession in 2008 - 2010. The volume of business actually increased by 10% in 2009/10 when most Northern New England motels suffered a significant downturn in business volume. AAA reported many closings while most motels reported 20% to 30% decrease by volume.

The Cunningham12, Inc. ownership increased the total volume of business with several improvements including upgrading the web site with installation of on-line reservation software. Publication of the cleaning checklist and the emphasis on cleaning on the web site is also reported by first time guests as being influential in their decision to stay at the Swanton Motel.

Expenses and capital improvements under Cunningham12, Inc. were based on the family income and preparing the business for the future. Karl Cunningham’s job income enabled investment into the business beyond the business income which provided for improvements and personal (joint) income tax savings associated with the expenses. As well there was a significant impact on the volume of business due to family use of several rooms that eliminated them from potential income generation (Karl and Shelly are parents of 12 children and 14 grandchildren), in particular was the use of the most expensive suite 101 for 2013 and 2014.

The motel sells out over 70 times a year. The occupancy rate from June 15 to October 15 is 85% compared to 10% from November through March and 30% the other 3 months. The impact of not having all rooms available for sale due to renovation and family occupancy, as well as under-reporting of sales, puts the projected gross income over $200k.

Additionally, Shelly Cunningham, the share owner and operator, enjoyed performing significant decorating and community support activities that created significant expense without a significantly off-setting business improvement benefit. These expenses will be reduced significantly by a business owner/manager operating under a proper fiscal model.

The most notable physical improvements under Cunningham12, Inc. include:

• Replacement of all credenza top CRT televisions with wall mounted flat screens.

• Additional flat screen TV’s in the additional suite rooms with a large flat screen in each main suite room.

• Additional wiring of the suite kitchen and appliance upgrades – new stove, refrigerator, dish washer, coffee maker, toaster, microwave, dishes and silverware.

• Installation of free high speed wireless internet access points covering all rooms.

• Installation of new Keurig coffee makers in every room.

• Installation of microwaves in every room.

• Replaced all mini refrigerators with half-height refrigerators (3X bigger).

• Replacement of all south side hot and cold water pipes with new larger diameter pipes.

• Increase of water pressure to all rooms.

• Installed new pressure bladder tank to eliminate water pressure fluctuations.

• Replaced boiler with new, high efficiency gas boiler unit.

• Replaced old washers and dryers with three each new units.

• Replaced drain plumbing of washers with properly vented design for proper water flow.

• Replaced water heater in motel and house with new units.

• Replaced main water plumbing with new larger copper pipes and valve manifold.

• Painted the exterior of the motel.

• Replaced several older heater valves and thermostats to modern more readable style.

• Performed major bathroom upgrades to 6 rooms with new floor tile, fixtures, vents, wall board, ceilings and painting.

• Performed carpet and furniture replacements and/or upgrades in most rooms.

• Replaced all bed spreads and blankets and increased spare linen inventory.

• Replaced pool lining and pump with upgrades to current code (dual drain).

• Added a large ice making machine that fills fishermen’s coolers without depleting machine.

• Added soda and snack vending machines.

• Upgraded the plants and shrubs on grounds for better road side appeal.

• Procured additional tools and machines for maintenance and grounds keeping.

• Replaced all sump pump units and installed operating spare units with new drain piping.

• Procured a 2010 Jeep Wrangler with Boss plow for winter snow removal.

• Replaced outdoor aluminum frame and plastic strap chairs with Adirondack wooden pairs.

• Installed CCTV security system.

• Replacement of all entry rugs and painting of concrete porch.

| | | | |

|Table: Past Performance | | | |

| | | | |

|Milestone Description |Start Date |End Date |Budget |

|Execute Commercial Account Sales Agreements |1/1/2015 |continue |$0 |

|Wrap-Around Porch with seating and tables |08/1/2015 |08/31/2015 |$12,500 |

|Commercial Kitchen Upgrades |11/1/2016 |01/31/2017 |$17,500 |

|New Sign |09/1/2015 |09/15/2015 |$2,500 |

6.0 Management & Personnel Summary

Swanton Motel has the following organizational structure:

Erin Moser – General Manager - Annual Salary $15,600 plus household expenses (rent, heating, electric, water & sewer, garbage removal, internet).  Salary position.  Job Description - Monitor and supervise the daily operations, housekeeping and independent contractor staff, financial management and overall productivity. Ensure a high level of customer satisfaction, monitor and track all company assets and reorder supplies as needed.

