2011

Invest Report

Table of Contents

Introduction ......................................................................................... 2 Chapter 1 Why to invest in the area Turkey ............................................. 4 Chapter 2 Advantages and disadvantages of the country ........................... 5 Chapter 3 Infrastructure in Turkey .......................................................... 6 Chapter 4 The reasons for opening an All-in-one-Report ............................ 7 Chapter 5 Expenses and revenue ............................................................ 9 Chapter 6 Conclusion .......................................................................... 15 Chapter 7 Recommendation ................................................................. 16 Bibliography.................................................................................... .17 Daily logs .......................................................................................... 18

Introduction
The following events have led up to the need of this report. This report was required by Ms. Mos to help her find a sound project to invest an amount of $3 million in. In order to be profitable there is searched for a current available project, after that the decision felt upon to open an All- in-oneResort which is according to our research findings a profitable project to invest in. The country that is chosen is Turkey and the city of Istanbul. The topic of this report is to show the findings of our research which prove that this is a profitable investment proposal. So the goal of this research is to investigate whether it will be feasible to start an ''All in One Resort'' in Istanbul, in order to make profit. The following items are the aims of the report: - To let the reader know how much is going to be spend to start the business and how the business is going to be run. - To analyse if the business is possible to be run and how is it going to be run in the future. The research methods that are used: internet relatives/friends articles/publications market research The following themes will be discussed in the report: The background of Istanbul, the aim of this part is to give more knowledge about the city which is chosen to invest in. It gives general information about the culture in the city, like the religion, population and the location of the city. The Financial part of the report is probably the most important one. This is actually what the whole investment is about. In this part the following questions will be discussed: What are the costs for specific expenses?, What will be earned by sponsors? There will be included a nice overview of the cash-flows. The infrastructure: Also an important issue, because this is actually the way to get in Istanbul. How is the traffic in Istanbul? and What kind of transportations are there to reach the city for people who are not living in Istanbul? 2

This report will further include the advantages and disadvantages of the country, the reason for opening an All-in-one-resort and further you can find the conclusion and recommendations and based on these findings there is also provided a bibliography.

1. Why to invest in the area Istanbul?

Why to invest in the area Istanbul is a good question, for this question there are some data collected. Background of turkey Istanbul, historically known as Byzantium and Constantinople is the largest city in Turkey. It is Europes most populous city, located in the north-west part of Turkey. The city covers 27 districts of the Istanbul province. It is the second largest city proper in the world with a population of 13 million inhabitants. Istanbul has an area of 5712 Km2, it bigger than Benelux countries. Istanbul lies on the border between Asia and Europe which is divided by a stretch of water. One part of Istanbul is in Europe while the other part of Istanbul is Asian. In the European section lives roughly 70% of the population and around 30% lives in the Asian section. There are main 2 bridges that connect Asian Istanbul to European Istanbul called The Faith Sultan and The Bosporus Bridge

There are many reasons for investing in Istanbul. First of all Istanbul is a great place to invest. Today it has become Turkeys most important tourism, trade and industrial city. The city was also chosen as joint European Capital of Culture for 2010 by the European Union. Istanbul belongs to one of the richest and most beautiful cities in historical background. It is also a mega city and Turkeys cultural and financial centre where the majority of business takes place with the largest sea port in Istanbul. The city is also the worlds only metropolis. Whether youre looking for a nice holiday place, investment or both, Istanbul is the place for it. Due to this project, the tourists that will visit the resort can expect to have things to do all year round. 4

2. Advantages and disadvantages of the country

The main reason for choosing for Turkey is the fast growing economy of the country. Turkey has become Europes second fastest growing economy after China with recently announced 11.7 percent growth rate in 2010. The second issue is the strong growing tourism sector that looks set to continue to grow. Turkey has stunning beaches and a climate that far surpasses many of Europes most popular holiday destinations. Over 25 million tourists visit Turkey each year. After these issues there is started a research about the country. During the research some very interesting and useful information about Turkey is found. First of all Turkey is not a member state of Europe, it is a part of Central Asia but it wants to become a member state of the European Union. The second issue what is mentioned before is the fast growing economy in Turkey. One of the reasons of the growing economy is that Turkey is the second-lowest taxed country. The third issue is the low cost of doing business. This includes low labor cost and low corporate cost which makes it very persuasive for the investors to make more profit. There are a lot of advantages mentioned. However, there are also disadvantages of the country discovered. The disadvantages are more or less expected issues of a developing country. One of the most important issues is the political environment since Turkey undergoes highly from bureaucracy and corruption. The second issue is the system, there are no effective regulations to protect a business in the begin stages. The third issue is the world economy. A decrease in inflation will affect the decision of the investors. It is very important that the world economy grows or at least stays the same.

