Ardvi Village Resort

Table of Contents

Executive Summary

3

1.

4

Company Description

1.1. Introduction

4

1.2. Concept

4

1.3. Location

5

1.4. The layout

7

2.

The History of Ardvi

12

3.

Social impact

16

3.1. The social enterprise model

16

3.2. Ardvi Foundation

17

4.

18

Organization and Management

4.1. Management

18

4.2. Booking and Reception Policy

20

5.

21

Marketing mix strategy

5.1. Products & Services

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5.2. Pricing

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5.3. Promotion

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5.4. Placement and distribution

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6.

28

Market Analysis

6.1. Development of tourism in Armenia

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6.2. Target Market Profile

30

6.3. Competitive Set Selection

32

7.

SWOT (Strengths, Weaknesses, Opportunities, Threats)

37

8.

Financial Plan, Projections and Feasibility Analysis

39

9.

Proposed action plan and logical framework

44

10. Progress to date

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ARDVI VILLAGE RESORT | BUSINESS PLAN

Executive Summary Ardvi Village Resort is a facility located in the Lori region of Armenia in the close vicinity of the historical village of Ardvi. The whole idea of this initiative is to create a sustainable model of a social enterprise that will not only generate profit but also will assure a direct inclusion of the community of Ardvi in the establishment of a multifunctional retreat promoting the development of tourism in Armenia and the region of Lori in general.

Located in the heart of breath-taking landscapes of Lori, Ardvi village resort will be built on 20,000 square meters of owned land with available area for further development and scale-up of nearly 50,000 square meters. The resort will include 20 isolated “bunker-like� apartments equipped with all needed comforts in the home-away-from-home concept. The sizes of the units will vary between 35 to 40 sqm, having a unique interior design and placement. The main building of the Resort includes several functional units. The first floor is designed for the Restaurant with its kitchen and storage facilities, wine bar, artisan crafts shop and other minor structures. In the second floor the spa area will be situated.

Such project design will ensure the complete involvement of the inhabitants in the establishment of a new and one-of-a-kind village resort.

This will create incentives for future development of a demonstrative community-based recreation model having a huge duplication potential in other regions of Armenia with the possibility of franchising on one hand and rural development on the other.

The resort will also include modules directly involving locals in the profit generation mechanism such as market for local goods and artisans as well as the guided tours (hiking, horse riding) where the villagers will be able to cooperate with the vast network of resort activities.

5 percent from the accommodation bills will be donated to the foundation to support community development projects.

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1. Company Description 1.1.

Introduction

Ardvi Village Resort is a facility located in the Lori region of Armenia in the close vicinity of the historical village of Ardvi. This business plan describes the service and products offered by the resort, the sustainability aspects of the development, the rates, and the economic feasibility of the project.

The facility is comprised of three main interconnected modules. The restaurant, event and the spa areas are located in the main facility of the resort. The accommodations will be provided in a form of 20 independent ecolodge units. These accommodation modules will be equipped with furniture, separate toilets and luxury eco-friendly amenities. The breakfast will be included in the standard booking packages. The optional accommodation packages will also include hiking trails, guided trekking, bird watching and other naturalist activities.

Ardvi Village Resort will also have a separate open camping ground offering secure camping possibility for visitors as well as providing tents and other camping amenities for rent. Additionally, it will provide an open-space discussion platform for corporate meetings, an event area in the main facility and a small boutique with local souvenirs and art crafts. The main facility of the resort will be designed appropriately to host different venues, events and concerts.

The facility will target tourists from all around the world interested in eco-friendly and remote rest with the highest quality of service in a luxury, still modest environment. It will also focus on the local people looking for a nice place to spend the weekends or short vacations.

1.2.

Concept

The name “Ardvi Village Resort� has been selected to reflect its nature, location and most importantly the inspiration and philosophy that led this project from the very beginning. The whole idea of this initiative is to create a sustainable model of a social enterprise that will not only generate profit but also will assure a direct inclusion of the community of Ardvi in the establishment of a multifunctional retreat promoting the development of tourism in Armenia and the region of Lori in general. The successful implementation of this project will

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create solid basis for further duplication of the concept in other regions of Armenia in the sphere of tourism and rural development policy of the country.

The resort will be an independent, multidimensional boutique ecolodge located in the village of Ardvi. It will include several interconnected modules together creating a complete recreation chain. The core modules are: -

Ecolodge units (home-away-from-home conceptual “shelters� equipped with all necessary utilities).

Free and secure camping ground with collection of tents available for rent.

Restaurant Entertainment zone Fireplace serving as an open-air conference area Open-air cinema

The resort targets both international and local tourists primarily interested in active, healthy and remote rest, including outdoor activities, trekking and sports. This project is intended to be a sustainable venture in every aspect.

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1.3.

Location

The “Ardvi Village Resort” will be situated on the hills of the ancient village of Ardvi located 9 km to the South-West of the city of Alaverdi and 45 km from the regional centre Vanadzor. The site is located in 176 km from Zvartnots International Airport in Yerevan, 121 km from Shirak International Airport in Gyumri and 132 km from Tbilisi, Georgia. The spectacular hills of Ardvi are located on the mountainous left bank of the Debet River at the foothills of the forested mountain range at about 1450 m above the sea level. The

total area of the village and its agricultural areas is about 8 square km. The climate is mild mountainous with a diversity of climatic conditions throughout the year. The site will be located in the close vicinity of the village’s habitable areas to assure the proper communication and infrastructure availability but at the same time the modules of the resort will be remote enough to get the atmosphere of peace and solitude that are part of the concept. Ardvi has a small community with only 240 people mostly engaged in agriculture and farming. Despite such a small population the village has all the required infrastructure and communications and is considered as one of the most ancient communities of Lori.

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1.4.

The layout

Located in the heart of breath-taking landscapes of Lori, Ardvi village resort will be built on 20,000 square meters of owned land with available area for further development and scale-up of nearly 50,000 square meters.

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Ecolodge units The resort will include 20 isolated “bunker-like� apartments equipped with all needed comforts in the home-away-from-home concept. The sizes of the units will vary between 35 to 40 sqm, having a unique interior design and placement. The concept of these ecolodge is creating an impression of semi underground concrete blocks: the land seems to be enveloping the units and the front facing the magnificent panorama. The roofs having a natural green cover will create an impression of an undisturbed landscape from the top of the hill.

It is worth mentioning that this module of the complex will assure the possibility for scaling of the project by adding new conceptual ecolodges in the future, based on the growing demand.

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Ecolodge units (front view)

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Ecolodge units (Interior 1)

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Ecolodge units (Interior 2)

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Main building The main building of the Resort includes several functional units. The first floor is designed for the Restaurant with its kitchen and storage facilities, wine bar, artisan crafts shop and other minor structures. In the second floor the spa area will be situated.

