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Naagoshi Island Resort

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  1. Naagoshi Island Resort Made in Heaven

  2. Overview of Maldives Position in the Globe The Republic of Maldives consists of 1,192 coral islands, which form a chain of 820 km in length, and 130 km in width, set in a territorial area of 859,000 square km of the Indian Ocean. The total land area of the Maldives is approximately 300 square kilometers. Proximity Nations Sri Lanka and India are the closest neighbours, lying 750 km and 600km north and north-east of Maldives, respectively. Landscape Features The islands of the Maldives are formed into 26 natural atolls, of which grouped into 20 administrative regions. Most of the islands are quite small and low-lying, with an average elevation of 1.6 m above mean sea-level. The islands are surrounded by shallow, crystal-clear lagoons enclosed by coral reefs. Out of the 1192 islands, 199 are inhabited and 87 islands have been developed as tourist resorts. Further, construction of new resorts are in progress. Climate The Maldives has a tropical climate. With two monsoons in the year, it is warm and humid throughout the year. Daily temperatures vary little. The annual mean temperature is 28.3°C with temperatures ranging from 25.1°C to 31.5°C. The average relative humidity ranges from 78% to 85%.

  3. Economy • The economy has grown consistently at a very impressive pace over the last two decades. • Prosperity of Economy • Maldivian economy has grown consistently at a very impressive pace over the last two decades. • Annual GDP growth has averaged 7.9 percent over the last 15 years, while inflation has been maintained at modest levels. • Major Sectors of Economy • The Maldives economy is largely based around two industries—tourism and fishing. • Tourism contributes over a third of the gross domestic products of Maldives. • Tourism industry is the largest foreign exchange earner, contributing approximately 70 percent of gross foreign exchange receipts. Tourism in Maldives Economic Environment for Tourism Sector

  4. Prosperity of Tourism Sector • Tourist arrivals • Increased from 83,814 in 1984 to 958,027 in 2012. • In the year 2006, the total tourist arrival was reported as 675,889 as per the Ministry of Tourism & Civil Aviation of the Republic of Maldives. • Presence of Other Prospering Sectors • Other complementary activities to tourism, including retail and wholesale trade, construction, communication and transportation, are increasingly becoming important sectors. • Underlying Strength of Economy • Prudent macro-economic management and a stable political environment have enabled the Maldives to achieve uninterrupted economic growth in the past. • The Maldives’ economy, although small and largely dependent on just two key sectors, has proven to be resilient to external calamities. Tourism in Maldives (Continued…) Economic Environment for Tourism Sector

  5. Government Assistance • The Maldives in the early days of tourism had a relaxed policy to attract investments. This has facilitated private sector involvement and rapid growth in the sector based on market forces. • The industry is now very much regulated by the government of Maldives and is now developed and managed according to country wide policy based on a master plan. The task is carried out by the ministry of tourism. The ministry decides the number of beds to be allocated in the country for tourists visiting Maldives in a given period. The government leases the islands to private parties to develop as tourist resorts, through a public bid. • Maldives tourism industry celebrates the 36 years of tourism. The vision of the government on tourism is to; • Be the most exclusive destination in South Asia • Be the top tourism earner in South Asia • Be an example of sustainable tourism development in small island nations Tourism in Maldives (Continued…)

  6. Tourism industry in Maldives operates under a protective and conducive legal and regulatory environment. • Legal Structure • Legislations Influencing the Hospitality Industry • Tourism Act (Law No: 2/1999) • Employment Act (Law No: 2/2008) • Law relating to Export and Imports Legal & Operating Structure

  7. Legislations Influencing the Hospitality Industry • Tourism Act (Law No: 2/1999)The tourism industry in Republic of Maldives is governed by this Tourism Act of 2/1999. The Act guides establishment and operation of the resorts, hotels, guesthouses, marinas, dive-centres, and other tourist facilities. Legal & Operating Structure – Cont… Right of Government to Monitor Standard of Services by Resorts The Ministry of Tourism reserves the right to protect the standard of the hospitality industry in Republic of Maldives. The Tourism Act vests the responsibility to the ministry as follows: • The Ministry of Tourism has the discretion to monitor tourist resorts in order to ensure that the services provided by the resorts are in accordance with guidelines determined by the ministry. • Where the standards of a tourist resort falls below the guidelines determined by the Ministry of Tourism, the ministry may in its discretion impose upon such resort, a fine, as well as suspend the license to the resort until the default is rectified.