3. Infrastructure in Istanbul
Istanbul is the largest city in Turkey and second largest city proper in the world with a population of 13 million. Istanbul is also the largest metropolitan city proper in Europe and the second largest metropolitan area in Europe by population. The city of Istanbul had been built with airport, harbour, train stations and road. The transport system in Istanbul is first class which is very convenient to get to Istanbul. There are two airports in Istanbul making it easy for the visitor. One is Istanbul Ataturk Airport, and another one is the Sabiha Gokcen Airport. The airport offers international flight, so people could start travelling from anywhere from the world to Istanbul. When people arrived by plane, there will be extra offers from the service companies, such as taxi service, and hotel service. The city of Istanbul is also equipped with harbours, which means that, the flying to Istanbul is not the only way to get there, people could also get to Istanbul by ship. And since Istanbul had covered over 25 districts in Turkey, the train transportation is so powerful that there are several train stations in Istanbul. With train, it makes the tour through Istanbul much more fun and convenient. How does Istanbul handle the travelling of the tourists inside Istanbul? It is not hard at all, because the city have almost every kind of transportations which makes it easy to travel from one place to another place. To get around in Istanbul, bus is the main public transportation mean in Istanbul. It is cheap and frequent. The city bus is best use for the major sight seen and longer trips in and out of the city. The IETT is owned by the government, also there are some buses owned by the private owners. The ferryboat had been counted as one of the most enjoyable way to travel in Istanbul. There are many kinds of ships people could choose from. People could enjoy their tea with good sunshine and floating on the beautiful sea. Beside that there are other alternatives as subway and taxi offered in Istanbul. You can also rent a car and hire a driver and guide.

4. The Reasons for opening an all-in-one resort

1. Tourism Advantages 2. Transportation Advantages 3. Cultural Advantages 4. Competition 5. Demand

First of all, there are tourism advantages. As everyone knows, Istanbul is one of the most important tourism cities in the world. The population of the tourism in Istanbul is around 20 million people. It is obvious that tourism had become one of the most important parts of the economic. Istanbul has an international Airport in Ataturk which serves as a major gateway for flying in and out of the city. There are also other transport means that can take you round the city when you visit. Shopping in Istanbul is part of the tourism affair. There are a lot of shopping malls to visit. There, you are sure of purchasing vital items you need in order to make your tour a memorable one. Hotels, restaurant and entertainment are everywhere. They are well constructed and had been operating for a long time. As expected, Istanbul will keep on attract the tourism to visit and enjoy their time over here and enjoy the good time with the infrastructure here. After the Tourism Advantages there is the transportation in Istanbul. There are city bus, ferryboats, taxi, metro and underground. The city bus is the best use for the major sight seen and longer trips in and out of the city. The IETT is owned by the government, also there are some buses owned by the private owners. The ferry boat had been counted as one of the most enjoyable way to travel in Istanbul. There are many kinds of ship people could choose from. People could enjoy their tea with good sunshine and floating on the beautiful sea. No doubt that the travelling is very convenience, people could reach anywhere they want by the public transportations. Istanbul is a travelling city mainly registered as the shopping and city travelling place, people just may not spend so much time and money on the hotel, restaurant and resting places. 7