In Ardvi Restaurant the guests will have the opportunity to taste unique Armenian dishes made from local ingredients. Three times a day fixed seasonal menus will be proposed to the guests, either included in the package or ordered separately. The restaurant will also be available for local and international visitors who don’t spend a night in the resort. The kitchen will have special packages of take-away food and drinks for hikers passing by the area of Ardvi village. This concept will ensure a constant profit generation throughout the year regardless the number of residents.

The spa area is equipped with several components covering daily necessities of guests as well as offering various recreational activities: ● ● ● ● ●

shower and bath zone spa area with hot tubs and jacuzzies two massage rooms two saunas fireplace with relaxing zone

The second floor also includes the technical and administrative rooms.

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Main building: Restaurant and Spa

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Campfire Chit-Chat Area The so-called Campfire Area will be one of the core communication modules of the resort. This module comprises an open-air discussion zone (conference platform) for corporate meetings, team building and brainstorming sessions, etc., primarily targeting Armenia-based companies interested in outdoor and remote activities. There is a growing demand in Armenia for such sites especially in the field of IT and communication. It is worth mentioning that a constant flow of corporate clients will assure proper networking and popularization of the resort.

Open camping ground An extended area of the site will be assigned for the open camping ground. The tourists will be given the opportunity to place their tents or chose from the offered collection. It is planned to acquire 30 tents of different sizes (single, double and family). The whole camping ground area will be equipped with necessary communications like potable water and electricity. High level of security will be assured in the area by the resort’s personnel. The campers will be given access to all activities offered by the resort.

Active Sports Field The entertainment zone will comprise various activities to make the stay of the guests more interesting and energizing. Several minor sports equipment will be placed in this zone and a wide range of activities will be offered to the guests, including guided hiking, team sports, yoga classes, etc. The zone will also include mini-tennis area, reading areas, telescope tower and a bicycle park.

Open-Air Cinema A special mountable cinematographic structure will be set close to the Campfire area offering the guests under-the-stars movie watching.

The cinema will be equipped with professional projector and all necessary sound and light systems. As a future development this unit can also host various film festivals in this format.

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Chit-chat campfire zone and main building (night view)

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Minor structures The resort will also include several minor structures required for the communication and general infrastructure assurance. Few storage facilities will be included in the main structures of the site for the equipment and tents.

Toilets equipped with appropriate sewage and water will be placed in different sites of the retreat, especially serving the visitors of the open camping ground. A remote parking lot will be set up in close vicinity of the modules near the main entrance towards main building (see the general layout).

Water supply In the beginning of 2000s’ around 10 km drinking water piping system divided into 3 separate lines has been established in the area supplying constantly the whole community of Ardvi and surrounding areas. The facilities of the resort can be supplied by the potable water from the main source of the mentioned piping system situated only 230 meters from the site, making the choice of the location even more competitive. A more detailed water supply system will be developed in the utility setup diagrams in the complete architectural project.

Energy Two main sources of energy supply are planned to be established. The main building of the resort will be supplied with municipal grid electricity system. However, the lodging units and other minor structures of the facility will be equipped with photovoltaic systems. In addition, solar and geothermal energies will be used for heating, significantly diminishing the costs for the winter season heating of the lodges and main building.

Such design will also assure lower carbon footprint and more environmentally friendly concept of the resort. With the further development of the project it is planned to increase significantly the share of renewable energy supplies with the major goal of converting the resort to an off-the-grid operating system.

Waste Waste management is the biggest challenge in remote locations. To assure proper application of waste management systems appropriate sewage systems and septic tanks will be installed in the area.

Kitchen waste will be separated into organic waste that will be composted. Additionally, the use of plastic bottles, and plastic containers will be decreased as much as possible. The waste management will be handled in the most sustainable and environmental way possible, always respecting the environment and the location.

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Main building: Entrance

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2. The History of Ardvi Ardvi is one of the oldest villages in Armenia, located between Koghes and Odzun. Ardvi's name is connected with the sage Catholicos, Hovhannes Odznetsi (St. John of Odzun) who served between 717 and 728 and is one of the three saints buried in Armenia, along with Grigor Tatevatsi and Mesrop Mashtots. In 726 Odznetsi decided to leave his catholicosal activities and returned from Dvin to Odzun. Since he was a celibate monk and Odzun was a populated area he couldn’t stay there. Instead he decided to build a Monastery a bit higher from the village that stood 6 km farther to the South-West of Odzun. He said “Սա առա` Դվինը տվի [sa ARa, DVIny’ tvi] which literally means “This I got, Dvin I gave”.

The architectural complex of the monastery includes two churches and a bell tower. There are cross stones, ruins left from living or household premises, as well as a tetrahedral monument on the territory of the monastery. The structural details of the buildings indicate that the church and bell tower were built at different times.

In modern times Ardvi was home to several important Armenian dynasties such as the Family of Kalantarians. Agrochemist Papa Kalantarian and archeologist Askharhabek Kalantarian were born there. The Kalantarian Dynasty's cemetery is located next to Surb Hovhannes Monastery and it was included in the list of historical and cultural monuments by a 2002 government decree, since Soghomon Kalantaryan, the former representative of the Tsar in the Caucasus, is also buried there. It is notable that even now The Kalantarians’ living relatives seem to be of a different social status from the rest of the locals. The families in Ardvi in general are far more segregated than residents of other communities; people are even buried in different cemeteries, according to their belonging to a particular family. There are 4 cemeteries in the village – one for each of the “most noble families” – the Kalantarians, the Kirakosyans, the Vahramyans, and the Hovvyans.

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Surb Hovhannes (also called Srbanes) Monastery (photo source from personal collection)

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Below Hovhan Odznetsi's Monastery the so called 'Snake's (Dragon's) Bellybutton' [arm. Օձի Պորտ - otsi port] is located. It has a very interesting legend, according to which the priest of the Hovhannavank used to have twelve monks. One day he asked one of them to go out to the field to bring water for everyone. The monk went out and never came back. Then, he sent out the second one, then the third, the fourth and when he realized that it took so long for the last one to return, he went out himself to see what happened to them all. Near the monastery, he saw a huge snake about to swallow the last monk. He ran to the snake and hit it on the head with his staff, yelling “May you turn to stone with water coming from your bellybutton, and those drinking from it get healed from all illnesses”. At that very moment a woman with a bag of bread on her shoulder stepped over the snake's tail to bring bread to her husband in the field. She also turned to stone.

Today you can see the snake with its head in the river drinking, healing water coming out of its bellybutton, and the woman at the end of its tail.

Locals and those who know about this place believe that the water has healing properties. Scientists from Yerevan have found that it contains some gold and silver. This is perhaps why, if you keep water in a bottle for up to a year, it does not change colour or leave any sediment. People in the region tell a number of stories of how it has healed people over the centuries.

Many famous films, including Sergey Parajanov’s “The Colour of Pomegranates” and Henrik Malyan’s “We and Our Mountains”, were also shot in Ardvi. Once, when asked why he had decided to film the movie in Ardvi, Parajanov supposedly said: “Ardvi is one of the last remaining virgin and pure places in Armenia.”

