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Tourism Business in Mauritius: Overview Report

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Updated: Jun 23rd, 2022

Goal Beach resort is designed as a world class five star hotel with the aim of redefining the hotel industry in Mauritius. Extensive market research reveals a market gap in the provision of hotel services for the aristocrats (football stars such as Didier Drogba, Wayne Rooney, and Ji Park Sung; top CEOs, executives and the world’s richest such as Steve Jobs, Larry Page, Jerry Yang Warren Buffet; actors like Angelina J, Will Smith and Megan Fox) in Northern Mauritius. In addition to these they are deprived of choice as most hotels are built with the same business models. Goal Beach Resort intends to capitalize on the 2010 FIFA World cup to be staged in South Africa later in the year, as the preferred resort for the nobles.

Facilities and services to be offered shall include 10 international status bungalows and villas, swimming pools, gyms, sauna, tennis courts, live music shows and entertainment. Meals will also be served daily with 24-hr security surveillance.

The proprietors are Dubai based investors (the Rene Db group) made up of seven United Arab Emirates nationals. Their long experience in business ideas identification and recruitment of personnel make them suitable to be directors of Goal Beach Resort. Abdul Saif, a retired executive of the group’s largest resort in Malaysia, has worked as the overall deputy director in the Datai, Malaysia (one of the best beach resorts in the world). He will serve as the director general owing to his previous experience. The wide investment base from Rene Db Group enables it to select an experienced management and other staff across the board to work in this new establishment.

Business objectives

Goal Beach Resort intends to capitalize on the 2010 FIFA World cup by providing hotel services to the high end class participants; this will also form its market afterwards. To achieve this, it will curve out a niche in the market as a Resort of choice in Mauritius and earn maximum returns. It also aims to provide consumers with an alternative of choice to make in picking a resort.

Vision and mission statement

The mission of the firm is to become the preferred resort in Mauritius for the high-end class of tourists, local delegations and individuals by offering superior unrivalled facilities, products and services. The firm will help set standards in the hotel industry and in turn, satisfy different customer tastes and preferences.

The hotel industry in Mauritius

Mauritius has become a large tourist destination owing to: its prime location, existence of a range of unique beaches and increased marketing by local agencies and authorities through online portals. In addition to these the use of tour operators as marketers has significantly strengthened the tourist industry. Previously, Mauritius used to be a French tourist destination. However, with marketing, tourists have been arriving from other destinations including England, Australia and South Africa. Other drivers of the growing popularity of this newly found holiday destination are, the friendly nature of the Mauritian people, the beautiful landscapes, the natural vegetation with over 700 species of native plants and the circumnavigation of the island by miles of coral reefs, with the beauty and elegance of nature at its purest form (MTPA tourism Office para 2).

Owing to this expansive tourist industry, Mauritius has experienced tremendous growth in the hotel industry. The existing hotels can depict the high demand for accommodations in the island. The industry has attracted both local and international investors. International investors can be seen by the presence of international hotel chains for example the Le Coco Beach Hotel of the Sun international Hotels. The hotel industry is structured to cater for different types of customers. The hotels range from simple bungalows to 6 star hotels. However market research in the Northern part of Mauritius revealed that customers are not offered with varieties to choose from, as most hotels have similar structures and offer the same services. Similarly, there is little or no focus on the top class of consumers. This gap has led to loss of income for the hotel industry and the Mauritian government where consumers have sourced for these services elsewhere, for example, the nearby South Africa.

With the upcoming FIFA World cup in mind, the consumers’ deprivation of choice and the existing market gap in provision of hotel services to the upper class, Goal Beach Resort will try to use this opportunity to grow. It will capitalize on these deficiencies and market problems to redefine the whole industry.

The core aspect to focus on in order to achieve success in this industry is the ability to establish operational advantages that are superior to the competitors. This will be attained through provision of world class services, marketing and innovation. Goal Beach Resort will take advantage of the investor friendly tax rules and environments in Mauritius.

There are highly favourable tax incentives with intentions of making foreigners to acquire property rights in Mauritius (According to MTPA tourism Office para 2). Some of the tax incentives include waivers of double taxation on foreigners. Similarly, Mauritius has experienced an annual growth rate of 5% over the last five years.

