FEASIBILITY STUDY OF PUTTING UP

LOU’s PARADISE BEACH RESORT IN

DALAHICAN, ROXAS, ORIENTAL MINDORO

MAGBANUA, LOUVIMNAZCEL R.

BSA ( 39879)
INTRODUCTION

This feasibility study on establishing a beach resort in Dalahican, Roxas, Oriental Mindoro aims

to enlighten the people of the development of this municipality. This development will eventually lead the

beach resort in Dalahican to become world class because of the rich natural resources that remains virgin

and undiscovered.

One of the Roxas Town’s biggest tourism achievement is the opening of the Strong Republic

Nautical Highway. The most ambitious government plan to develop tourism across the province has been

commercialism of the beach resort and hotel industry. Tourism can generate employment, attract foreign

investment, stimulate infrastructures and services, and help maintain biodiversity. Job opportunities are a

vital part of tourism development and one of the most interesting strategy is the establishment of beach

resort to meet the demands of local and foreign tourist and transient borders.

For years, Roxas Town has been a jumping port to Boracay. With the opening of Strong Republic

Nautical Highway, people will therefore become oriented of the place and be interested to afford to visit

the islands in Visayas and Mindanao. Tourist find in very convenient and less expensive to stay in this

town before leaving for the so called “paradise islands”. This site offers enough suitable accommodation

and plenty of possibilities for interesting and affordable pre and post vacation tours and excursions.
LOU’s PARADISE BEACH RESORT

Our establishment is providing the irresistible charm and when you entered the facility, the staffs

will welcome you with a smile and serve you with the best of their ability. Every special occasion such as

Debuts, Birthdays, Christening, get together, reunion and even seminars or conferences can be done in the

resort. We are offering some of the water activities like; jet ski, water volleyball and banana boat. For

customers who want to sing along we have a private videoke room good for 10 persons and if you’re

confident enough with your voice then we also offers a public videoke. If your fond of playing Billiards,

our establishment is open for you because we have 4 billiards.

For accommodations, we have 3 ordinary rooms good for 1-2 persons and 3 ordinary family

rooms good for 5 persons, 3 air-conditioned rooms good for 1-2 persons and 3 air-conditioned family

rooms good

for 5 persons and we do have a Deluxe rooms good for 10 persons. The air-conditioned and ordinary

room’s amenities are shampoo, toothbrush, toothpaste, w/ cable TV, WIFI access. For Deluxe suites, it

has 2 Queen size bed, a cable TV, WIFI access cold shower w/ tub (soap, shampoo, toothpaste,

toothbrush, bath towel, and slippers).

The facilities of Lou’s Paradise are the Canteen, Function Hall that can accommodate up to 200

pax, meter swimming pool and kiddies’ pool, spacious venue poolside parties, and Jacuzzi.
Most important is safety and the security of everyone. The Lou’s Paradise is assuring that every guest is

away from danger once they have entered the resort. We have 2 security Guards and 3 lifeguards to

upkeep the safety of everyone.

The location of the Lou’s Paradise is near the Dangay Port, Roxas, Oriental Mindoro. There are

lots of souvenir shops and restaurant that you can go to and it’s just a 5-10 mins. walking distance. If you

are not familiar with the place, we have a shuttle or resort service to escort you to the resort.

TARGET MARKET

Roxas had a median age of 30 years, the same as in 2011. This means that half of the population

is below 30 years old. Accordingly, it is evaluated that the major consumers of our Beach resort embraces

ages 18-50. Those persons aging 11-30 are presumed to patronize beach resort for their occasion and

bonding. Consequently, our target market encompasses the travelers, students, office workers,

professionals, establishments’ workers, and the like.

Our target market comprises the professionals, students office workers and establishments’ workers that

are from Roxas, Mansalay, Bulalacao and Bongabong.

COMPETITIVE POSITION

In relation with the competitive position of the business, we have a lot of competitors in the

location. Kamayan, La Primera Grande, Park’ n suns, Romulo’s, Crisfel and Rafaela’s beach resort. Even

though we have several competition in the market. The Lou’s Paradise will generate more customers

because we don’t just offer pools and room services. We also have water activities and beautiful

landscape that can entice customers to check in with us.