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Snake’s Bellybutton (Odzi port) (photo source: Wikimedia, Armen Manukov)

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3. Social impact 3.1.

The social enterprise model

One of the key priorities of this project is the establishment of a successful social enterprise that will serve as a communication, knowledge transfer and, more importantly, profit generation hub for the community of Ardvi village and Lori region in general.

Such project design will ensure the complete involvement of the inhabitants in the establishment of a new and one-of-a-kind village resort.

This will create incentives for future development of a demonstrative community-based recreation model having a huge duplication potential in other regions of Armenia with the possibility of franchising on one hand and rural development on the other.

Ardvi is a small community with nearly 200 inhabitants. These are proud and educated people having a bright vision about the development of their own community. Based on the discussions with locals, nearly all of them see the true potential of the village to develop in the area of tourism. The realisation of this project will have a significant social impact not only for the local people directly involved in the development and/or maintenance of the resort but will also ensure the impact on the community level creating possibilities for the establishment of sustainable community-based social enterprise.

The project final outcome in terms of community development will be the transformation of this small village with an underdeveloped infrastructure and low-income level into a prototype of a touristic village with a working network of resorts, B&Bs, village taverns and various other services. The role of Ardvi Village Resort in this process will be the creation of employment opportunities on one hand and, more importantly, the establishment of a knowledge transfer station for locals to promote the creation of network of small B&Bs in the village for the growing demand of tourists.

The resort will also include modules directly involving locals in the profit generation mechanism such as market for local goods and artisans as well as the guided tours (hiking, horse riding) where the villagers will be able to cooperate with the vast network of resort activities.

It is worth mentioning that the restaurant will serve dishes exclusively made/grown by local population involving them in the value chain of the project to increase the profit generation and sustainability.

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3.2.

Ardvi Foundation

Another source for the development of the community will be the establishment of a foundation-like structure working under the direct control of the Resort management team. This foundation’s main goal will be the realization of different small projects that will promote the development of village’s infrastructure, the education level of the community, the cultural education aspect as well as the development of environmentally friendly technologies. The foundation will specifically target the vulnerable groups of the community.

The main income of the Foundation for the realization of its projects will be generated through a fundraising system that will directly involve the customers in this initiative. 5 percent from the accommodation bills will be donated to the foundation to support community development projects. It is notable that this strategy will be fully visible for the visitors. In other words, they will be informed in advance that a certain share of their bills will be used exclusively for the support of the community.

Based on the sales projections the donations will annually generate around $25.000-35.000 of funds reserved for the realization of targeted projects for the community development.

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4. Organization and Management 4.1.

Management

Apart from the directors’ board managing the general strategy and the financial flows of the resort, a well-defined management team will be responsible for 3 main departments of Ardvi Village Resort: 1. General Management and Housekeeping 2. Administrative Department 3. Kitchen Personnel Ardvi Village Resort will be managed by a single on-site general manager. The GM will coordinate the housekeeping and security services as well as control the service personnel of the restaurant, including waiters, dishwashers and the bartender. His team will also be in charge of warehouse logistics and procurement operations. The reception personnel will assist the GM with his daily duties. This support position is important to maintain booking and front desk duties as well as the reservations of restaurant.

The administrative department will be managed by an operations manager who will be responsible for daily paperwork, procurement documentation and payroll. This position will be in collaboration with an off-site accountant, solely managing the government taxes and other federal requirements.

The kitchen personnel will be managed by the chef cook. A sous-chef and a kitchen assistant will be responsible for daily restaurant duties.

Front Desk and Guest Service.

The front desk will have a three-shift receptionist/concierge. The front desk morning shift will work from 7 am to 3 pm, the evening shift will be from 3 pm until 11 pm and the night shift will be from 11 pm until 7 am. The front desk will be in charge of regular duties: communicating with housekeeping, answering phones, making reservations, guest check in and check out, coordinating shuttle service, and assisting customers. The front desk will also be in charge of guest statistics and surveys about quality.

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Housekeeping The facility will have two housekeepers. The daily shift will run from 7 am to 3 pm to handle food area, stay overs, clean the accommodation, open air and entertainment areas and prepare the rooms for new arrivals.

All other duties (Sustainable Manager, QA Specialist, Digital Marketing Specialist, Business Development Expert, Entertainment Organization Specialists) will be covered by founders in cooperation with field-related professionals.

4.2.

Booking and Reception Policy

Ardvi Village Resort’s policies are based on market research, industry standard and management procedures. All the guests should confirm the Resort’s general policies and rules before filling the booking forms, that will be available on website and other online-booking platforms. Offline booking will also be possible i.e. via phone or email.

Check-in: Check-in time will be 2 pm. Early check-in can be offered based on availability or pre-registration and payment may be required.

Valid and pre-approved credit card information is mandatory (MasterCard, Visa, American Express, Maestro, ArCa). Upon arrival guests have to present valid ID/Passport that matches reservation.

Check-out: Rental period expires at 12 am, late check-out may require additional charge and must be communicated with the front desk previously.

Cancellation policy: Individual guests have 48 hours from check-in time to change or cancel the reservations. All cancellations received within 48-hour period or no-show will be charged in the amount of one-night stay. Confirmed group reservations require 15-day prior cancellation or change and in case of cancellation within 15 days or no-show, the group is charged 50% of the entire amount or require a deposit in the amount of 30% of the entire fee.

Breakfast: Breakfast for ecolodge guests is included in price and buffet is available between 8:30 - 11:00 am.

Pets: No pets are permitted in the Resort Smoke-Free: Smoking indoors will be forbidden both in the main building and ecolodge units.

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5. Marketing mix strategy 5.1.

Products & Services

Considering the multifunctional design of Ardvi Village Resort and the wide range of activities offered the Products and Services are presented for each unit of the lodge accordingly.

Restaurant The core unit of the resort will be the Ardvi Restaurant. It is a cafe/restaurant/coffeehouse venue that sells moderately-priced food to an upscale casual dining market. It will be located in the main building of the site, neighbouring the spa area, storage facilities and minor utility structures. The restaurant will be available not only for the guests staying at Ardvi Village Resort but also for the public assuring a more vivid customer flow and generating additional income. The restaurant will have two main seating areas: 1) indoor dining room available for up to 60 guests and 2) outdoor terrace with additional 100 seats, also serving as a free food court zone.

The menu of the restaurant will be based on local seasonal products exclusively. It will feature a selection of ethnic dishes influenced by Armenian cooking traditions with a modern glance appealing to the taste of the foreign guests. It will also feature some European and Mediterranean dishes but with an identifiable Armenian origin and/or influence.

The menu will not be very extended and will vary according to the seasonal particularities to respect the local concept of the venue.