Market Analysis

Goal Beach Resort shall undertake a study on the market feasibility of the upper class oriented beach resort in Northern Mauritius. Market variables to be focused on in this research are the goods, services, facilities, consumers, competition, size of the market and its trends through primary and secondary research means.

Market size and trends

In view of the changing trends and market dynamics, the firm will undertake a study of these aspects with a bias on the 2010 FIFA World cup. It is expected that the number of tourists will multiply infinitely during the event to premier in Africa in June. Official reports from Mauritius tourism authorities, indicate that FIFA organs responsible for accommodation have been tasked with outsourcing 6,400 beds in Mauritius during the world cup period.

Required are high class accommodations owing to the high standards of life that football stars and tycoons live. This means that the 6,400 beds will be out of reach for ordinary customers. Accordingly MTPA tourism Office says that 20, 000 visitors are expected to source for accommodation in Mauritius. Goal Beach Resort expects to attract a considerable percentage of the total revenues expected from this arrangement. (MTPA Tourism para 3-5)

Goal Beach Resort also expects to curve out a niche from the world cup experience. In order to ascertain the demands and needs of the world cup community, primary research will be carried out through online surveys and interviews from potential and actual participants. Customers who will be accommodated during the sporting event will be indirect marketers and advertisers who will come through referrals and come-backs.

The ever busy tourism market, which is also expected to grow further, will provide an impetus of growth for Goal Beach Resort after successfully accommodating the world cup community.

Consumer market research

The impetus behind the idea of establishing Goal Beach Resort is satisfaction of the neglected consumer demands. The fact there is a high demand will guarantee success of the venture. However, it is important to redefine consumer demands for maximum results. This calls for market segmentation of the expected customer base, and a segment by segment analysis which needs to be carried out.

The first group here will be the aristocrats. This group is of great concern as its expected to form the future market for the resort. Its composed of ; world football stars: Wayne Rooney, Didier Drogba, Ji Park Sung; Top CEOs, executives and the world’s richest people: Steve Jobs, Larry Page, Jerry Yang, Warren Buffet; Actors: Angelina J, Will Smith and Megan Fox; Presidents, and high level diplomatic delegations. In order to fully understand the needs of this class, Beach Goal Resort will utilize the experiences and services of the Director General, Abdul Saif to develop the best suited goods, services and facilities. He will be in-charge of a panel which will evaluate their spending behaviors, patterns, inference their findings and make recommendations.

The second group of consumers will be the world cup fraternity. This is made up of football delegations composed of players, coaches and their technical benches, heads of state, and ultimately the spectators. Spectators will form the bulk of this group. This research will determine the consumption patterns and their decision making process through expert surveys in order to influence these patterns.

The goods, services and facilities Research

This resort is built to serve the needs of the nobles. It will be providing all facilities, goods and services provided expected of an international five star hotel. A research will be carried out to determine the changing attitudes, likes, tastes and preferences and emerging trends in the five-star hotel sector. The sector will need to come up with new innovative services and facilities which is necessary in satisfying the market. New innovations will ensure that the resort is unique as opposed to reproducing hotels models, similar to the present ones

Competitor analysis

In order to ensure that the resort is not driven out of business, a competitor analysis will be carried out prior to entry. The will involve a strength and weakness analysis of the hotel and that of its competitors (Forbes para 2-3)

Table 1.0

Name of Competitor Strengths Weakness
The Oberoi, Mauritius(Oberoi Hotels & Resorts para 5 ) – Competitive plan; possession of the largest international customer base,
-Wide network of international hotels,
-rank as the best hotel chain outside UK and USA; control of 25% of tour operators, and consequent near free advertising and market research through direct contact
– tarnished reputation from 2008 terrorist attacks on a sister hotel n India
-Focus on ordinary people, its been criticized or not being up to class,
Le Prince Maurice (Constance Prince Maurice para 3) -the presence of a sister hotel along the coast line and its direct access to coast line facilitates easy advertising.;
-online booking portals, web advertising
-payable internal facilities( for example gyms), should be include in daily fee
– its Indian orientation limits customers
Self analysis – employment of experienced staff members with experience in best world hotels, Association with best resort worldwide; Focus on new model of a resort; targeting satisfaction of un-catered for market segment; provision of non-payable facilities, liaison with private and government agencies. -new entrant into market with no previous record hence lack competitive advantage