  8. Legislations Influencing the Hospitality Industry – (Continued …) • Law Relating to Export and Imports (31/1979)The tourism industry consumes resources imported from overseas countries. This Act describes authorised import and export activities and exemptions. Thus, the legislation is relevant to the procurement activities of Naagoashi Island Resort. • Employment Act (Law No: 2/2008)Being in the tourism industry, Naagoshi Island Resort relies on human resource to provide hospitality services. The Naagoashi Island Resort’s human resource management operations will be in conformance with this legislation. Legal & Operating Structure – Cont…

  9. Haa Dhaal Atoll Haa Dhaal Atoll is situated in 6.6166670 latitude and 72.8666670 Longitude in Maldives, being extreme north to the Male’ city. The closest Atolls are the Haa Alifu Atoll and the Shaviyani Atoll from the north and south respectively. The Haa Dhaal Atoll consists with 35 islands out of which 16 islands are inhabited. The capital of the Atoll is Kulhudhuffushi. The Atoll is approximately 280 Km far away from the Male’ International Airport. Resorts in Haa Dhaal Atoll accommodated 324 beds in 2006 as per the government statistics. The Atoll has 1.8% share of the total number beds in all the atolls of Republic of Maldives. It now has two more other resorts upcoming.

  10. Naagoshi Island Naagoshi Island in Haa Dhaalu Atoll is located in the Northern regions of Maldives. The Island is 2550 meters long in length with white sandy beaches and has a large land area of 50 Hectares. The island is situated 283 km from Male’ International Airport. It takes around 45 minutes to the Hanimaadhoo Regional Airport in Haa Dhaalu Atoll and from there it is 32.1km distance to the resort.

  11. Why Naagoshi is Unique Naagoshi has a unique shape and is the second largest island released by the government for development of tourist resorts in Maldives. The length of the island approximates 2.5 km. There are seven separate beaches all of which are not visible from the other, which enhances the privacy of tourist visiting Naagoashi. The lagoon of the island is one of the best in the Maldives for snorkeling and water sports The island is surrounded by scores of diving spots. There are 15 inhabited villages within a radius of 20 miles in Naagoshi. Manpower recruitment will be much easier and cheaper than any other resorts. • With the regional port of Kulhudhufushi, just 18 miles away, the developers of resorts expect a major part of the supplies directly to be shipped from India, lowering considerably the cost as compared to buying from Male’ and transporting to Naagoshi. • The location of the island, being closer to the regional airport of Hannimadhoo, also gives the property a lot of cost advantages. The guests transfers to the region of Hannimadhoo from Hulhule can be made in conventional planes and by speed boats. • The cost to the resort of this operation is less expensive than transferring guests by sea plan directly to the island.

  12. Why Naagoshi is Unique – Cont… Naagoashi Island Resort will provide a choice of two different types of bungalow and two different types of water villas, each with its own distinct characteristics: Product Concept The Island will be developed and positioned as a “Tropical Eco Island Hideaway”. It is not conceived to be operated as a traditional resort but is conceptualised and designed as a unique hideaway for all kind of markets. The concept of Naagoshi facilitates the middle market by providing both four star categories of facilities. The product holds its competitive advantage through the following two aspects: The resort will not disrupt the existing natural environment of the vast naturally beautiful Island and the panoramic scenery of the lagoon. It will provide the hospitality service ensuring the pleasing nature of staff

  13. Product Concept • The Rooms • Open, endless horizon overlooking the Indian Ocean with a view of the sunrise and sunset from the bungalow • Equipped with state-of-the-art technological equipment • Guest’s feet to roam the soft sandy beaches • Extreme in comfort and luxury Tropical Eco Island Hideaway Not conceived to be operated as a traditional resort Four star and six star categories of facilities. The product holds its competitive advantage: Naturally beautiful Island and the panoramic scenery of the lagoon. Pleasing nature of staff

  14. Product Concept The Resort Naagoashi Island Resort would be more than just beautiful. It would be so stunning and is enough to take your breath away. Its natural form as a vast island with its beautiful vegetation, huge sandy beaches surrounded by shallow waters, would offer a unique setting, and a breathtaking panoramic view enjoyable to the visitor. Naagoashi Island Resort Resorts would be ready to cater a unique and unprecedented experience in the hospitality sector in the sparkling white sands of Maldives. This very natural beauty and uniqueness of Naagoashi island gives the resort a competitive advantage for marketing it as the most attractive natural villa for the visitor looking for peace, quiet, undisturbed endless tranquillity. • The Rooms • The beach bungalows would give the guests a view of the open, endless horizon overlooking the Indian Ocean with a view of the sunrise and sunset from the bungalow. • The bungalows will be equipped with state-of-the-art technological equipment. • The rooms would located to let the guest’s feet to roam the soft sandy beaches of the island. • Overall the bungalows would provide the extreme in comfort and luxury while displaying Maldivian style.