Specialty coffees, espresso-based drinks, desserts and pastries, light sandwiches will be available as well. A small wine bar featuring best Armenian wines will be designed in the restaurant area as a separate wine corner. It will be used for hosting different wine tasting sessions, wine talks and meetings with winemakers. Musical offerings will span ethnic Armenian, jazz, classical, and urban musical traditions. The performance space will also offer ample opportunities for space for an artist, poet, reader, etc. When not in use as a stage, the space will double as a customer seating area with tables and chairs.

Ecolodge units and Spa

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The central part of the resort will be the zone of the ecolodge units or so-called shelters. The facility will offer twenty independent accommodations equipped with all required furniture, separate heating system, WC and minor eco-friendly amenities. Each ecolodge unit will have a terrace with small tables and comfortable chairs where the guests can enjoy their morning coffee. The units will also be equipped with constant electricity supply converting the half-buried shelters into independent luxury rest zones.

The accommodation zone will be divided into 12 single suites and 8 family suites. The single suites will be developed under 30 square meters including the small terrace. They will have a queen bed, a hammock and a coffee table with two chairs. The family suites will be developed under 35 square meters having one king bed, two sofa-beds, and a coffee table with four chairs. For all units daily housekeeping, breakfast and Ardvi resort activities will be provided all day long. Additional meals will be available upon request in the restaurant area.

Each ecolodge unit will be equipped with a separate toilet and lavatory, however, not to lose the feeling of a remote and partially wild rest the main building of the resort will also have a bathroom/spa area, where apart from the comfortable shower areas, various services such as hot tubs, eastern baths, saunas, massage rooms will be offered to the guests.

Free camping site Ardvi Village Resort will offer the hikers from all around the world an opportunity to enjoy camping experience in a specially designed secured camping ground located in the close vicinity of the main facilities of the lodge. Two main service patterns will be available: The tourists will be able to place their own tents in the area with the support of the Resort’s staff and have access to different activities offered by the Resort, including the separate WCs, electricity sources, meals in the restaurant, etc. It will also be possible to rent tents and sleeping bags from the resort. It is planned to purchase around 30 simple tents of various size (2-6 people) with corresponding sleeping bags and other minor amenities. Separate price policies will be introduced for both camping options to fulfil the needs of different tourist groups.

The designed camping ground will be available for up to 50 campers (separate tents). A reservation policy will also be introduced being slightly different from the main reservation strategy of the ecolodge units (e.g. no prepayment for simple tents’ rental is required, no minimal number of nights defined, etc.)

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Activities and entertainment The Ardvi Village Resort will not only serve as a sleeping-and-eating site but also will include numerous activities and entertainment possibilities for its guests. Such design will attract more visitors and make their stay much more interesting and, more importantly, will ensure that the guests will be willing to stay for a longer period of time. The activities of the resort will include following elements: 1. Open-air cinema zone will be established where the guests and visitors will be able to spent their evenings enjoying the best movies of the global cinematography. The same area will also serve as a convertible concert hall for special music events ensuring a constant flow of tourists - both local and international.

2. The campfire chit-chat zone where special events such as workshops, company team-building sessions, summits and art discussions will take place. This area is one of the most essential communication elements of the resort attracting corporate clients and ensuring a vast opportunity for the promotion of the resort.

3. Hiking trails will be designed in the surrounding area of the resort with guided tours available upon request for the guests.

Considering a wide range of destinations in the Lori region including historical monuments, churches, breath-taking sightseeing this entertainment option will be a core activity of the resort. A special walking trail with necessary signs, maps and guidelines will be designed in cooperation with several hiking organizations working locally and recruit professional guides who will develop professional and safe tours for the clients.

5.2.

Pricing

Pricing strategy of the Resort will be consistent with the differentiation objective, to provide added value for a reasonable rate as opposed to discounting and devaluing the offered products and services.

The ecolodge units will be rented for a fixed price regardless the number of guests with a preliminary set of a maximum number of guests being able to stay in one shelter. Accommodation rates quoted include tax and service, are per night, per unit with buffet breakfast included. â—? Family suite (up to 4 people) - 40.000 AMD (around $ 85) â—? Single suite (up to 2 people) - 30.000 AMD (around $ 60)

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For the free camping ground two accommodation options will be available. The mentioned rates do not include the breakfast and/or other minor amenities. The breakfast will be available for the campers upon request. ● Rent of a tent from the Resort (double tent) - 5000 AMD (around $10) ● Rent of a sleeping bag - 1000 AMD (around $2) ● Rent of a camping space - 2000 AMD (around $4)

The food, drinks, and entertainment options of Ardvi Village Resort are priced to give an attractive margin while at the same time offering value to the consumer. Therein lies why the food, beverages, and musical/entertainment programming will be relatively flexible. It is planned to have fixed hours for the breakfast from 8:30 am till 11:00 am. A buffet breakfast table will be available for all the guests. The guests staying at the ecolodge units will have the breakfast fees included in their reservation package, while the free campers will be able to order their breakfast for a fixed price of 1500 AMD (around $3). A short but unique menu will be available for the rest of the day. A twocourse lunch will account in average a bill of 2500 AMD (around $5) and a three-course dinner - 4500 AMD (around $9) accordingly. Water will be unlimited; however, soft drinks such as soda, juice, tea or coffee and alcoholic beverages will be extra charged.

The pricing for other services such as the organization of events, corporate meeting in the chit-chat zone, concerts, etc. will have a consumer-based rate strategy and will be defined during the operational stage of the project.

An important pricing policy will be the inclusion of a 5 percent donation on the accommodation bills of ecolodges to support community development projects, such as reconstruction of community schools, organization of educational and art events, etc. This will generate a significant profit and be transferred to a foundation operating under the guidance of the Resort management team. The mentioned pricing policy will be fully visible for the guests ensuring their involvement in the development of the community.

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5.3.

Promotion

To ensure constant customer flow to Ardvi Village Resort and to keep product awareness high, both traditional and digital marketing tools will be used for the promotion. However, taking into consideration the target market and nowadays advantages offered by online world, the preference will be given to digital marketing tools and platforms. Main marketing channels are listed below: Social Media and Search Marketing (PPC, pay-per-click) These two major marketing directions create opportunity to reach and communicate the customers from around the globe through correct targeting and strategic choices. Social media channels (Facebook, Instagram, Twitter, LinkedIn, Pinterest) and Google Ads will be used to keep direct communication with existing and new customers. As the algorithms and tools of SM advertisements are constantly changing, the main principle of setting a campaign will be testing and analysing. First, create several ad options, set keywords for one campaign, analyse all the results and then narrow the audience, make it coherent to campaign type. Thus, reach the market reality and make the ads’ engagement more relevant and effective.

The other important part of digital advertising will be remarketing. This is a useful method to connect visitors to business website who may not have made a direct book or enquiry. It allows to position targeted ads for the audience specifically, that had previously visited the website, as browsing something else on the internet. So, this tool will assist in generating loyal visitors.

