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AMAPOLA LODGE !!!

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AMAPOLA LODGE & TOURIST CENTER

PLAYA ROYAL, NORTHERN CARIBBEAN COAST, COSTA RICA

 

Executive Summary:

1. Project description

2. Project Unique Features

a. Costa Rica

b. Tourism in Costa Rica

c. Caribbean coast

d. Amapola Lodge

3. Market Demand & Supply

4. Funding required & Security

5. Use of Funds

6. Ownership & Management

 

 

 

 

1. PROJECT DESCRIPTION:

A small three star Beachfront economy hotel under construction in Costa Rica with first stage of development nearing completion and is in pre-operation stage. Located at the gateway entrance of famous eco-tourism area of Tortuguero Canal on the northern Caribbean coast, AMAPOLA LODGE & TOURIST CENTER is part of a planned destination resort village- MAR CARIBE-THE BEACH RESORT. This popular tourist destination area is known for Tropical Jungles, Turtle eggnesting, Canals, boating, Surfing, Fishing, National parks, Biological reserve, Plantations and quiet beaches. The location is served by a beachside access road and is close to a cruiseship terminal, city and urban services and an Airport.

Corporate mission of Amapola Lodge is to develop an Eco-Lodge providing tourists with an interest in ecotourism and tropical flora and fauna, with basic yet comfortable facilities & personalized services at affordable prices and to make Amapola Lodge a profitable business venture.

Amapola Lodge Development program consists of Accommodations, Restaurant, Bar, Tourist Center, Store & Gift shop, swimming pool, health spa & fitness center along with outdoor sitting areas and kiosks, Gazebos and shelters.

Accommodations will include 26 rooms and 2 Dormitories, each fronting on a covered Verandah to enjoy the oceanview (rain or shine). The first stage comprises of 10 rooms (4 rooms are completed at present & 6 room structure is 60% complete), and 2 completed Dormitories (each for 4-6 beds and full bathroom), a Restaurant (completed) which will double as a Tourist Center and will accommodate excursion groups of upto 120 people, convenience store (completed) and Bar (completed) structure. A large swimming pool construction is slated for the first stage along with a Bar-B-Q pit, several Gazebos, covered sitting areas & benches throughout the property and on the beachside. The second stage development program includes 16 more rooms along with a health SPA & Fitness center and assorted convenient landscape structures.

Because of its unique location it will also provide a one-stop Tourist Center for tour services to all attractions in the project area. At present, all individual tour service providers and facilitators are scattered all over the area from road side locations to under the tree on intersections to the parking lot of govt buildings and boat moorage site; and are not the most convenient, competitive and safe business practices for a visitor. Amapola Tourist Center services will include bringing most of the area tour operators and facilitators under one roof at Amapola Location which is uniquely served by Road, Beach, Canal & by Air (float plane). Atleast 40% of these operators and facilitators are expected to locate at Amapola. Amapola tours will be conducted by Boats, Tourist Buses & Vans and by Air ( Helicopter & Float plane). Amapola will charge a fee for each booking provided at the Tourist Center.

 

 

2. PROJECT UNIQUE FEATURES:

a. COSTA RICA: for investors

Costa Rica is a stable, democratic country which has experienced significant growth in attracting international investment in recent years, due in part, to its reputation as a nation of peace and democracy and its policies relating to conservation and environmental protection.

International Country Risk guide ranked Costa Rica among the top ten countries in terms of risk for investors based on the economic, financial and particularly the political environment of the nations.

Private ownership of land is protected under Costa Rican laws & by its constitution foreigners enjoy the same ownership rights as its citizens. The land registry system in Costa Rica is similar to the Torrens system used in Canada and a fully computerized Central Property Registry is used to record both title documents and survey plans for properties.

Corporate ownerships is open to foreigners and nationals alike and enjoy the same rights and benefits. After USA and Canada, Costa Rica is increasingly becoming an attractive place to invest and visit in the northern continent of Americas.

Costa Rica offers efficient modern International Banking system. Banking system is modernized and facilitates international electronic transfers through commercial and merchant Banks; and financial corporations.

b. TOURISM IN COSTA RICA: a growth industry

Costa Ricas unique natural beauty, warm and sunny climate, peaceful political environment, and naturally friendly people have combined to make Costa Rica a prime destination for tourists which is reflected in the remarkable growth in tourism in

Costa Rica.