ACTIVITIES:

 Banana Boat:

Cost: 69 370 Price: 1 500 per half hour

 Function Room:

Price: 5 000 a day (Good for 200 Pax)

 Videoke Room (Private):

Price: 500 per hour

 Billiards:

Cost: 50 000 Price: 20 per game

  Jet Ski:

Cost: 910 000 Price: 2 000 per half hour

 Water Volleyball:

Cost: 7 000 Price: 100 per 5 hours

ROOM RATES

 Ordinary Single

Per day: 500 Per night: 800

 Ordinary Family

Per day: 1 200 Per night: 1 500

 Air- conditioned Single

Per day: 1 000 Per night: 1 500

 Air- conditioned Family

Per day: 2 000 Per night: 2 500

 Deluxe Suites

Per day: 3 000 Per night: 3 500

 ORGANIZATIONAL FLOWCHART

Manager

Financial Dept. Administrative Dept. Technical Dept.

Accountant/
Auditor Nurse Maintenance

Receptionist Concierge Security Guard

Sales Lady Housekeeping Life Guard

Utitlity

PROJECTED INCOME STATEMENT

Sales
Cost of Sales
Gross profit
Less:
COMPENSATION PLAN

POSITION NO. OF NO. OF DAILY PER MONTH PER YEAR

EMPLOYEE DAYS RATES
Manager 1 6 25 000 300 000
Cashier 2 6 360 17 280 207 360
Nurse 1 6 280 6 720 80 640
Receptionist 1 6 280 6 720 80 640
Housekeeping 3 6 280 20 160 241 920
Utility 2 6 280 13 440 161 280
Maintenance 1 6 300 7 200 86 400
Security Guard 2 6 320 15 360 184 320
Life Guard 3 6 290 20 880 250 560

The following assumptions are established the conduct of study regarding the project:

 First year of operation is 2020

 Projected shall cover years from 2020-2024
 Sale shall increase by 12.19 % for 2021, 18.88% in 2022, 22.33% in 2023 and 38.09% in 2014
compared to the 2020 sales due to increase in population and effective management.
 COST ESTIMATED LIFE ANNUAL DEPRECIATION

BUILDING 16 000 000 20 800 000

AUTOMOBILE 700 000 10 70 000
CASH REGISTER 60 000 5 12 000
COMPUTER 34 000 5 6 800
AIR CONDITION 85 000 5 17 000
TELEVISION 192 000 5 38 400
CCTV 30 000 5 6 000
JETSKI 910 000 5 182 000
BANANA BOAT 70 000 5 14 000
TELEPHONE 79 800 5 15 960
ELECTRIC FAN 15 000 5 3 000
STAND AIRCON 186 000 5 37 200
VIDEOKE 54 000 5 10 800
GENERATOR 39 000 10 3 900
TRANSFORMER 24 000 10 2 400
LAMP SHADES 300 000 5 60 000
DECORATIVE LAMP 20 000 5 4 000

COST ESTIMATED USEFUL ANNUAL DEPRECIATION

LIFE
FURNITURES 25 000 5 5 000
RECEPTION DESK 15 000 5 3 000
SETTING DESK 10 000 5 2 000
BOOKSHELVES 15 000 5 3 000
FLOWER DISPLAY RACK 5 500 5 1 100
WALL DÉCOR PAINTING 100 000 5 20 000
GLASS DIVIDER RACK 54 000 5 10 800
SOFA 50 000 5 10 000
GLASS CABINET 15 800 5 3 160
CABINET FILING 13 000 5 2 600
TABLES 32 000 5 6 400
CHAIRS 105 000 5 21 000
 LOU’s PARADISE BEACH RESORT

PROJECTED STATEMENT OF FINANCIAL POSITION

AS OF DECEMBER 31, 2020-2024

ASSETS 2020 2021 2022 2023

Cash on hand 4,332,869.00 4,636,170.33 4,960,702.26 5,307,951.41
Supplies 4,984.00 5,332.88 5,706.18 6,105.61
total current Assets 4,337,853.00 4,641,503.21 4,966,408.44 5,314,057.02

