Entrepreneurship: Feasibility of a New Hotel Joint Venture Report

This report presents a detailed analysis of a new hotel venture in Australia, focusing on the application of entrepreneurial principles. It begins with an executive summary and introduction, followed by a comprehensive business model canvas that dissects customer segments, value propositions, customer relationships, key activities, key partners, key resources, cost structures, communication channels, and revenue streams. The report then delves into a feasibility analysis, examining market, technical, human, and financial aspects. The core concept revolves around a hotel offering entertainment (theatre) and a playgroup for children, targeting a premium customer segment. The business model canvas is used to outline the key components of the business, including customer segmentation (travelers and Australian residents), value proposition (entertainment and child care), and revenue streams (room bookings, theatre, and playgroup). The feasibility analysis assesses the viability of the venture, considering market conditions, technical requirements, human resource needs, and financial projections. The report concludes with a summary of findings and a list of references.

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Entrepreneurship
A new joint venture

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Executive summary
Entrepreneurship is considered as the engine that is able to grow the economy favorable.
It is easy to get idea for opening new business but it is hard to execute the plan with analyzing
the ach factors of the market for the purpose of growing in the market. The report has been
focused on new idea in existing industry of Australia. Idea has been taken in the hotel industry
which has been evaluated as the boon industry in the Australia. The nine building block of
business model aided to know more requirements about establishing new idea in existing
industry. Feasibility analysis has been done so that the strength and weakness of the company
can come to know in the view of entrepreneurship.

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Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Business model canvas....................................................................................................................5
Customer segments......................................................................................................................5
Value proposition.........................................................................................................................6
Customer relationship..................................................................................................................6
Key activities................................................................................................................................7
Key partners.................................................................................................................................7
Key resources...............................................................................................................................7
Cost structures..............................................................................................................................8
Communication channel..............................................................................................................9
Revenue streams........................................................................................................................10
Minimum Viable Product (MVP) (if applicable).......................................................................10
Feasibility analysis.........................................................................................................................11
Market feasibility.......................................................................................................................11
Technical feasibility...................................................................................................................12
Human feasibility.......................................................................................................................12
Financial feasibility....................................................................................................................13

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Conclusion.....................................................................................................................................14
References......................................................................................................................................15
Appendix 1.....................................................................................................................................17
Appendix 2.....................................................................................................................................19

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Introduction
There are so many aspects and factors which should be analyzed while developing the
new venture. It is important to analyze various components of business before going with new
idea of new venture. Business model canvas facilitates to understand the each elements of new
business idea in an appropriate manner. The report will focus on the new idea that is opening
new hotel in the Australia. It is the industry which is very competitive and huge advantages
which provides enlarge opportunities to entrepreneur. The hotel which will be discussed in below
that serves the people with great quality of accommodation as well as food services. Australia is
an attractive place for tourists and the idea of opening new hotel near tourist place will be
advantageous for entrepreneur. It is the hotel which would be full of entertainment because it
would give theatre and playgroup in the hotel. It is the hotel that serves the market with
entertainment along with accommodation. This business will operate the targeting market of the
Interested people who fond of travelling. Along with that it will have playgroup because it has
been analyzed that parents with child cannot have enjoy that much due to proper care of child.
Due to having playgroup in hotel, it would be helpful for the parents to go outside for certain
period and apart from that the different activities in playgroup will be facilitated to learn new
things of new culture to child. It is the business that can only the target of premium customer
because the staying cost in the hotel will be very high in comparison of normal hotels.

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Business model canvas
Business model canvas is considered as the instrument which will be obliging for the
organization to initiate new idea and concepts supporting financial viability of an organization.
With the help of business model canvas, an organization is capable to generate revenues and
turnover from the operation of the company. It helps to attain the rationale of the business and
assist to distinguish the source of company for increasing the revenue (Bohm, 2015). It aids to
get know about the value of the business and its strategies to deliver effective services and values
in sophisticated manner. It is made with nine building blocks such as value proposition, key
activities, key partners, revenue streams. client segmentation, cost structure, key sources,
communication channel and client relationship.
Figure 1: Business model canvas
Source: (Itami, & Nishino, 2010).
Segments of customer
It is the first element of the business model that involves all entire member of the
organization for which business building the value. It is vital for the new hotel with special