Search Engine Optimization (SEO) In order to have a refined /indexed website and ranked by search engines (Google, Yandex, Bing) SEO will have a huge role in promotional tools. So, here are strategically important points, that need to be followed during online presence establishment: Keyword research through free online tools like Keyword Planner, Search Console, Spyfu, iSpionage, Yoast, etc.

Meta Titles and Meta Descriptions optimization will give more chances to become a “good website� for Google algorithms, because these fields will pull directly into Google.

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For On-Site SEO it is worth to use the right taglines, have an excellent website internal linking structure and take an accent on content quality.

For Off-Site SEO we will place the business on Google Places, Google My Business, tourism-related directories. Also, we will use Content Marketing for being published on the related websites with high domain authorities and rankings.

Furthermore, the website will be integrated with Google Analytics and Google Tag Manager to fully track all activities on the website. There will be need to work with hosting providers to decrease load time of the website to enhance user experience while on the website. Most importantly, the website will be regularly updated with blog posts, news and events, to keep the content fresh and reach long-tailed keywords for different relevant search terms.

Display Advertising / Media Buying There are various news websites, blogs and info-sites that offer platforms for banners and they are mostly targeted for tourism. After a thorough research for highest traffic, relevance of visitors, domain authority and click-through ratio the best platforms will be chosen for placing Resort’s banners.

Display marketing is also very relevant in tourism sphere, as it helps to engage customers, that were not the direct target audience. Media Buying includes all types of advertising placement platforms in different websites out of social and search engine channels.

Radio and TV According to statistical researches, radio promotions are mostly effective, when combined with paid Google and SM Ads. This platform will keep the brand awareness high even if it does not attract new customers directly. No matter how digitized the world gets, TV still has its audience and is a good means of communicating. Short promotional and introduction videos will be made for morning programs and tourism-themed programs to make the brand awareness high enough.

Outdoor Advertising 31

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Outdoor banners will be placed on the most strategic locations of Armenia (in the future also in neighbour countries): Zvartnots International Airport, highway to Georgia (Bagratashen, Alaverdi), Tavush (Dilijan, Semyonovka) and in Yerevan city centre (Saryan str., Mashtots str., etc.). Having 2-3 big banners in the country will have a better outcome than 100s of banners in subways and outskirts with low price.

5.4.

Placement and distribution

Product and service information will be delivered to the guests using both direct and indirect distribution channels.

The distribution plan will begin during the construction phase with press releases going out through selected media and Ardvi Village Resort web page. The advertising will be in four different languages: Armenian, Russian, English and French. The Resort will have online-booking capabilities through its website as well as be present on Expedia, TripAdvisor, Kayak, Orbitz, Hipmunk and other accommodation search engines. One of the key priorities in the development of distribution channels is the establishment of cooperation network with various tourist platforms specializing in ecotourism, trekking and hiking trails’ development, working both locally and internationally.

Developing these partnerships is essential to maintain flowing demand and update information and features regarding sustainable practices. Preliminary discussions have been made with various hiking/trekking organizations such as “Armenian Geographic”, “HikeArmenia” “AHA-Armenian Hikers Association”, etc. to create customized trails, expeditions, and conservation voluntarism throughout the location.

Another important channel for the distribution of resort’s services is the establishment of a strong cooperation network with potential corporate clients interested in using the resources of the Resort for their activities such as team building sessions, capacity building events, discussions and summits. This cooperation pattern is primarily targeting the companies from the IT and communication sectors and is vitally important for the promotion of company’s services as it will create a broad connection network with people involved in numerous distribution channels. Additionally, the services will be advertised in various academic associations that may be interested in extended stay

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expeditions for investigations, dissertations or general research studies. The Resort considers these organizations vital to the demand of an ecolodge.

As another way of pre-promotion, the collaboration with travel agencies, info centres around the country (Yerevan, Dilijan, Vanadzor, Alaverdi), tourism offices and governmental institutions like Tourism Committee of Armenia will be used.

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6. Market Analysis 6.1.

Development of tourism in Armenia

In last three years Armenia is facing a dynamic development in the spheres of ecological tourism and village-based resorts. With its rich historical, cultural and natural resources, unique religious and cultural heritage, Armenia has the potential to offer attractive and competitive tourism products and high-quality services. Several unique facilities offering a wide range of recreation services have been opened in nearly all regions of the country promoting the rural development and the creation of infrastructures in remote areas of Armenia. The number of tourists visiting the country is constantly growing reaching 1,192,120 visitors in 2015. This is lower than the number of visitors in 2014, but more than 10% high of figures in 2013. In 2016, number of tourist visits reached 1,259,657 or 5.7% more than in 2015. Number of domestic tourists reached 979,968 persons or 12.4% more than in 2015. Armenia is ranked 89th out of 141 countries in the Travel & Tourism Competitiveness Index 2015 of the World Economic Forum. There is a significant flow of tourists from all around the world.

Armenia is a unique tourism destination with a rich and diverse cultural heritage that provides dynamic opportunities for developing tourism markets. The country features an abundant variety of cultural, natural, and historical sites, including UNESCO World Heritage sites, medieval monasteries, churches, and fortresses. Over 2,000 hospitality companies work in Armenia, including hotels, B&Bs, restaurants, transportation companies, tour operators, and travel agencies. However, the supply of quality hospitality services, pit stops, modern and affordable accommodations, B&Bs, food courts, etc. is still lacking and presents a good niche for the development of new initiatives. It is worth mentioning that ecological and village tourism have been included as priority spheres in the global state strategy for tourism development. This tendency is first of all conditioned by a growing demand for such kind recreation.

On the other hand, the state has prioritized the ecological tourism as a tool for the overall rural development and inclusion of local population in the full value chain of the touristic development. The rising number of bed and breakfast services in-house restaurants in many villages all around the country serve as a good measurement indicator for the social impact that this strategy has.

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The general tendency of tourism development in Armenia from 2012 until 2018 35

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Lori region covers 3750 km2 or 13% of Armenia’s territory. It is located in the north of Armenia. Lori is the third largest marz by its territory.

There are eight urban and 105 rural communities in the region. The population of the region amounts 223,900. inhabitants, 59.1% of population lives in urban areas. Industrial production of Lori marz comprises 8.9% of total industry production of the country in 2015, the volume of agricultural production is AMD 75.2bln or only 7.5% of total agricultural production of Armenia. The geographical position and climatic conditions are favourable for growing many varieties of vegetables and for animal breeding. Bounded on all sides by rugged mountains and cut by sheer gorges, Lori is a dramatically beautiful region having all precondition for tourism development. Lori is home to UNECSO heritage site Haghpat, Sanahin and Kober monasteries - Armenia's loveliest - and a host of other important medieval monuments, to the spectacularly sited Lori Castle (Lori Berd), to a pleasing Arboretum in Gyulagarak, and to a range of stunning landscapes. Though lacking a major resort destination, Lori's importance as a transport corridor to Georgia has contributed to the development of a growing number of small hotels and restaurants on the main routes M3 and M6 and the necessity of having modern infrastructure for travellers is obvious.