  15. Product Concept Guest Facilities The resort would offer its guests a bar area with an extensive collection of beverage. Naagoashi Island Resort is dedicated to entertain its valuable customers with the touch of utmost care by providing different choices of food and beverages.

  16. Product Concept Approved Site Plan of the Resort Under Construction 23 year lease extendable to 50 years 284 villas with 586 beds 104 over-water villas 2.5km long 50Ha land area 7 beaches 1km lagoon 4 restaurants, including 2 over-water 4 bars 4 swimming pools Spa complex, dive centre and water sports centre

  17. Resort Developer : ThreeK International Private Limited • Total Project Cost : US$ 91.1Mn • Cost Incurred ( April 2014): Approx. US$ 30.5 Mn Project Overview…

  18. The Naagoashi Island has been leased from Maldives Tourism Development Corporation Limited (MTDC). The terms of the lease agreement are summarized as follows: Summary of Lease Agreement

  19. Proposed Investment & Capital Structure US$ (Mn) Capital Expenditure 67.7 Pre opening exp 4.8 Working Capital 2.5 Advanced Lease rent 16.1 Total Investment 91.1 Capital Structure Equity Capital (35%) 31.9 Debt Capital (65%) 59.2

  20. ThreeK International • Incorporation • ThreeK International is private limited liability company, incorporated under the Act No. 10/96, in the Republic of Maldives, with the registered address of “Sikkage Hulhangubai, Medhuzirarath Magu, Malé”. • Naagoshi Island Resort is the exclusive project that ThreeK International Private Limited has commenced.

  21. ThreeK International (Cont.) • Corporate Objectives • To lease and/or acquire the islands for the purpose of developing tourist resorts. • To develop, manage and operate tourist resorts in the republic of Maldives. • To carry out any and all of the business relating to the development, management and operation of tourist resorts in Maldives.

  22. ThreeK International (Cont.) • Main Partners • KPMG - advisory • Dentons – lawyers service • Group-X – architect • Hassel – landscape and interior design

  23. The main components of the business plan of Naagoashi Island Resort are summarized as given below Summary of Business Plan Goals To offer our guests a true taste of paradise with a blend of authentic Maldivian cultural heritage. We believe reaching out to our customers, by being creative and empathetic to their needs; henceforth, making their stay an experience that they would cherish forever as they go along, Our staff is our most precious asset. We will place emphasis on their needs and goals as much as we do on ours. We will create a work environment that fosters high spirits and morale, and nurtures a team that identifies themselves with and takes pride in our quest. Be innovative and always seek new ways of adding value to our guests. Make our product superior by uplifting our standards in all aspects. Vision To endeavour and be passionate in delivering a marvel premier destination that offers all that our Nation is world renowned for and more.

  24. Goals (Continued…) Present our additional facilities (i.e. SPA, water sports, excursion, etc.) in a manner that embodies it as part of the overall package, and not merely as an expense option. To always be aware of and respect the community around us – to recognize their every contribution, direct or indirect, towards the resort, and reciprocate by playing an active role in enriching their lives. Our long-term aim is to establish a market position by building a brand image that sets us apart from everyone else. Our strongest value is being environmentally conscious at all times. We will look into every nook-and-cranny and ensure that our resort thrives on the natural surroundings, including the people. Every step of the way we will ensure that we leverage on our environment and our culture. Summary of Business Plan - Cont…

  25. Organizational Execution • The Naagoashi Island Resort will carry out its business plan under the stewardship of the board of directors of ThreeK International Private Limited, to whom the General Manager of the resort will be accountable. The organizational structure is given beside: Managing Director Sergey V. Komarov Summary of Business Plan – Cont… Director Mikhail A. Zvyagintsev Director Vladislav G. Kuzminov Director Dmitry N. Kirin General ManagerNaagoashi Island Resort