Financial Feasibility

Start up Costs

The initial costs required to set up Goal Beach Resort are listed in table 2.0 below:

Table 2.0

Start up costs 000’ Amount (SR)
Acquisition of Land ( 400 sq m) 9,000
Equipment and furniture (gym, kitchen, music, house ware) 14,000
Business Registration and License 82
Catering Compliance and Inspection permits 80
Raw materials for 1 week 66
Staff training (orientation with new environment) 104
Establishment of Tennis court 600
Construction costs 9,548
Insurance 2,7000
Print Advertising and outsourcing of Tour operators 600
Web design and domain acquisition and maintenance 700
Salaries and allowances for 1month 1300
TOTALS 39,080

The total funds required are SR 39, 080, 000. The firm will be looking for loan that it will use to start the business. The loan will be repayable within 5 years at 8% p.a. But later on it will be converted into equity.

Operating Expenses

These are grouped into fixed costs that are independent of production and business status; variable costs dependent on scale of production. A detailed analysis is provided in the table 2.1 below:

Table 2.1

Definition of cost 000’ Amount (SR)
FIXED COSTS
Labor 1100
Loan repayment and interest charges 580
Permits and Registration renewal fees 9
Web maintenance and advertising 5
Depreciation, 4% 400
Insurance premiums 800
TOTALS 2894
VARIABLE COSTS
Raw materials for catering 70
Power 120
Tour operator charges 80
Rental of special equipments 200
Rental of private jets and motor boats 460
FIFA World cup advertising costs 370
TOTALS 1200

Firm’s projected cash flow analysis

In view of the 2010 FIFA world cup, and unsatisfied market demand the firm projects a positive favorable cash flow during the event. This world cup is expected lay a good foundation for future operations. The firm has projected a positive cash flow. A positive flow of profit is expected as a result of mass participation in this event.

However, earnings are expected to fluctuate in the period after the world cup but improve after the world cup fever is due and over. Online marketing coupled with on-the-ground ads in world cup venues is expected to boost sales from the first day on. Most of the internationally acceptable forms of money remittance will be utilized (FAO Corporate Document Repository n.d.)