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quality to construct the customer segment because an organization is liable to serve the services
one or several customer segment. As discussed that the business is providing the theatre services
for entertainment and playgroup for learning new things to the child who arrive from different
culture. The hotel can also target the customers who have been living in Australia for long time.
Value proposition
A value proposition is the statement of business and marketing that a business utilizes to
define that why a customer should purchase a product or use a services. As far as this restaurant
is conferred it provides the facility of theatre and playgroup for child within the hotel. Serving
the good facility in a sophisticated manner attracts the travel lover to stay in this hotel for
experiencing new things and learn their child about their culture and trends. It has been evaluated
that the segment of people who are fond of travelling and experience of new things, thus it would
be the enormous idea to provide the people with the theatre and playgroup in the hotel (Nieves
and Segarra-Ciprés, 2015). Australia is rich in tourist place so there are number of tourist as well
as citizens of Australia who visit different place so it would not be difficult for the business to
make so many efforts in convincing people to have experience of new things.
Customer relationship
Customer relationship can be driven by focusing on various motivations techniques such
as customer retention, customer acquisition and up selling. The new venture would be dealing
with online as well as offline ways. Customers are the key of success so it is essential for the new
business venture to keep focusing on the satisfaction level of the customers so that they back
again for experiencing services of hotel and recommend to others for staying (Lager, 2010). The
hotel can provide the additional activities to maintain the long term relationship with customers.
These activities can include the specific movie, drama and small functions for entertainment.

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Key activities
Key activities are vital for the company because it includes the various activities which
are integral for the business to execute the new business idea. There are various sorts of key
behavior such as production, problem solving and platform. The key activities of new venture are
serving higher quality in service so that customer get attract and recommend others. Provide the
facility to customer for prior booking from home (Fraj, Matute, and Melero, 2015). It promotes
the services to customer by up selling and other marketing activities such as discount on prior
booking, special place of sitting in theatre and various activities in playgroup for their children.
Key partners
The key partners can be considered as the partners that are being included in the business
or are associates with the business for the purpose of supporting the activities of business. It has
been analyzed that there are number of activities which would be helpful for the hotel industry,
there are many helpful elements such as logistics, suppliers, maintenance team, experts of
activities and teachers. The major key partner of the new venture would be legal partners,
investors, financial partners and logistic partners. Partnership is able to decrease the risk in the
environment of uncertainty (Orfila-Sintes and Mattsson, 2009).
Major resources
A key resource as the element of building block can be defined as the vital assets needed
to make a business model work. it is available where when an organization can develop the value
proposition and turnover. Key resources can be physical resources, human resources and
financial resources. A physical resource are considered as the tangible resources and involves
equipment, building, manufacturing plants, building and inventory that enable the business to
function. The interior of the hotel would be attractive and define the specific features of hotel

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while entering in the hotel (Nicolau and Santa-María, 2013). The appearance of the hotel should
be done in perfect theme so that the images take place in the mind of customer. Human resources
are the essential resource of the hotel. Human resources are in the form of receptionists, waiters,
management and IT department for handling the online website of hotel for prior booking and
updating customer about the features of the hotel. It is essential to penetrate in the market to
attract the customer, it is necessary for the company to be a financial strong and maintain the
effective image in the view of outsiders (Mackey and Sisodia, 2014). By being a financial strong
hotel can provide the attractive and luxurious services to its customers.
Cost structures
The structure of cost includes entire costs incurred to make a business model works. The
cost of hotel can be calculated in simplest manner after determining the key activities, key
partnership and key resources. The cost structure of hotel is defined below.
Cost of the startup
Expenses Amount
Hotel infrastructure cost
Servicing cost
Legal charges and expenses
Portal expense and IT cost
Marketing and hiring cost
Total Start-up Expenses
$80000
$40000
$8000
$20000
$30000
$178000
Start-up Assets
Cash in hand
Long-term and short terms assets
$80000
$100,000

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Current assets
$30000
Total Start-up Requirements $210000
The cost structure of the hotel defines that there are various activities that need cost to be
spent by the entrepreneur of the enterprise. It has been evaluated that sales at 210000 AUD is
required to start up the new business. Along with that it is also required to manage the all
activities of the hotel effectively so that all resources can be used appropriately.
Communication channel
Communication channel is most important for the new venture to get promoted in an
appropriate manner so that targeted market can get aware about new hotel while visiting in
Australia. Social media is the most popular tool which would be helpful for the new venture to
promote its new idea in the hotel. Along with that there are so many channel exist which is able
to promote the hotel in sophisticated manner (Morecroft, 2015). Organization can use online site
to make easy booking for visitors and allow them as well to book after reaching at hotel. It is
proficient element of business model canvas to deliver a value proposition to the customer.
Revenue streams
It is the most important element of the building block signifying the cash of a company
generates from each segment. In the context of new idea for hotel, the structure of revenue of the
hotel is very easy. Customers are allowed to pay bill from electronic medium as well as cash.
The organization can also earn revenues in the form of online booking of rooms, theatre and