Also there are the cultural advantages in Istanbul. Turkish culture has undergone profound changes over the last century. Today, Turkey may be the only country that contains every extreme of Eastern and Western culture. Upon the fall of the empire after World War I the Turkish Republic adapted a unitary approach, which forced all the different cultures with its borders to mix with each other with the aim of producing Turkish national and cultural identity. This mixing, instead of producing cultural homogenization, instead in many shades of grey as the traditional Muslim cultures of Anatolia collided with the cosmopolitan modernity of Istanbul and the wider west. As Istanbul had gathered so many cultural around the world, the local people would easily adapt the performance of the tourists. The cultural advantages will help Istanbul to be a better city. The competition between the similar resorts are greater than ever before. Istanbul has more than 430 hotels in the city, even more restaurants but there are fewer casinos in the city. So, if all these put together, hotel, restaurant and casino put together, in that way, people could save up a large amount of time and could also gave them a good rest in the resort. In the end there is the demand of the all-in-one resort would be great. Not only the travelers would need the all-in-one resort but also the local people might need it too. One reason for this is that, the all-in-one resort will not take much to live in and could enjoy the spare time there. For the travelers, the resort could help them to solve the living and the eating problem, so that they dont need to wonder around in the different hotels and restaurants, at the same time, the casino and pool could help them to spend their spare time in the resort. For the local people, the resort could help them to spend their holidays there, have a good rest and have a great meal at a very low price compare to other hotels and restaurants in the city. There are good restaurants, good hotels and good casino or other joyful places in Istanbul. But since there are a lot of hotels in Istanbul there is chosen for a resort. Mostly the tourists who visit Turkey are families with children thus it is easy for them to be at one place where they have all the activities, by this they save money and time which can be seen as an important advantage of having all in one resort. You will also save some travel time each morning, since you won't have to fight traffic and drive to another destination for example going to a casino, this way you do not have to pay for taxi and the time that you travel, you can use for other things. Furthermore it could also help the local people to have great rest during their free time and make sure they will have a great tour the next day.

5. Expenses and Revenue

This is an overview of the cash-flow, later on you can find an explanation of all these costs.
Sheet1 A
1 2

C
Capital

Investment expenses LABEL 1,250,000. 00

Monthly expenses LABEL ..Employee salaries ..Maintenan ce

Revenue division LABEL %

LABEL

..Building

3,000,000. 00 Start.. 1,750,000. 00 1,749,958. 00 1,749,908. 00 1,743,708. 00 1,742,108. 00 1,741,328. 00 1,741,074. 00 1,741,056. 00 1,740,236. 00

151,200.00 ..Hotel

50.00%

..Lot plan ..Road datum document

42.00

2,500.00 ..Casino

40.00%

50.00

..Utility bills ..Food and beverages

..Restaur 8,000.00 ant 10.00% 100.00 %

..Inspector ..Approval drawings ..Approval Fire Department

6,200.00

1,500.00 TOTAL

1,600.00

..Other

850.00

780.00

TOTAL TOTAL per day

164,050.00

..Contractor registration form 254.00 ..Project approval CDD 18.00

5,858.93

10

..Proof of payment 11 water,clearance

820.00

12 ..Building permit 2,300.00

Price per room

..Occupancy 13 permit

916.00

1,737,936. 00

LABEL

VAR

..Development 14 costs ..Contraction 15 costs

144,700.00 500,000.00 104,000.00

1,737,020. 00 1,592,320. 00 1,092,320. 00

..Weeks Of Rental rate ..Required percentage of revenue ..Required revenue (5y) ..Required revenue (per day) ..Rooms available ..Required revenue (per room) Price per room per night

0.22

50.00% 6,167,790.00

16 ..FF&E costs

17 TOTAL 18

2,011,680 Endin .00 988,320.00 g..

3,379.61 75

19

204.82

20 Marketing expenses 21 LABEL ..Television 22 commercial ..Radio advertisement 23 (Turkey) ..Website 24 development ..Website 25 registration 500,000. 988,320.0 00 0 15,000.0 488,320.0 0 0 473,320.0 5,000.00 0 468,320.0 500.00 0 520,50 0.00

Capital LABEL

204.82

Start..

Casino revenue

LABEL ..Required percentage of revenue ..Required revenue (5y) ..Required revenue (per day) Casino revenue per day

VAR

40.00% 4,949,940.00

26 TOTAL

467,820.0 Ending. 0 .

27

2,712.30

28 29 Income 30 LABEL 31 ..Hotel revenue Investment return LABEL Return

2,712.30

Restaurant revenue

10

94,629.1 42,227.05 1

on invest ment per month. .