Housekeeping Staff- Annual Salary $14,000 – Part-time hourly positions as needed. Job Description – Manage the daily operations of cleaning and maintaining suites in superior condition, reassess supplies and refill as required, perform daily laundry and monthly cleaning functions as required. 

7.0 Financial Plan

The current financial plan is for Swanton Motel to obtain mortgage funding in the amount of $487,500 to pay off the existing mortgage and reduce the monthly payment based on a 20 year amortization.

7.1 Assumptions

Inflation is not factored into the sales and expense as rates have historically been increased based on the cost inflation and are planned to continue in this manner.

The mortgage payment is based on 5% interest over 20 year amortization schedule.

Swanton Motel uses a cost base of $40 per room-night to cover all variable costs – immediate expense for cleaning and short term capital. This is atypical of many motel financing models but replacement and incremental improvement is considered a necessary part of the variable costs to be a quality motel. Thus, they are included in the $40 cost model rather than being factored in with the fixed (capital) costs of longer terms such as real estate. Heat and electric is treated as a fixed cost because they do not vary much in Vermont given the harsh winter and need to keep up room temperatures as well as lights and appliances energized to welcome guests.

7.2 Break-even Analysis

The Company's annual break-even revenue is expected to be $150,000 without consideration of the interruptible terms of the second mortgage, and includes the owner’s salary. Break-even is $130,000 without the owner’s salary and $106,000 with interruption of second mortgage.

7.3 Projected Profit and Loss and Cash Flow

The motel profits will be directed to the development expenses and capital required by the complementary businesses. This is the main growth opportunity due to the limitations of the property for expansion.

| | | | | |

|Table: Pro Forma Profit and Loss | | | | |

| |2015 |2016 |2017 |2018 |

|Motel Sales |220,000 |225,000 |230,000 |236,000 |

|Plowing Sales |2,500 |10,000 |10,000 |10,000 |

|Diner Sales | |20,000 |40,000 |60,000 |

|SALES |$222,500 |$255,000 |$280,000 |$306,000 |

| | | | | |

| | | | | |

|EXPENSES: | | | | |

|Repairs & Maintenance |12,000 |12,500 |13,000 |14,000 |

|Taxes & Licenses |12,000 |14,000 |15,000 |16,000 |

|Interest |32,000 |31,000 |30,000 |28,900 |

|Depreciation |36,000 |36,000 |36,000 |36,000 |

|Advertising & Marketing |2,000 |2,500 |2,500 |2,500 |

|Accounting & Legal & Pay Processing|3,000 |4,000 |4,000 |4,000 |

|Vehicle Expenses |4,000 |5,000 |5,500 |6,000 |

|Bank and Credit Card Charges |6,000 |7,000 |8,000 |8,200 |

|Dues, Subs, Licenses, Travel, Misc.|1,600 |3,000 |3,000 |3,000 |

|Insurance |4,200 |6,000 |6,000 |6,000 |

|Office Supplies |3,000 |3,500 |3,500 |3,500 |

|Contract Labor and Direct Salaries |18,000 |23,000 |25,000 |27,000 |

|Salary |18,000 |18,000 |18,000 |18,000 |

|Supplies |15,000 |29,000 |40,000 |50,000 |

|Utilities |20,000 |22,000 |24,000 |26,000 |

|Telephone & Internet & TV |8,000 |8,000 |8,500 |8,500 |

|Small Furniture & Appliances |1,000 |1,100 |1,200 |1,300 |

|Décor & Grounds |1,000 |1,100 |1,200 |1,300 |

|TOTAL EXPENSES |$196,800 |$226,700 |$245,400 |$260,200 |

| | | | | |

|Net Profit (Loss) |$25,700 |$28,300 |$34,600 |$45,800 |

| | | | | |

|CASH FLOW (before tax): | | | | |

|Depreciation & Interest |68,000 |67,000 |66,000 |64,900 |

|Mortgage Payments |(51,500) |(51,500) |(51,500) |(51,500) |

|Net Positive Cash Flow |$42,200 |$43,800 |$49,100 |$59,200 |

| | | | | |

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