Table 2.2 is a Goal Beach Resort cash flow

Details/period 1stMonth 2ndMonth 3rdMonth 4thMonth 5thMonth
cash received
Cash from operation
Cash sales 3,894,800 2,100,000 2,587,400 2,800,000 3,000,000
Cash from receivables 360,000 180,000 150,000 250,000 234,000
Total from cash operations 4,254,800 2,280,000 2,737,400 3,050,000 3,234,000
Other cash received
Sales tax& VAT received 1,106,248 592,800 711,724 793,000 840,840
Current borrowings 80,000 0 0 0 0
Other liabilities 0 0 0 0 0
New long-term liabilities 0 0 0 0 0
Sale of other current asset 0 0 0 0 0
Sales of long term assets 0 0 0 0 0
Investment received 0 0 0 0 0
Total cash received 3,068,552 1,687,200 2,025,676 2,257,000 2,393,160
Expenditures
Operation expense
Cash spending 234,000 185,000 174,000 184,000 200,000
Payment on bill 125,000 78,000 68,000 99,000 122,000
Total on operation 359,000 220,000 242,000 283,000 322,000
Other cash spending
Sales tax & VAT paid 0 0 0 0 0
Principal paid on current borrowing 500,000 500,000 500,000 500,000 500,000
Additional liabilities on principal payment 0 0 0 0 0
Principal payment –long term liabilities 0 0 0 0 0
Purchases on other 0 0 0 0 0
current assets
Purchase of other long term assets 0 0 0 0 0
Dividends 0 0 0 0 0
Total cash spent 1,218,000 983,000 984,000 1,066,000 1,144,000
Net cash flow 1,850,552 704,200 1,041,676 1,191,000 1,249,160
Details/period 6th Month 7th Month 8th Month 9th Month 10th Month
cash received
Cash from operation
Cash sales 3,800,800 2,000,000 2,687,400 2,920,000 3,400,000
Cash from receivables 300,000 180,000 150,000 250,000 234,000
Total from cash operations 4,866,200 2,180,000 2,837,400 3,175,000 3,634,000
Other cash received
Sales tax& VAT received 1,006,248 592,800 711,724 793,000 840,840
Current borrowings 80,000 0 0 0 0
Other liabilities 0 0 0 0 0
New long-term liabilities 0 0 0 0 0
Sale of other current asset 0 0 0 0 0
Sales of long term assets 0 0 0 0 0
Investment received 0 0 0 0 0
Total cash received 3,068,552 1,687,200 2,025,676 2,257,000 2,393,160
Expenditures
Operation expense
Cash spending 234,000 185,000 174,000 184,000 200,000
Payment on bill 125,000 78,000 68,000 99,000 122,000
Total on operation 359,000 220,000 242,000 283,000 322,000
Other cash spending
Sales tax & VAT paid 0 0 0 0 0
Principal paid on current borrowing 500,000 500,000 500,000 500,000 500,000
Additional liabilities on principal payment 0 0 0 0 0
Principal payment –long term liabilities 0 0 0 0 0
Purchases on other 0 0 0 0 0
current assets
Purchase of other long term assets 0 0 0 0 0
Dividends 0 0 0 0 0
Total cash spent 1,218,000 983,000 984,000 1,066,000 1,144,000
Net cash flow 1,750,552 704,200 1,041,676 1,191,000 1,249,160
Details/period 11th Month 12th Month
cash received
Cash from operation
Cash sales 4,200,000 4,500,000
Cash from receivables 360,000 180,000
Total from cash operations 4,560,000 4,680,000
Other cash received
Sales tax& VAT received 1,106,248 592,800
Current borrowings 80,000 0
Other liabilities 0 0
New long-term liabilities 0 0
Sale of other current asset 0 0
Sales of long term assets 0 0
Investment received 0 0
Total cash received 3,068,552 1,687,200
Expenditures
Operation expense
Cash spending 234,000 185,000
Payment on bill 125,000 78,000
Total on operation 359,000 220,000
Other cash spending
Sales tax & VAT paid 0 0
Principal paid on current borrowing 500,000 500,000
Additional liabilities on principal payment 0 0
Principal payment –long term liabilities 0 0
Purchases on other 0 0
current assets
Purchase of other long term assets 0 0
Dividends 0 0
Total cash spent 1,218,000 983,000
Net cash flow 2,056,752 2,304,200