32 ..Casino revenue

Return on invest 75,944.2 506,724.6 ment 8 2 p/y Return on invest ment 53,950.9 2,533,623 per 5 7 .10 years.. Net profit after 5 1,443.10 years..

LABEL

VAR

..Restaurant 33 revenue

..Required percentage of revenue

10.00%

34 Expenses 151,200. 35 ..Employee salaries 00 2,500.00 8,000.00 1,500.00 1,000.00 60,324.3 6 18,097.3 1 42,227. 05

..Required revenue (5y) ..Required revenue (per day) Restaurant revenue per day

3,516,447.00

1,926.82

36 ..Maintenance 37 ..Utility bills ..Food and 38 beverages 39 ..Other

1,926.82

40 Operating income

41 ..Tax

42 Net profit

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5.1 - Targeting group The first and most important topic that has to be cleared before determining all costs and the price per room for the all-in-one-resort is the targeting group. In this case the targeting groups are locals with a high income and tourists who are planning to enjoy a luxurious and glamorous stay in Istanbul for a longer period of time. This places the all-in-one resort in a high-segment, allowing for a high price while always having to keep in mind the need to provide a high quality service to its customers. Although a high price will generate more revenue, continuously maximizing customer satisfaction will increase investment expenses as well as monthly expenses. 5.2 - Starting the resort The costs of starting the resort will consist out of both investment expenses and marketing expenses. The investment expenses will be far higher than the marketing expenses, since this regards the actual construction of the sort. The marketing expenses will be used to generate name recognition amongst tourists as well as locals. An overview of all expenses is stated below. The building is by far the largest investment that will be made and amounts to almost 50% of the total startup expenses. However, the building can also be seen as an investment on its own rather than a pure expense. This is due to the expected increase in real estate value in Turkey. This topic will be further discussed in paragraph eight of this chapter. As for the marketing expenses, there are three ways by which the all-in-one resort will be promoted. A television commercial will be broadcasted on the Travel Channel which is available in multiple countries. This way tourists from all over the world can be made aware of the existence of the all-in-one resort. To attract locals to the resort a radio commercial will be produced and broadcasted on the Turkish radio station Istanbul FM. A website will also be developed, which will feature an online booking system for customers to use. In addition the resort will be registered with various online booking websites such as booking.com. The investor will be left with a 500.000 euro margin that can be used to cover unforeseen expenses or a setback in revenue within the first quarter.

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5.3 - Monthly expenses To assure an accurate estimate on the return on investment, target revenues must be set. The variable costs, in this case the monthly expenses, are a key component to the target revenue determination. These expenses will first have to be covered before being able to get a return on investment. 5.4 - Revenue division Since the resort will be aiming at three main sources of income, a revenue division has to be made. This states the weight of each source regarding the return on investment. In this case the renting of rooms to customers will amount to 50% of the revenue, meaning that in five years the renting of rooms will have contributed half of the profit as one source of income. The casino will amount to 40% and the restaurant will contribute 10% of the profit.

5.5 - Revenue targets With the revenue division made and all expenses calculated the revenue targets can be set. Each source of income will use its revenue division percentage, together with all expenses over a five year return on investment time span, to determine the revenue target per day. A revenue target per day allows for management to respond quicker to profit endangering situations and thus ensures the client of a more risk free investment.

5.6 - Price per room Based on the total expenses and a return on investment time span of five years, a price per room can be determined. The hotel will require 50% of the necessary revenue to be earned by the renting of rooms. At a weeks of rental rate of 0.22 (the hotel will only be fully booked 22% of the time) the price per room will have to be 204.82 euros excluding VAT, in order for the investor to break-even in five years. The high price per room per night indicates that the hotel will indeed be targeted at people with a high income.

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5.7 - Return on investment The information stated below is a summary showing that the investor will breakeven in five years. All the information previously discussed in this chapter is combined and used to illustrate how the return on investment will be achieved.