  26. Profitability Objectives • The resort has been set with the following financial targets under its business strategy. • To achieve an average occupancy rate above 75% over the first five years. • Continually develop and enhance the facility, and build an image that enables us to increase the room rates by 10% from year 5 onwards. • Develop, redevelop and fine-tune the facilities and increase our guests’ expenses on these extras, year-on-year. • Ensure that the cash flows are well managed and adequate funds are available for the prompt settlement of the loan finance, thereby reducing the finance costs. • Complete construction within a period of 18 months, and have a fully-fledged resort running in the very first year itself, operating at full scale. • Achieving revenues at around US$ 191 Million within the first five years of operations. • To achieve a average net profit target of around US$ 35 Million during first 5 years, and progressively increase this in the subsequent years. • To have a planned and consistent cost structure throughout the running of the resort, and ensure that this is reflected in the profit margins of all the services. • Continually monitor the overhead expenses and maintain these to a minimum absolute level. Summary of Business Plan – Cont…

  27. Synopsis of HMA Management Fees Base Management Fee Incentive Management Fee Royalty Fee Global Sales & Marketing System Contribution FF & E Reserve Distribution System and Reservation Service Charge NB: Synopsis of HMA is based on the existed contracts between ThreeK International and CHAP (Carlson Hotels Asia Pacific) There were two agreements – HDSA (Hotel Development Service Agreement) and HMA (Hotel Management Agreement) The resort was supposed being operated under the brand “Radisson Plaza” Now all the agreements are terminated due to long delay of the completion of resort construction

  28. Profitability Objectives • The resort has been set with the following financial targets under its business strategy. • Occupancy rate above 73% • Increase the room rates by 13% from year 5 onwards • Develop, re-develop and fine-tune • Cash flows are well managed • Construction within a period of 18 months • Revenues at around US$ 255 Million • Net profit target of around US$ 51 Million • Planned and consistent cost structure • Monitor the overhead and maintain to a minimum absolute level. Forecasted Financials

  29. Anticipated Trend Return on Investment • Return on Investment (“ROI”) is anticipated to improve during the first 10 years of operation of the Naagoashi Island Resort from 2015to 2024. Highlights of Financial Feasibility

  30. The Naagoashi Island Resort has been estimated to be profitable as given below during the first ten years from its commencement. Highlights of Feasibility (Cont.) Measures of Anticipated Financial Performance • Gradual improvement • Lowest standard deviation of (2.54%) • Expected to keep its pricing constant. • Greatest standard deviation (of 6.62%)

  31. Trend of Profit Estimated to be Earned by Naagoashi Island Resort for the First Ten Years Highlights of Feasibility (Cont.) • The project earns steadily rising gross profit over its years of operation. • The project proves to be profitable after all overhead costs and financing costs being deducted from the operating profit, leaving a steadily rising net profit over its years of operation.

  32. Trend of Estimated Profitability of Running Naagoashi Island Resort for the First Ten Years Highlights of Feasibility (Cont.) • The project shall earn a constantly rising operating profit as its business remains prospering from the first year of operation. • The project shows a profitability with rising operating margin and operating profit

  33. Trend of Estimated Distribution of Profit to Equity Investors • An attractive dividend growth is expected from the project during its years of operation Highlights of Feasibility (Cont.) • The return on equity shall grow till its climax during the fifth and sixth years of operation, and then shall settle at a constant rate beyond the climax years.

  34. Trend of Return from Naagoashi Island Resort for the First Ten Years of Operation Highlights of Feasibility (Cont.) • Investment in the assets of the Nagoshi, shall yield steadily rising return.

  35. The Naagoashi Island Resort has been estimated to have liquidity, as given below during the first ten years from its commencement. Highlights of Feasibility (Cont.) Measures of Estimated Liquidity • The resort is estimated to improve in its liquidity as implied by the current ratio from 1.62 as in 2010 to 12.79 as in 2018. • The resort is expected to invest gradually increasing amounts in working capital. This shows a sign of catering for improving levels of operations. • By 2018 the debt capital finance is estimated to be settled, therefore the financial risk in the investment is expected to become less significant by 2018.

  36. Trend of Estimated Liquidity in Naagoashi Island Resort for the First Ten Years of Operation • Nagoshi project shall face less risk of illiquidity because, • its current ratio remains at a healthy level throughout its years of operation (the current ratio shall dramatically climb up, when the long-term debts shall be settled-up, towards the end of the project, because during the later part of the project the current portion of the non-current liabilities shall become nil so as to leave insignificant amount current liabilities) • its working capital remains positive throughout its years of operation.(the working capital shall also dramatically climb-up due to the final settlement of all long-term debts) Highlights of Feasibility (Cont.) • Working Capital = Current Assets – Current Liabilities

  37. The Naagoashi Island Resort has been estimated to be solvent as given below during the first ten years from its commencement. Highlights of Feasibility (Cont.) • As the long-term debts are settled at the later part of the project’s life, the solvency shall dramatically improve with a considerable fall in financial gearing, and spectacular rise in the ratio of equity capital to debt capital. Measures of Estimated Solvency

  38. Measures of Estimated Operational Efficiency • Assets of Nagoshi shall earn turnover at increasing efficiency from the beginning to the end of the project. Highlights of Feasibility (Cont.) • The ratio of turnover to total assets shall accelerate to a high level during the first three years of operation and shall remain high with a positive tendency to improve further beyond the third year of operation.