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playgroup. An organization can also apply some strategies to earn revenues by offering packages
to its regular customer and some advantages to its first time customer (Lober, 2015). Revenue
stream may have the several pricing mechanism such as volume dependent, bargaining or yield
management.
Minimum Viable Product (MVP) (if applicable)
A minimum viable product is considered as the development technique in which latest
technique or idea is generated with appropriate features. It has the flexible working nature and it
offers some major discrete advantages such as minimum cost of production because it provides
the genuine information about the exact needs of the customer. It has been analyzed that the
major services is provided to customer is special entertainment by theatre and playgroup service
for learning new things about new culture to the children of tourists.
Feasibility analysis
Feasibility analysis of the business demonstrates that how much the business is feasible
to enter the new market in term of several elements such as financial, human resource and
marketing. It facilitates business to determine various aspects in term of analyzing the strength

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and weaknesses of the new idea in the existing business. There are some types of feasibility is
mentioned below in the term of new idea in the hotel.
Figure 2: Feasibility analysis
Source: (Cho, Kim, Choi and Jeong, 2016,).
Market feasibility
Market feasibility helps to determine various aspects before entering into new market in
depth so that entrepreneur get to know about the condition to enter in the new market and how is
the market of the business (Jo, Lee, Suh, Kim and Park, 2015). It has been analyzed that the
industry of hotel in Australia is growing and become a booming industry. It has been evaluated
in the report of Newsroom that in the beginning months of 2016, it has been seen that about $1.7
billion of hotel transaction takes place in Australia. Market feasibility is the process to facilitate
the effective source for evaluating the several integral aspects for start up new venture with new
features. It has been determined by analyzing the market of hotel that there is no strict restriction
in hotel industry and it would be easy for the entrepreneur to start up new venture in this industry

Entrepreneurship 13
by involving specific features. The interference of government is existed in this industry to make
ensure tourist that they are at safe place and all facilities of accommodation is hygienic.
Technical feasibility
A technical feasibility is considered as the essential process for making customer satisfied
and trouble shooting of the problems. It defines the tactic and logistic plan to new venture to how
it will develop store, techniques and booking services of its services. It is responsible to give
support in the term of financial. There is some restriction by government in the context of hotel
to provide the exact service what is mentioned in the portal of company while booking room by
customers. The technical feasibility includes physical location, labor requirements, material and
technology. These all requirements play a vital role in the context of increasing sales of the hotel
and make aware people abbot the new features in the hotel.
Human feasibility
Human feasibility is an important aspect which provides information regarding required
staff to accomplish the task and provide the efficient services to the customer of the hotel. A new
venture is going to be done in large scale so it has been analyzed that there are requirement of
people at large scale for different position (Hoque, 2013). There are various people in the hotel
which is liable to handle the department of the hotel in appropriate manner. It is required to the
entrepreneur of the hotel to provide the proper training to the staff so that customer of the hotel
could not get dissatisfied from the services. Human feasibility aids to determine the aims of
strategic plan and include document of current capabilities, recognize the required needs,
organize a gap analysis and review the feasibility analysis (Kalra, Rakheja, Marcotte, Dewangan
and Adewusi, 2015).

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Financial feasibility
Financial feasibility is helpful to evaluate the process of the business in term of project,
budget and other financial entities regarding decision their performance and suitability. It
involves three keys such as startup capital, startup capital requirements and potential return for
investment (Akbaba, 2006). As per the market research, it has been analyzed that the expected
sales for the organization would be 400000 AUD. This selling price of the services is different
but the range of the selling price per unit of the room is 100 AUD to 150 AUD.
The startup cost of the new venture is described in the appendix 1 according to the activities that
are needed to be conducted and the process of the business.
Appendix 2 explains the profit and loss of the business.
The soruce of finance includes the partners and suppliers of the services have also invested in the
hotel business. Loans are other source which is available for the entrepreneur to invest in new
business. It is essential for the organization to utilize the loan amount appropriately and give
away the loan as soon as possible.

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Conclusion
It has been concluded that entrepreneur should analyze the entire market before entering
into new market with specific features. It is the report which has been made on the new venture
idea in existing industry that is hotel industry and the new idea has been taken of opening theatre
in hotel for entertainment and playgroup facility within the hotel for learning new things for the
children who belongs other country. The competitive environment of the industry is able to
provide various opportunities to this innovative idea as tourist is seeking for new innovative idea
for wandering thus it is required to the organization to make efforts in the process and market
promotion.

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References
Akbaba, A., 2006, Measuring service quality in the hotel industry: A study in a business hotel in
Turkey, International Journal of Hospitality Management, 25(2), pp.170-192.
Bohm, J., 2015, Business Model Archetypes for Utilities-A Resource and Stakeholder
Perspective (Doctoral dissertation).
Cho, J., Kim, B., Choi, C. and Jeong, H., 2016, Study of Market Scale and Share Estimation
Methodology on Effective Feasibility Analysis of Government R&D Program Related to
Information Technology, In Platform Technology and Service (PlatCon), 2016 International
Conference on (pp. 1-3). IEEE.
Fraj, E., Matute, J. and Melero, I., 2015, Environmental strategies and organizational
competitiveness in the hotel industry: The role of learning and innovation as determinants of
environmental success, Tourism Management, 46, pp.30-42.
Hoque, K., 2013, Human resource management in the hotel industry: Strategy, innovation and
performance, Routledge.
Itami, H., & Nishino, K., 2010, Killing two birds with one stone: profit for now and learning for
the future, Long Range Planning, 43(2), 364-369.
Jo, H., Lee, H., Suh, Y., Kim, J. and Park, Y., 2015, A dynamic feasibility analysis of public
investment projects: An integrated approach using system dynamics and agent-based
modeling. International Journal of Project Management, 33(8), pp.1863-1876.