6.2.

Target Market Profile

The target market of the Resort are the tourists looking for an alternative recreation experience, tired of trivial hotels and guesthouses and willing to find a calm and harmonious natural environment with high class service and delicious food.

A typical traveller visiting Ardvi Village Resort is someone seeking relatively undisturbed phenomenon of nature and that is not satisfied with just a natural experience. These travellers are environmentally responsible, expect to interact and engage with the natural environment, and are prepared to be physically and intellectually challenged in doing so.

Two main targeting tools are used to define main countries that are important in terms of tourists’ flow: 1. The general picture of the number of tourists by country visiting Armenia. This valuable indicator in defining the main touristic segment of the Resort is shown in details in the graph below as a comparative analysis between years 2017 and 2018.

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The general picture of the number of tourists by country visiting Armenia

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From this graph it can be seen that quantitatively the most important group of tourists is coming from Russia as well as the neighbouring countries Iran and Georgia. However, in case of the last two countries there is a visible decline in the number of visitors between 2017 and 2018. While all other countries including Russia USA and European countries show a significant increase in the number of visitors.

2. Second tool in targeting the visitors by country is the unique profile of the Resort offering a particular and alternative experience. Such kind of recreation is certainly popular all around the world but in certain countries this kind of experience is more common than in others.

Based on various researches and own experience the countries like United Kingdom, Scandinavian countries, Benelux and France are considered the most important segments.

Regardless the country of origin three major groups of tourists can be defined: 1.

Group 1 - “The chillout generation”

Young people between 20-35, both local and from abroad, seeking for adventures and alternative traveling experience. They are looking for active but not physically enduring leisure.

2.

Group 2 - “OLD but GOLD”

Superactive senior tourists in early pension years looking for active and healthy rest, including biking, hiking and sports.

3.

Group 3 - “The Walkers”

Professional trekkers who are happy to walk 5 km just to get a cup of morning coffee - organic coffee

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6.3.

Competitive Set Selection

The competitive set was selected based on their similarities to Ardvi Village Resort in terms of amenities, location, room size and services.

The competitive set comprises of four locations in the Lori Region, and four locations on a national level.

Hotel/Resort

Accommodation options

Price policy

Location

LORI REGION Tufenkian Avan Dzoraget

01.04 - 31.10 Medium single Large single Large double with the gorge view Suite

Gayane Standard single Standard double/twin beds Luxe Premium

42000 AMD 48000 AMD 53000 AMD 62000 AMD

01.01 - 31.03 01.11 - 31.12 34000 AMD 39000 AMD 43000 AMD 50000 AMD Full year 10000 AMD 20000 AMD 30000 AMD 49000 AMD

Debet, Dzoraget

Haghpat

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Odzun Hotel

01.05 - 30.09 Single room Cottage for one person Double room Cottage for two people Cottage for three people Family cottage Luxe cottage

Green House Single Double Deluxe Luxe Exclusive Luxe

06.01 - 30.04 01.10 - 29.12 9000 AMD 9000 AMD 16000 AMD 16000 AMD 24000 AMD 32000 AMD 36000 AMD

12000 AMD 12000 AMD 20000 AMD 20000 AMD 28000 AMD 38000 AMD 43000 AMD

Full year 8000 AMD 15000 AMD 17000 AMD 20000 AMD 25000 AMD

Odzun

Vanadzor

OTHER REGIONS Apaga Resort Standard single Standard double Deluxe single Deluxe double Hunter’s house

40

01.07 - 01.10 20.04 – 12.05 31700 AMD 33700 AMD 39700 AMD 41700 AMD 14000 AMD

13.05–15.07 02.10– 25.12 10.01–19.04 27800 AMD 29800 AMD 34700 AMD 36700 AMD

Yenokavan

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Tezh Ler Resort

01.07-31.08 Standard single Standard double Deluxe Suite for two people Family suite Cottage for 6 people (2 floors)

23 700 AMD 29700 AMD 37500 AMD 39500 AMD 55000 AMD 77000 AMD

Twin standard (1 person) Twin standard (2 people) Twin deluxe (1 person) Twin deluxe (2 people) Double standard (1 person) Double standard (2 people) Triple standard Triple deluxe

Low Season 30000 AMD 35000 AMD 37000 AMD 42000 AMD 30000 AMD 35000 AMD 45000 AMD 48000 AMD

HyeLandz Eco Village

Lucy Tour

Standard single cottage Standard double cottage Double cottage with balcony Double twin cottage Family cottage

01.05 - 30.06 01.09 - 30.09 21700 AMD 27700 AMD 34500 AMD 36500 AMD 50000 AMD 72000 AMD

15.01 - 30.04 01.10- 30.12 18500 AMD 24500 AMD 30800 AMD 31800 AMD 45000 AMD 58000 AMD

July-August 35000 AMD 40000 AMD 47000 AMD 52000 AMD 35000 AMD 40000 AMD 50000 AMD 58000 AMD 13000 AMD 20000 AMD 23000 AMD 28000 AMD 44000 AMD

Road from Dilijan to Vanadzor

Geghadir (from Yerevan to Garni)

Yeghegis

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7. SWOT (Strengths, Weaknesses, Opportunities, Threats) The following analysis highlights the internal strengths and weaknesses of the Ardvi Village Resort and the opportunities and threats facing the company in the external environment. Organizational strengths must be leveraged in order to capitalize on external opportunities as they arise, and contingency plans formulated in order to deal with threats presented by the environment.

Strengths ● Growing tourist inflow, especially from Diaspora ● Sightseeing, ski resort, summer resort, excellent weather in spring and autumn ● Unique design and architecture of the complex ● Natural advantages, opportunities of developing adventure, nature, ecology tourism ● 20K sqm owned land for project development

Opportunities ● Development of a Sustainable brand in resort management ● Planned sale mechanisms of local products ● Possibility of creating model ecovillage for further duplication.

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Weaknesses ● High prices for air transport ● Underdeveloped tourism in the Lori region ● Lack of well-trained workforce in the rural areas

Threats ● ● ● ●

Sustainability of businesses and tourist attractions Lack of tourism and visitor traffic Lack of monetization and fees International competition

ARDVI VILLAGE RESORT | BUSINESS PLAN

8. Financial Plan, Projections and Feasibility Analysis

Financial Plan, Projections and Feasibility Analysis This section includes Ardvi Village Resort’s financial statements of estimated operating results and ratio analysis to prove the financial feasibility of the project.