Recent government statistics show that tourism in Costa Rica has grown by an incredible 72% over the last four years, an annual increase of 18% annually since 1997 on straight line basis. Specially considering the events of 09/11, this growth in tourism for Costa Rica reflects a new realty of traveling to secured and peaceful countries of Americas.

Tourism is a major national source of income and exceeds US1.3 billion dollars annually making it the second largest industry in Costa Rica.

In an effort to promote its growing tourism industry, Costa Rica government has adopted a number of policies and incentives designed to support private initiative in tourism industry, tourism related services and resort developments.

c. CARIBBEAN COAST: emerging major tourist destination

Caribbean coast is emerging as a major tourist destination zone for ecotourism enthusiasts and visitors wishing to enjoy all the diversity Costa Rica has to offer. Traditionally, pacific coast has provided much of the tourism activities for Costa Rica, but growing interest in ecotourism, tropical flora & fauna, active sport & fishing tourism, conservation of endangered animals and cultural tourism has made Caribbean coast a major emerging tourist destination as it offers these attractions in abundance.

With the structural change occurring in tourism industry from "Sun & Beach" tourism to "Something more than Sun & Sand", the tourism market demands are increasingly seeking destinations that provide a diversity of opportunities and tourist attractions involving "Natural environment & Culture", such as the emerging new markets for enthusiasts of ecotourism, adventure water sports and endangered flora & fauna. Caribbean coast is one of the major zones in Costa Rica to offer these along with the traditional tourist attractions of Sun, Beach & Entertainment. Over the last decade Caribbean coast has slowly & steadily become a major tourism destination and increasing its share of tourism market of Costa Rica.

Caribbean coast enjoys abundance of Sunshine & Rain, making it a year round warm & green area. Out of 10 rain zones in Costa Rica, caribbean coast is the 5 th making it neither the driest or wettest area in the country. Caribbean coast enjoys 1800 hours of Sunshine a year, avg. 5 hrs a day. This unique balance of sun & rain weather makes it truly a natures paradise with an incredible amount of ecological diversity in tropical Flora & Fauna to make it a major ecotourism destination.

Government has recognized this growth in tourism on the Caribbean Coast by increasing major public investment in tourism infrastructure involving Cruiseship terminals,

City Center, Bus Terminals, Airport and Roads and in the protection of natural environment & endangered life. This growth is evident by the increase in ecotourism visitors to Tortuguero Canal zone, on the northern caribbean coast, making it the number one ecotourist attraction; tremendous increase in cruiseship arrivals, from 3 in 1993 to 76 currently and bookings of 146 arrivals for year 2002- 2003 season on the Caribbean coast terminals; arrival of international charter flights to the caribbean coast airport of Limon and its planned expansion, rumored to the extent of $45 M to $100 million dollars, as a major international terminal for the country on the Caribbean coast; large public and private investment in commercial, industrial and Tourism related services; and revitalization and beautification projects for City center.

Ongoing government interest and investments in Caribbean region together with the increased focus on Caribbean coast tourism potential & the political environment created by the new government headed by a president who hales from the Caribbean; has made this region the fastest growing economy in the country.

d. AMAPOLA LODGE: unique development opportunity

Amapola Lodge enjoys some unique and important features:

1. Amapola Lodge is ready for immediate operation start. This ongoing Costa Rica Tourist Project provides certainty for operating and immediate cashflow.

2. Amapola Lodge will have the First Tourist Center with a full service Hotel on the Northern Caribbean Coast of Costa Rica.There is no competition for this level of service.

3. Amapola Lodge Resort is the last private Hotel property, accessible by a direct road access from the highway, city of Limon, Cruiseship Facility and Airport on the northern Caribbean Coast of Costa Rica.All other tourist establishments are accessed only by boats as there is no road north of Amapola Lodge property on the coast.

4. The project is financed by the principals todate and is debt free, save the payables to shareholders, and provides greater security for funding.

5. Amapola Lodge is at the gateway entrance of a popular eco-tourism destination, an increasingly popular tourism sector, and is close to a fast growing Cruiseship facility, Major City center and an international Airport.

6. Caribbean coast is in a growth mode and with increased Government and private investment emphasis in infrastructure ( City Center, Transportation hubs, Airport, Roads, Public utilities & Tourist facilities), this coast has become the fastest growing market in Costa Rica.