5.8 - Real estate development As earlier stated, the building can be seen both as an expense as well as an investment. In this paragraph the development of Turkey as a country will be directly linked to the real estate development. Therefore the estimates in this paragraph can be seen as a guideline to whether or not the building will increase in value. No prospect based on monetary value will be made since the prospect would simply be too inaccurate. Turkey has shown an incredible rate of GDP growth over the past 8 years with exception to 2010 which was the only year in which the Turkish GDP experienced a 4.7% decline. In 2010 rating agencies S&P and Moodys raised their rating for Turkey from BBB to BB mainly due to the constant decrease in public debt and positive outlook for 2011, meaning that Turkey is now considered a safer investment. In 2011 the Turkish GDP is estimated to grow 7.3% Turkey is showing numerous signs of growth which will contribute to the increase in value of real estate, especially real estate located in popular areas such as Istanbul. The building will thus hold its value if not increase in value. This means no depreciation expenses will have to be embedding in the budget and the building will most likely increase the net profit after five years.

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6. Conclusion
There can be drawn a conclusion in which the emphasis is on the financial part. This part shows with different types of revenue that can be made, like price per room and casino on which we subtract the expenses, that the revenue gives a five year return of investment which is also made possible by the huge economic growth of Turkey and the Real estate development in Turkey. The reasons to invest to open an All-in-one resort in Istanbul, which are the tourism, transportation and cultural, are a big advantage for the investment and the infrastructure in and to Istanbul are willing to support the fact that it is an advantage, since there are a lot of ways of transportation in and to the city.

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7. Recommendations
The findings and conclusions in this report support the following recommendations. It is highly recommended that you should invest your $3 million into this project and to start investing in this project right now since there are more advantages then disadvantages. There are more investors that will choose Istanbul as place to invest as a consequence there will be more competition and the profit will decrease. It is highly recommended to start with the project as soon as possible. After the agreement on the investment, a contract has to be made and signed by the client. The aim of the contract is to hold meeting with the investment consultants and hold all contact necessary with them concerning the investment and that everything within the contract is sound and safe for you to sign.

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Bibliography
Istanbul Information. Mydestinationinfo.com. 2011. Mydestinationinfo. 10/03/11 <http://istanbul.mydestinationinfo.com/en>. Istanbul Information. Iexplore.com. 2010. iExplore. 11/03/11 <http://www.iexplore.com/city_guide/Turkey/Istanbul/Information>. Resort Istanbul. resortistanbul.com. 2008. Resort Istanbul. 10/03/11 <http://www.resortistanbul.com>. Travel and transport in Turkey. Turkeytravelplanner.com. 2002. Turkey Travel Planner. 09/04/11 <http://www.turkeytravelplanner.com/trans> Doing Business. Doingbusiness.org. 2011. Doing Business.org. 07/05/11 <http://www.doingbusiness.org/data/exploreeconomies/turkey/dealingwith-licenses>

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Tammana Rahmani Date

Sunday 6th March

0820841 Activity Signature

Search for several investment Tammana opportunities to make a choice on the country of research. Meeting to discuss the country and Tammana investment opportunity. More research question. about the research Tammana the and new Tammana the Tammana Tammana Tammana

Monday 7th March

Monday 14th March Friday 18th March

Meeting to agree on investment opportunity research question.

Sunday 8th May Wednesday 1st June Monday 6th June

Tuesday 7th June

Wednesday 8th June Tuesday 14th June

Divided the tasks and made Chapter 1. And prepared for the meeting with the client. Searched for information about the country and Chapter 1 and chapter 2. I received from everybody their part and put everything in 1 document and after all I made the cover and table of content. Changed and finished the introduction and made the recommendation. Read the whole report and checked the spelling and improved others part. Read all the Chapters again and hand in the draft version Meeting to see the notes made by the client about the corrections.

Tammana

Tammana

Tammana

Thursday 16th June

Send the report to the other group Tammana mates and finally hand in the final version.

I liked to work on this report, also because I learned a lot about the country and the investment plan. Unfortunately I could not always work as I had planned. Sometimes it was pretty annoying to work with the group because if they were late, I had to call theme to send their work. Furthermore what I could improve for the next time is to choose a own group and to be honest I dont like to work with Chinese people.