The projections and estimations were made based on the following assumptions: ● Revenues are expected to grow by 15% for the first 2 years, by 9.04% for the subsequent 2 years (based on the hotel industry expected growth rate), and by 5% stable annual growth rate (typical growth rate of eco-tourism sector) after that. ● Sales forecast is based on the overall resort capacity and the number of estimated target. For the sensitivity analysis, it is assumed that in case of the optimistic scenario the Resort will reach its full capacity in the 3rd year. In the realistic and pessimistic cases, it will reach 70% (average hotel occupancy rate in Europe) and 60% occupancy rates respectively. ● The useful lives (years) of the non-current tangible assets are as follows: Buildings Machinery and Equipment Furnishing Transportation Equipment

20 8 7 5

All the variable costs are increased by inflation rate except for direct materials food and drinks, which are considered to grow by 5% together with sales. ● Considering profit distribution to shareholders through capital growth for the upcoming several years, no dividends will be distributed, and as a for-profit social enterprise, the retained earnings will be reinvested into the organization to continue its operations, develop future growth strategies and support local community.

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The cost of equity, which is used to discount the future cash flows, is calculated using the CAPM method and the following information: Armenia's RFR for 2018 (damodaran.com)

4.77%

Unlevered beta for travel & tourism in 2018 (NASDAQ100)

0.89

Armenia's equity risk premium for 2018 (damodaran.com)

11.73%

Discount rate/cost of equity by CAPM

10.96%

The rest of the assumptions are introduced in the following table.

Inventory Holding Period

60

Days Sales Outstanding

60

Trade Payables Days

10

Tax rate

20%

Number of working days

365

Forecasted inflation rate (2019 Jan)

1.8%

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Based on the assumptions and the information available so far, the team has thoroughly analysed and calculated the investment and ongoing expenses (cost of sales and operating expenses). Total investment amount also includes several operating expenses until the business covers its costs. Initial investment required to start up the business is estimated to be $2,000,033.

Investment expenses (Year 0)

unit

Construction-main building (storage and minor facilities, windows)

sq.m

Construction-Eco lodge units (including windows)

number of units

unit cost (USD)

total (USD)

1,500

$200.00

$300,000.00

pieces

20

$7,000

$140,000.00

Architecture, planning and design

months

24

$2,920

$70,080

Construction and engineering

sets

1

$14,000

$14,000

Utility setup (water, electricity and heating)

lump sum

1

$300,000.00

$300,000.00

Infrastructure development (access roads and signs)

lump sum

1

$20,000.00

$20,000.00

Restaurant kitchen equipment

lump sum

1

$55,000.00

$55,000.00

Office supplies for reception and administrative rooms (computers, etc.)

sets

7

$1,000.00

$7,000.00

Spa Equipment (hot tubs, Jacuzzi, amenities)

sets

1

$120,000

$120,000

Rental inventory tents

pieces

30

$150

$4,500

Rental inventory sleeping bags

pieces

30

$40

$1,200

Main building furnishing and interior design

lump sum

1

$750,000

$750,000

Eco lodge units furnishing and supplies

sets

20

$5,000

$100,000

Passenger car

lump sum

1

$10,000

$10,000

Truck car

lump sum

1

$14,000

$14,000

Marketing and promotion

months

24

$1,500

$36,000

Total direct costs

$1,941,780

Other expenses as contingency reserve (3% of total direct costs) TOTAL COSTS

$58,253 $2,000,033

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Payroll

Number

Monthly wage

Salary expense

receptionists

3

$300

$900

housekeepers

2

$250

$500

executive chef

1

$1,000

$1,000

sous-chef

1

$600

$600

Kitchen assistant

1

$400

$400

waiters

2

$250

$500

dishwasher

1

$250

$250

bartender

1

$300

$300

security (with shifts)

3

$150

$450

security full time

1

$400

$400

Tour guides/hiking guides

2

$400

$800

general manager

1

$1,000

$1,000

accountant (outsource)

1

$450

$450

event manager (outsource)

1

$500

$500

administrator

1

$550

$550

work covered by the founders

1

$1,500

$1,500

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Costs

Year 1

Year 2

Year 3

Year 4

Year 5

Cost of Sales Direct materials accommodation amenities

$72,000

$72,000

$72,000

$72,000

$72,000

$180,000

$189,000

$198,450

$208,373

$218,791

Buildings

26,204

26,204

26,204

26,204

26,204

Machinery and Equipment

63,463

63,463

63,463

63,463

63,463

Furnishing

121,429

121,429

121,429

121,429

121,429

Transportation Equipment

4,800

4,800

4,800

4,800

4,800

Utility Services (Main building, accommodation and general maintenance)

$48,000

48,864

49,744

50,639

51,550

Salaries/management fees

121,200

123,382

125,602

127,863

130,165

Annual license/legal fees

$1,200

1,200

1,200

1,200

1,200

Trainings of personnel

$6,000

6,108

6,218

6,330

6,444

$18,000 $18,000

18,324 18,324

18,654 18,654

18,990 18,990

19,331 19,331

12,000

1,000

1,000

1,000

1,000

692,295

694,097

707,417

721,279

735,708

Direct materials food and drinks Operating expenses Depreciation of non-production facilities

Administrative and General

Repairs & Maintenance Marketing/Promotion/Sales/Distribution Other Expenses Total Costs

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In order to forecast the optimistic revenue for year 3, the daily revenue at the resort’s full capacity is calculated and multiplied with the number of operating days.

Daily sales forecast (full occupancy)

Capacity (unit, people)

Price

Revenue per day

Average share

Ecolodge units

12

$60

$720

22%

Ecolodge units

8

$85

$680

20%

Lunch

56

$5

$280

8%

Dinner

56

$9

$504

15%

Rent ordinary tent (2-6 people)

30

$10

$300

9%

Rent a sleeping bag

30

$2

$60

2%

Rent a camping space

10

$4

$40

1%

Breakfast

90

$3

$270

8%

Lunch

34

$5

$170

5%

Dinner

34

$9

$306

9%

$3,330

100%

Total

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The financial statements are prepared based on the realistic revenues (70% occupancy rate). A Sensitivity Analysis of different occupancy scenarios and their corresponding impacts on profitability and investment returns is presented together with the financial statements.

Income Statement

Year 1

Year 2

Year 3

Year 4

Year 5

Sales

643,338

739,839

850,815

927,729

974,115

COGS

252,000

261,000

270,450

280,373

290,791

Gross Profit

391,338

478,839

580,365

647,356

683,324

General and Administrative Expense

73,200

74,496

75,815

77,158

78,526

Selling/Marketing Expense

18,000

18,324

18,654

18,990

19,331

Personnel Expense

121,200

123,382

125,602

127,863

130,165

Depreciation on Fixed Assets

215,895

215,895

215,895

215,895

215,895

12,000

1,000

1,000

(48,957)

45,742

143,398

206,450

238,407

-

9,148

28,680

41,290

47,681

(48,957)

36,594

114,719

165,160

190,726

Other Operating Expense Operating Profit Taxes Net Profit

1,000

1,000

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Balance Sheet Inventory Receivables Cash Other Current Assets Total Current Assets