 

 

3. MARKET DEMAND & SUPPLY:

Tourism in Costa Rica has grown by an incredible 72% over the last four years, an annual increase of 18% annually since 1997 to 2001 on straight line basis. Specially considering the events of 09/11, this growth in tourism for Costa Rica reflects a new realty of traveling in 2002 onwards to secured and peaceful countries of Americas. Strategic Plan for Sustainable Development of Tourism in Costa Rica for the 1993-1998 period states that total demand in the Tortuguero Tourist Area, where Amapola is located, is 11,193 tourists per year with a potential demand for the area of a total of 50,368 room/nights per year. The target Demand for the project is at 36% which represents the tourists who spend an average of US $53 or more for accommodation per day during the peak and green seasons. At room occupancy of 1.48 tourist/room per night, the Target Demand of the project is 12,251 room/nights per year. The comparable Lodging establishments located in the area offer a total of 105 rooms or at projected occupancy rate of 65% a total of 24,570 room/nights per year. There is a deficit in the area of 25,798 room/nights between the current annual supply and the projected potential demand for the area. Amapola Lodge will supply at a projected occupancy rate of 65% a total of 1,872 room nights in the first year and at buildout a total of 6,636 room/nights in the second year onwards. This Data shows that there is more than sufficient demand for the supply of rooms by Amapola in the area.

4. FINANCIAL PROJECTIONS:

Capital investment made todate & additional funding for the first & second stage will total US$1,925,000. The financial projections are based on the first stage of operation starting in mid 2003 with the presently completed accommodations: four rooms and dormitories; Restaurant, Bar and Tourist center and Store and gift shop. Another six rooms are added to the earlier income items in May 2003. Second stage of sixteen more rooms are added to the income items for December 2003 projections and onwards. Room rates are calculated for two persons at $79 ($40 for single) in the peak season and for two persons at $59 ($30 for single) in the green (low) season. For the developers and investors, the projections shows a gross profit of US$129,000 in the first year and US$464,000 in the second year onwards at a return on investment, R.O.I., is projected at 24% based on income at full operation from total buildout. EBITDA for the second and third year is projected at 42% & 67%. The break even point for the lodge operation works out to be an occupancy rate of 38.50% at room rack rates discounted at 50% or at room rates for two people at $40. The break even point is defined as the level of income at which all fixed and variable operating costs are covered. This analysis shows that Amapola Lodge as a business, will be successful, profitable and feasible.

5. FUNDING REQUIRED & SECURITY:

Land acquisition, construction, operations and management expenses todate have been financed by the principals of the project and by unregistered private repayable loans. Payables total US$150,000. At present Amapola is seeking further cash infusion from outside sources of total US$1.2 Million for US$550,000 (first stage) & US$650,000 second stage) either by way of equity funding or by Debt funding. In case of equity funding, Amapola will negotiate an equity participation for the investor. And in case of debt funding, a security is available for the total amount by way of a firstmortgage/charge against Amapola Land and buildings and improvement which is appraised at US$973,000. The balance of funds raised through this funding effort (net of payable $150,000) will be used for project construction, FF&E, pre-operation budget, supplies and management.

6. USE OF FUNDS:

The funds raised will be used to finance the investments needed to develop the project and start the operation of Amapola Lodge. Following is a breakdown of net proceeds of the funds assuming full funding for each stage.

First Stage Second Stage

Land acquisition & construction todate

at vended Value $ 875,000 ---

Current Payables 150,000 ---

Furniture, Finishes & equipment

Landscaping, Construction deficiencies 130,000 135,000

Vehicle, Operating costs,

Pre-opening promotion & publicity 75,000 90,000

Construction 40% of Rooms, & Amenities 160,000 380,000

Contingencies & Costs 35,000 45,000

Totals 1,275,000 650,000

Equity held by principals 725,000 ---

Funding required 550,000 650,000

Total Development Budget for first and second stage is US $ 1,925,000

Construction & Land represent 87% of total investment.

6. OWNERSHIP & MANAGEMENT:

Amapola Lodge with the funding in place, will be owned and managed by Bienes Raices Global SA, a Costa Rican corporation. The funding sponsor, Global Realty Company

( Bienes Raices Global SA), was formed in 1993 as a project corporation for the management and operation of Amapola Lodge. The corporation is privately held by a group of individuals (equity shareholders) with the power of attorney vested in the corporation President to make all corporate financial and legal decisions. The principals of the company as a group have extensive experience in the real-estate development industry and have broad experience in general management, administration and corporate finance. The principals will retain a manager/operator with staffing for Amapola Lodge. Manager/Operator and all the staff have local experience and have worked in the hospitality industry for several years and are familiar with local tourism market.

Amapola Lodge & Tourist Center could start operation of the first stage within ten weeks of obtaining the required additional funding.

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