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Kalra, M., Rakheja, S., Marcotte, P., Dewangan, K.N. and Adewusi, S., 2015, Feasibility
analysis of low-cost flexible resistive sensors for measurements of driving point mechanical
impedance of the hand-arm system, International Journal of Industrial Ergonomics, 49, pp.44-
52.
Lager, T. 2010, Managing Process Innovation: From Idea Generation to Implementation, World
Scientific.
Lober, H. 2015, Different Phases of the Innovation Process: An Overview of Challenges and
Customer Integration. Anchor Academic Publishing.
Mackey, J. and Sisodia, R., 2014, Conscious capitalism, with a new preface by the authors:
Liberating the heroic spirit of business, Harvard Business Review Press.
Morecroft, J.D., 2015, Strategic modelling and business dynamics: a feedback systems approach.
John Wiley & Sons
Nicolau, J.L. and Santa-María, M.J., 2013, The effect of innovation on hotel market
value, International Journal of Hospitality Management, 32, pp.71-79.
Nieves, J. and Segarra-Ciprés, M., 2015, Management innovation in the hotel industry. Tourism
Management, 46, pp.51-58.
Orfila-Sintes, F. and Mattsson, J., 2009, Innovation behavior in the hotel industry. Omega, 37(2),
pp.380-394.
Zott, C. Amit, R. & Massa, L., 2011, The Business Model: Recent Developments and Future
Research, Journal of Management.

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Appendix 1
START-UP COSTS Cost ($)
EQUIPMENT/CAPITAL
COSTS
Cost ($)
Registrations Business purchase price 100000
Business name 4000 Franchise fees -
Licences 400 Start-up capital 388000
Permits 600 Plant & equipment
Domain names 430 Vehicles 3000
Trade marks/designs/patents 500 Computer equipment 50000
Vehicle registration 1500 Computer software 1500
Membership fees 1400 Phones 2000
Accountant fees 1000 Fax machine 2500
Solicitor fees 1500 Security system 4500
Rental lease cost (Rent
advance/deposit) 35000
Office equipment
Utility connections & bonds
(Electricity, gas, water) 5000
Furniture
4500
Phone connection 2000 Shop fitout 7800
Internet connection 2000
Computer software 5000
Training 15000
Wages 40000

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Stock/raw materials 40000
Insurance
Building & contents 1000000
Vehicle 2000
Public liability 5000
Professional indemnity 50000
Product liability 5000
Workers compensation 4600
Business assets 1870
Business revenue 5400
Printing 4100
Stationery & office supplies 4100
Marketing & advertising 10000
Total start-up costs 1247400
Total equipment/capital
costs
563800

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Appendix 2
Profit & Loss for [Business name] as at [Financial Year]
PROFIT & LOSS
Month
1$
Month
n$ Year 1$ Year 2$ Year 3$
Sales 74000 110000 600000 850000 1650000
less cost of goods sold 15000 22000 120000 170000 340000
More…
Gross profit/net sales $59000 $88000 $480000 $680000 $1616000
Expenses
Accountant fees 1200 1600 19200 20000 25000
Advertising &
marketing 2000 3000 36000 40000 50000
Bank fees & charges 1500 2500 30000 35000 40000
Bank interest 2500 2500 30000 35000 45000
Credit card fees 4000 5000 60000 80000 100000
Utilities (electricity,
gas, water) 1000 1500 18000 20000 25000
Telephone [phone] 20000 25000
Lease/loan payments 1500 1500 18000 20000 25000
Rent & rates 1000 1400 16800 18000 20000

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Motor vehicle
expenses 1000 1200 24000 30000 40000
Repairs &
maintenance 1000 1500 18000 20000 25000
Stationery & printing 1400 1400 16800 18000 20000
Insurance 1000 1500 18000 20000 25000
Superannuation 250 250 3000 5000 8000
Income tax 2000 2500 30000 35000 45000
Wages (including
PAYG) 1000 1500 18000 20000 25000
More… 1000 1800 21600 21600 21600
Total expenses $24350 $32150 $395400 $465600 $589600
NET PROFIT (Net
Income) $34650 $55850 $84600 $214400 $1026400