Year 1 41,425 105,754 166,938 58,253 372,371

Year 2 42,904 121,617 411,480 58,253 634,255

Year 3 44,458 139,860 742,088 58,253 984,659

Year 4 46,089 152,503 1,121,750 58,253 1,378,596

Year 5 47,801 160,129 1,525,710 58,253 1,791,893

Buildings Machinery and Equipment Furnishing Transportation Equipment Less: Accumulated depreciation Net Non-Current Assets Total Assets

440,000 507,700 850,000 24,000 211,691.07 1,610,009 1,982,380

440,000 507,700 850,000 24,000 423,382.14 1,398,318 2,032,573

440,000 507,700 850,000 24,000 635,073.21 1,186,627 2,171,285

440,000 507,700 850,000 24,000 846,764.29 974,936 2,353,531

440,000 507,700 850,000 24,000 1,058,455.36 763,245 2,555,138

6,904 6,904

7,151 9,148 16,299

7,410 28,680 36,089

7,681 41,290 48,971

7,967 47,681 55,648

Common Stock Capital and Restricted Reserves Revaluation Reserves Retained Earnings Total Equity

2,000,033 24,399 (48,957) 1,975,476

2,000,033 19,917 28,603 (32,280) 2,016,274

2,000,033 21,718 52,724 60,721 2,135,196

2,000,033 23,681 78,645 202,200 2,304,560

2,000,033 24,865 106,530 368,061 2,499,489

Total Equity and Liabilities

1,982,380

2,032,573

2,171,286

2,353,531

2,555,138

Trade Payables Tax Payables Total Liabilities

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Statement of Cash Flows Cash Flows from Operating Activities Operating Profit Increase/(Decrease) in Inventories Increase/(Decrease) in Receivables Decrease/(Increase) in Payables Depreciation and Amortization Corporation Taxes Paid Net Cash from Operating Activities Initial investment Net Cash Flows Increase/(Decrease) in Cash Opening Cash Balance Closing Cash Balance Terminal Value Discounted Cash Flow with TV NPV with TV IRR

Year 0

Year 1

Year 2

(48,957)

215,895

166,938 (2,000,033) (2,000,033)

166,938 166,938

Year 4

Year 5

45,742

143,398

206,450

238,407

(1,479)

(1,553)

(1,631)

(1,713)

(15,863) 247 215,895 -

(18,243) 259 215,895 9,148

(12,643) 272 215,895 28,680

(7,625) 285 215,895 41,290

244,542

330,608

379,663

403,960 403,960 403,960 1,121,750 1,525,710 7,111,490 4,467,213

166,938

244,542 244,541 166,938 411,480

330,608 330,607 411,480 742,088

379,663 379,662 742,088 1,121,750

150,443

198,603

241,970

250,417

-

(2,000,033)

Year 3

3,308,612 24.10%

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Year 0 Cash Flows Accumulated Cash Flows

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

(2,000,033)

166,938

244,542

330,608

379,663

403,960

482,053

(2,000,033)

(1,833,095)

(1,588,554)

(1,257,946)

(878,283)

(474,323)

7,729

Based on initial investment and the inflows anticipated to occur in the following five years, the net present value of future cash flows is $3,308,612, meaning that the business will cover its costs and bring back much more than invested, thus the project is justified to implement. This number can be used to decide the investor’s percentage of stock:

Investor's % of stock=investment/company value (NPV) = $2,000,033/ $3,308,612 = 60%

Internal rate of return (IRR=24.1%) was calculated as well and compared with the cost of equity (10.96%). IRR is higher confirming that the project is adding value. Another financial measure, the payback period for Ardvi Village Resort project is 6 years which means the investment amount will be fully covered in the 6th year.

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The sensitivity analysis scenarios show that even in the worst case the company covers the major part of investment amount and the IRR is still higher than the cost of equity, indicating that the project is worth the investment.

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Based on the projections for the upcoming years, the break-even revenue is calculated to understand how much the Resort should sell every year to cover its variable and fixed costs ($692,021).

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From the Ratio Analysis table, it can be seen that the Current Ratio is high due to small amount of current liabilities and extra cash. This cash can be used for further reinvestment in the business. Profit Margins, as well as Returns on Asset and Equity are increasing over time, which is mainly because of increasing operating and net profits. Ardvi Village Resort is expected to generate 20% profit margin in the 5th year, which is higher than the industry average (12-16%1). The Operating Gearing shows the company’s business riskiness in terms of costs, and it is decreasing. Overall, the calculated financial ratios speak about the company’s prospected business efficiency.

Ratio Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Current Ratio 54 39 27 28 32 Operating Profit Margin -8% 6% 17% 22% 24% Net Profit Margin -8% 5% 13% 18% 20% ROE -2% 2% 5% 7% 8% ROA -2% 2% 5% 7% 7% Operating Gearing -5 7 3 2 2 Finally, the general concept behind Ardvi Village Resort’s operations as a social enterprise, is to impact its surrounding community. The policy of the Resort assumes 5% donation on the accommodation bills to support community development projects, such as reconstruction of schools, organization of educational and art events, etc. It is important to note again that the above-mentioned projections and estimates were made based on the information so far available and any further findings should be incorporated into the calculations.

Projected Community Impact Direct Impacts Community fund (5%) Other visitor spending (handicrafts) Indirect and Induced Impacts Salaries and trainings for locals Sales to the company (food, wood) Total 1

Year 1 -

Year 2

Year 3

Year 4

Year 5

$7,507

$19,917 $7,883

$21,718 $8,277

$23,681 $8,690

$24,865 $9,125

$127,200 $180,000 $314,707

$129,490 $189,000 $346,289

$131,820 $198,450 $360,265

$134,193 $208,373 $374,937

$136,609 $218,791 $389,390

https://csimarket.com/Industry/Industry_Profitability.php?ind=906

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ARDVI VILLAGE RESORT | BUSINESS PLAN

9. Proposed action plan and logical framework Activities

Year 1 Apr

Site preparation for construction Development of infrastructure (electricity, water and roads) Geological measurements and forecasts Preparation of blueprints and construction permits Construction phase one (main building) Construction phase two (accommodations) Marketing Research on equipment and furniture Ordering/purchase of kitchen and spa equipment and amenities Ordering/purchase of tents and other camping tools HR Research Staff selection and training Promotion and advertising campaign phase one (pre-launch) Inclusion of all distribution channels in promotion Soft opening event Promotion and advertising campaign phase two Grand opening event

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May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

ARDVI VILLAGE RESORT | BUSINESS PLAN

10. Progress to date

● The land required for the construction has been purchased (around 2 Ha). ● The application for changing the type of land from “pasture” to “suitable for construction” has been submitted to local authorities. ● The geodesic analysis and mapping have been performed for the whole area of the future construction. ● Hydrological studies on the site have been conducted and deemed to be more than sufficient to meet the needs of the resort. ● Detailed site mapping, planning and architectural studies are now underway. ● Training programs for related tourism enterprise development in the community are now being drafted. ● A hotel employees’ training program is currently being researched. ● The webpage of the Resort is currently under development. ● At this stage in the process no major obstacles to successful project development have been identified.

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