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Minutes of the Meetings

First group meeting on Monday 7th of March Attendance: Tammana, Marc and Cevat was present Time: from 11:30 am to 12:30 pm Reason: To discuss the country and investment opportunity to choose from. During the class we discussed about the country where we invest money in. Cevat came with the idea to invest in Turkey and all the other group mates agreed on it. We were not sure about which city to choose, we looked for a suitable city and agreed on that Istanbul would be the best place to invest. The reason why we choose for Istanbul is because Istanbul is the largest city in Turkey and have a huge population. Annually millions of people around the world visit Istanbul. And then during our first meeting it was very difficult for the group to find a proper project and whether the proposed project would be profitable or not. Also we missed one group member in the first two weeks, so it was difficult to discuss the topic with him and we didnt know whether he will agree on the proposed country. The first subject that came in our mind was about a hotel or a yacht in Turkey, but we came to conclusion that this was not a good idea since this is more seasonable and we need to make profit during the whole year thus not in one season.

Second group meeting on Friday 18th of March Attendance: Tammana, Cevat and Bowen was present Time: from 15:25 am to 16:05 pm Reason: To discuss about the country and decide on the research questions. At our second meeting when we came together and discussed also other proposals since we were not convinced with the subject of opening a hotel in Turkey. The group did research on the price of hotels in Turkey and what the other options were. After a lot of research and discussion with the group Bowen and I decided to take a building and within the building and have different kind of accommodations so a All-in-one-resort and accommodations such as casino, restaurants, fitness-area, cinema, small shop, thus this would be an ideal place to be since you can find all the fun things in it. We would love to give everybody the chance to spend their time there. So not only for the tourists but everybody can make use of our accommodations. Marc missed the meeting but he agreed with our research question.

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Third group meeting Wednesday 30nd of April Attendance: everyone was present Time: from 12:55 am to 13:45 pm Reason: Meeting to discuss and agree on the research questions that will be conducted and divide the tasks. Finally when the research question was finalized we searched for information. I divided the tasks. Since Marc is very good in finance, he got the financial part of the report. Further we discussed about the target group. First we thought about a motel instead of a hotel, but then we thought it was not a sound idea. Our target group are people with higher income and they should at least overnight one day. Furthermore there were not a lot to talk about since everybody knew what to do.

Fourth group meeting on Monday 9th of May Attendance: everyone was present Time: from 12:55 am to 13:45 pm Reason: Meeting to decide what should be involved in the rough draft. After our second meeting with the client we had a group meeting, we discussed the things that had to be done. We also agreed on deadline in order to have everything on time and to be able to submit on time. The group decided that everyone should send their task to me so that I can put it in one document and finally check the whole report. Also we discusses that everybody should do serious research so that we are able to hand in a high quality document.

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Cevat Topaloglu Date Monday 7th March: Monday 14th April Sunday 20 March Wednesday 7th April Monday 9th April Tuesday 19th April Wednesday 25th May Thursday 26th May Tuesday 7th June Tuesday 13th June

0839309 Activity Signature

Meeting to discuss the country and Cevat investment opportunity. Thinking about the research question. Preparing for our first meeting with the client. Starting to search information and reading all the information about the investment. We had a group meeting to discuss everything. Write the introduction Checking of my work for mistakes. Meeting with the client to discuss the parts that we made. After that I received the whole report I wrote the conclusion. Meeting to talk about the correction notes on the rough draft part 1. Cevat Cevat Cevat Cevat Cevat Cevat Cevat Cevat Cevat

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Marc Klootwijk Date Monday 7th March

0824371
Activity Signature

Friday 11th March Monday 14th March Saturday 19th March Saturday 7th May Thursday 2nd June Saturday 4th June Tuesday 7th June

Missed meeting, but was informed Marc on discussed subjects later on that day by telephone. Searching some information on real Marc estate in Turkey. Thinking about the research question. Marc

Preparing for meeting with client, Marc together with Cevat. Doing research on building Marc expenses and legal aspects of construction in Turkey. Working on the Excel sheet. Marc Working on the Excel sheet. Marc Processing the financial data from Marc the Excel sheet. Finalizing the financial part. Marc

Wednesday 8th June

Bowen Chen

0842693
2011-4-4 2011-05-12 2011-06-03 2011-06-05

Introduction for the report Resort and Infrastructure is Istanbul Reasons for Starting an All-inOne resort version1 Reasons for Staring an all-in-one resort Version2

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