  39. Government Assistance Tourism in Maldives (Cont.) • The Maldives in the early days of tourism had a relaxed policy to attract investments. This has facilitated private sector involvement and rapid growth in the sector based on market forces. • The industry is now very much regulated by the government of Maldives and is now developed and managed according to country wide policy based on a master plan. The task is carried out by the ministry of tourism. The ministry decides the number of beds to be allocated in the country for tourists visiting Maldives in a given period. The government leases the islands to private parties to develop as tourist resorts, through a public bid. • Maldives tourism industry celebrates the 36 years of tourism. The vision of the government on tourism is to; • Be the most exclusive destination in South Asia • Be the top tourism earner in South Asia • Be an example of sustainable tourism development in small island nations

  40. Guest and Public Area • 1. Roads and Walkways • Roads and walkways leading to rooms, public area, staff area and service area are completed • 2. Office, reception and Lobby • Foundations, masonry and pillaring • Roofing • Out side plastering • 3. Main Restaurant & Kitchen • Foundations, masonry and pillaring • Roofingof the kitchen • Out side plastering Present Status of the Project

  41. 4. Diving School • Foundations, masonry and pillaring • Out side plastering • Roof beams • 5. Water Sports Centre • Foundations, masonry and pillaring • Out side plastering • Roof beams • 6. Guest Rooms on Land ( 180 ) • Foundations, masonry, pillaring and roof beams • Plastering except room interior • Front deck foundation • Front sundeck beams • Pools of 30 pool villas Present Status (Cont.)

  42. Present Status (Cont.) • 7. Guest Rooms ( Over Water ) • Room pilling in 90 of 104rooms • Room walkways • 8. Jetties and Pavilions • Pilling and Concrete work of water villas for 1.9Km • Completed the arrival jetty except deck and the roof • of 2 pavilions • 9. Pool Bar • Foundation, masonry and pilling work except for pool • Outside plastering • 10. Main Store Rooms ( 3 Units) • fully completed

  43. Present Status (Cont.) • 11. Lagoon Bar and Restaurant • Foundation and Masonry work • Pillars and roof beams • Outside plastering • 12. SPA main building • Foundation, masonry work, pillars and roof beams • Outside plastering • Hot & Cold water pool moulds • Hydro therapy pool mould • Yoga and Dai-ichi platform pillaring • 13. SPA treatment rooms • Foundation, pillaring, masonry and roof beams • Outside plastering

  44. Present Status (Cont.) • Staff Accommodation • 14. Management Staff Room ( 26 units) • Foundation, structure and roofing • Masonry work • 15. Junior Staff Room ( 26 units) • Foundation, pillaring, masonry work and roof beams • 16. Labour Quarters Rooms ( 26 units) • Foundation, pillaring, masonry work and roofing • 17. Executive Rooms ( 8 units) • Foundation, pillaring, masonry work and roofing • 18. Senior Staff Room • Foundation, pillaring, masonry work and roofing

  45. Present Status (Cont.) • Service Area • 19. Power House and Desalination Plant • Foundation, structure, masonry, plastering and roofing • 20. House Keeping Huts ( 10 units) • Foundation, pillaring, masonry work and roofing • Plastering is work in progress

  46. Over water work • Water Bungalow Jetty (South) • Arrival Pavilion (North) • Pool Water Bungalow • Water Bungalow

  47. Ground Work • Beach Villas • Beach Suits • Staff area

  48. Ground Work (Cont.) • Water Sports • Main Restaurant

  49. Taking into account of the following aspects: • Constantly growing tourism industry in Republic of Maldives • Geographical location of the island, with seven unique beaches of the island, and other natural beauties the island contains • Stable Maldivian economy, and protective legal environment, • Positive financial performance indicators derived from the feasibility study on Naagoashi Island Resort • Serving the international tourist markets • by providing hospitality services • by operating Naagoashi Island Resort • is financially and strategically feasible. Wrap Up

  50. Thank You