Land 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00

Building 16,000,000.00 16,000,000.00 16,000,000.00 16,000,000.00
Acc. Dep'n- Bldg. 800,000.00 1,600,000.00 2,400,000.00 3,200,000.00
Equipment 2,098,800.00 2,098,800.00 2,098,800.00 2,098,800.00
Acc. Dep'n- Equipt. 413,460.00 826,920.00 1,240,380.00 1,653,840.00
Furniture and Fixtures 450,300.00 450,300.00 450,300.00 450,300.00
Acc. Dep'n- F&F 88,060.00 176,120.00 264,180.00 352,240.00
Automobile 700,000.00 700,000.00 700,000.00 700,000.00
Acc. Dep'n- automobile 70,000.00 140,000.00 210,000.00 280,000.00
total Non-current Assets 22,877,580.00 21,506,060.00 20,134,540.00 18,763,020.00
TOTAL ASSETS 27,215,433.00 26,147,563.21 25,100,948.44 24,077,077.02

LIABILITIES
Long- term Debts 2,286,096.37 2196395.31 2,108,479.67 2,022,474.47
Equity 24929336.63 23,951,167.90 22,992,468.77 22,054,602.55

TOTAL LIABILITIES AND EQUITY 27,215,433.00 26,147,563.21 25,100,948.44 24,077,077.02

COST OF INVESTMENT
 LAND 5 000 000
BUILDING 16 000 000
AUTOMOBILE 700 000
FURNITURE AND FICTURES 450 800
EQUIPMENT 2 098 800
24 249 600

ANNUAL CASHFLOW

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

INCOME 6,339,713.54 7,871,538.64 8,106,763.46 8,384,132.60 10,056,374.45
BEFORE TAX
TAX 0.30 0.30 0.30 0.30 0.30
INCOME AFTER TA 4,437,799.48 5,510,077.05 5,674,734.42 5,868,892.82 7,039,462.12
DEPRECIATION 1,371,520.00 1,371,520.00 1,371,520.00 1,371,520.00 1,371,520.00
ANNUAL CF 5,809,319.48 6,881,597.05 7,046,254.42 7,240,412.82 8,410,982.12

Payback Period
Year Annual Cash flow
1 5809319.48 5809319.48
2 6881597.05 12690916.53
3 7046254.42 19737170.95
4 7240412.82 26977583.77
5 8410982.12 35388565.89

Payback period = 3.6232 years

Payback reciprocal= 1/ 3.6232

= .2760
WACC= 10.69%

NPV
PV OF ANNUAL CASHFLOW
YEAR 1 5,248,278.51
YEAR 2 5,616,586.66
YEAR 3 5,195,569.49
YEAR 4 4,823,139.01
YEAR 5 5,061,797.49 25,945,371.16
COST OF INVESTMENT 24,249,600.00
NPV 1,695,771.16

IRR
X= 3.6232
@ 12%= 3.6048
@ 11%= 3.6959
X= 11% + [(3.6959-3.6232)/(3.6959-3.6048)]*1%
= 11.80%

Profitabilty Index
= PV of Cash inflow
Cost of investment
= 25945371.16
24249600
=1.0699

Accounting Rate of return

 NET INCOME COST OF INVESTMENT ARR
YEAR 1 4,437,799.48 24,249,600.00 18%
YEAR 2 5,510,077.05 24,249,600.00 23%
YEAR 3 5,674,734.62 24,249,600.00 23%
YEAR 4 5,868,892.82 24,249,600.00 24%
YEAR 5 7,039,462.12 24,249,600.00 29%

Bail out Period

= 3 + [(24249600-19737170.95)/ 7240412.82]

= 3 + .623226144

= 3.623228144 years

Discounted Payback

PV OF ANNUAL CASH FLOW

Year 1 5,248,278.07 5,248,278.07
Year 2 5,616,586.66 10,864,864.73
Year 3 5,195,569.49 16,060,434.23
Year 4 4,823,139.01 20,883,573.23
Year 5 5,061,797.56 25,945,370.80

= 4 + [(24249600-20883573.23)/5061797.56]

= 4 + .664986446

= 4.664986446 years
CONCLUSION

Based on the information presented in this feasibility study, the findings show that this initiative

will be highly beneficial to the organization and has high probability of success.

 Breakeven point occurs in the 3.8251 year of operation

 The IRR > WACC, the NPV is Positive and we have Profitability that is greater than 1

 As far as financial aspect of the study is concerned, the proposed business project is very

much viable. The Lou’s Paradise Beach Resort will be profitable, solvent, and liquid in

the years to come.

 As for the marketability of the business, advertisement should be put in order for the

Lou’s Paradise Beach Resort to be known to the public and to attract more people who

wished to have an enjoyable time, in order for the business to meet its target income.