Summary

The opportunity to run a magnificent property with an amazing history. The business is 15 room hotel located in the CBD nested among similar "historically rich" structures. The buyer will earn functions, bar and restuarant revenues to support accomodation revenues. The business is currently at an average of 28% for the first five months of 2011.

1. History Background

Fully describe the business's activities?

The business is a 15 room boutique hotel set in a magnificent colonial building in the middle of the city. The hotel has a restaurant, function facilities, two bars and several rooms loaded with historical pictures and artifacts. The business comes with a gentlemen's membership club and a 100+ year private cellar with a lot of history behind it.

How long has the business been established?

2.5 years

How long has the owner had the business?

2.5 years

What steps are in place to solve 'load shedding' problems?

Located in the CBD where there are rarely ever any load shedding problems.

What is the average KW usage?

Not applicable

2. Present Market

How does the business operate on a daily basis?

The business provides accommodation for business guests, hunters, safari tourists and the average stay is typically 1-2 nights. The restaurant, function rooms and bars also form a critical part of the revenues of the hotel. Bookings are received directly from customers as well as through agents. The Hotel is also part of a collection of hotels that are jointly marketed to create a selection of choice properties. There is a lot of cross selling within this collection.

How are the clients attracted to the business?

Through direct calls and through travel agents

What Advertising/Marketing is carried out?

Local press, website and joint marketing efforts with other boutique properties in the group.

Does the business have any contract work?

No

What competition exists?

Various B&B type accommodation and hotels around the city. Admittedly the Hotel gets a lot of repeat clients and is unique in its market position of an intimate 3-4 star hotel (the hotel unrated though).

What are the seasonal trends?

Peaks are during are during holidays and business activities in the City such as business fairs and government functions.

3. Financial

Is the business VAT Registered?

Yes

What VAT documentation is on file?

Yes

Are there up-to-date Management Accounts available?

Yes

What Balance Sheet and Income Statements are available?

Yes. 2010

What percentage of of the business is cash/credit?

80-90% cash

What is the age analysis of the debtors book?

No Debtors as 31.05.2011

How could the profitability of the business be improved?

Focus on marketing the domestic market and hosting attractive functions at the Hotel.

Is Seller finance available and for what amount?

40% of the purchase price

What is the payback period?

What is the ROI?

4. Staffing

What is the total staff complement?

20

Give a breakdown of staff/functions/length of service?

The majority of staff have been with the business for 2.5 years. A staff list is attached. The staff functions are related to the department i.e. restuarants- waiters, rooms and housekeepers.

Do any receive special perks or incentives?

Reservation consultants on booking incentives

Are they on contract?

All staff are permanent employees and have contracts

Do any have management potential?

Yes. Assistant Management positions can be filled by one or two individuals

How involved is the Owner in running the business?

The owners (a husband and wife team) are very involved with the business on daily basis.

5. Premises

When does the current lease end?

In 11.5 years time.

Is there an option of renewal & what period?

Pending negotiation

What is the annual escalation %?

The rental is turnover based and is 4% of turnover.

What are the trading hours?

24-7

What is the square meterage of the business?

Not applicable

Is a copy of the lease available?

Yes

Do you require a licence?

Yes. Liquor Licence and ZTA Licence

6. Assets

Is a full asset list on file?

Yes

Are any items not included in the sale?

Memorabilia that is part of a Trust Club

What is their overall condition?

Good

Do any require repairing?

No

How have they been valued. ?

Owner's valuation

Which assets are on lease/HP and with whom?

Not applicable

What are their settlement amounts?

Not applicable

Will Seller settle or Buyer to take over?

Not applicable

Are copies of agreements available?

Not Applicable

Are they presently insured?

Yes

7. S.W.O.T. Analysis

Strengths?

(1) Great location (2) Magnificent building (3) Joint marketing efforts (4) Hands on management style of the owners (5) The Hotel is also a type museum because of the artifacts and memorabilia that belongs to the land lords.

Weaknesses?

(1) Seen as elitist and colonial in an environment where the middle class is changing with regard to the local market.

Opportunities?

(1) Marketing to tourist segment

Threats?

(1) There are other old buildings in the city that could converted into grand colonial style hotel.

8. Reason For Sale

What is the reason for the sale?

Owners wants to focus on safari camp type business where they have major strengths.

9. Conclusion

Why is this a good business?

The property has a lot of potential

What is the price plus stock and the net profit?

ZAR3,850,000.00