Goal Beach Resort Pro forma Income statement

Table 2.3

Details/period 1stMonth Amount in SR 2ndMonth Amount in SR 3rd Month Amount in SR 4th month Amount in SR 5thmonth Amount in SR
Sales 3,400,000 2,100,000 1,800,000 2,400,000 2,500,000
Direct sales cost 698,590 198,540 85,000 236,595 256,458
Other cost of sales 458,254 42,000 21,000 85,000 145,236
Sales total cost 1,156,844 240,540 106,000 321,595 401,694
Gross margin 2,243,156 1,859,460 1,694,000 2,078,405 2,098,306
Gross margin in % 87.98% 59.55% 74.11% 76.60% 73.93%
Expenses
Cost of labor 1,100 1,100 1,100 1,100 1,100
cost of promotion 348,954 400,000 102,548 398,654 387,561
Cost of depreciation 400,000 400,000 400,000 400,000 400,000
Insurance 800,000 800,000 800,000 800,000 800,000
Total operating expense 1,550,054 1,601,100 1,303,648 1,599,754 1,588,661
Net earnings before interest & tax 693,102 258,360 390,352 478,651 509,645
Cost of interest expense 25,000 25,000 25,000 25,000 25,000
Cost of tax 208,000 126,540 168,250 189,000 190,000
earnings after interest and tax 460,102 106,820 197,102 264,651 294,645
Details/period 6thMonth Amount in SR 7thMonth Amount in SR 8thMonth Amount in SR 9thmonth Amount in SR 10thmonth Amount in SR
Sales 3,422,000 2,114,000 1,900,000 2,600,000 2,800,000
Direct sales cost 670,590 190,540 75,000 266,595 286,458
Other cost of sales 458,254 42,000 21,000 85,000 145,236
Sales total cost 1,156,844 240,540 106,000 321,595 401,694
Gross margin 2,243,156 1,859,460 1,694,000 2,078,405 2,098,306
Gross margin in % 87.98% 59.55% 74.11% 76.60% 73.93%
Expenses
Cost of labor 1,100 1,100 1,100 1,100 1,100
cost of promotion 348,954 400,000 102,548 398,654 387,561
Cost of depreciation 400,000 400,000 400,000 400,000 400,000
Insurance 800,000 800,000 800,000 800,000 800,000
Total operating expense 1,550,054 1,601,100 1,303,648 1,599,754 1,588,661
Net earnings before interest & tax 703,102 268,360 430,352 578,651 609,645
Cost of interest expense 25,000 25,000 25,000 25,000 25,000
Cost of tax 208,000 126,540 168,250 189,000 190,000
earnings after interest and tax 460,102 106,820 197,102 264,651 294,645
Details/period 11thMonth Amount in SR 12thMonth Amount in SR
Sales 3,500,000 3,730,000
Direct sales cost 698,590 198,540
Other cost of sales 458,254 42,000
Sales total cost 1,156,844 240,540
Gross margin 2,243,156 1,859,460
Gross margin in % 87.98% 59.55%
Expenses
Cost of labor 1,100 1,100
cost of promotion 348,954 400,000
Cost of depreciation 400,000 400,000
Insurance 800,000 800,000
Total operating expense 1,550,054 1,601,100
Net earnings before interest & tax 743,102 798,360
Cost of interest expense 25,000 25,000
Cost of tax 208,000 126,540
earnings after interest and tax 460,102 106,820

Table 2.4: Goal Beach Resort Pro- forma balance sheet analysis for year 1 SR

Current assets
Cash 28,000,000
Accounts receivables 360,000
Inventory 900,000
Other current assets 6,548,950
Total 35,808,950
Fixed assets
Long term assets (machinery) 14,000,000
Accumulated depreciation 400,000
Total fixed assets 13,600,000
Total assets 49,408,950
Capital and liabilities
Creditors 0
Current borrowing 0
Other current liabilities 25,000
Total current liabilities 25,000
Long term liabilities 12,000,000
Total liabilities 12,050,000
Paid in capital 28,000,000
Reserves 950,000

Loan repayment

As an upstart, partners will borrow a loan of SR 28 M which will be later converted into equity. The loan will attract an 8% p.a., simple interest. The business will operate as it repays the loan since from the forecasts business will continue improving year on. The earnings will be used to come up with more innovations and fund expansion.

Risk analysis

The underlying assumption behind all forecasts is that the 2010 FIFA world cup has the capacity to create supernormal changes in demand. Additionally, the proximity of Mauritius from the host nation South Africa , in addition to South Africa’s inability to accommodate all participants is another potential benefit for this venture. The aim is to capitalize on this demand to achieve our competitive advantage. Consequently, the risk of failure on start up is eliminated due to this certain spurt in demand. Major competitors are not readjusting any of their business strategies. This gives the firm a grace period to establish, before competitors re-brand. These will help to eliminate the barriers to entry. In addition, the government rules are investor friendly with no looming political or economic uncertainties. The business will likely rebound after the world cup as it heads to December. During the months from November to December business picks up as there is a lot of holidaying that takes place.

Works Cited

Constance Prince Maurice. Latest Special Offers. 2007. Web.

FAO Corporate Document Repository. Conducting a feasibility study, n.d. Web.

Forbes. Home Page for the World’s Business Leaders. 2006. Web.

MTPA Tourism Office. Discover Mauritius. 2010. Web.

Oberoi Hotels & Resorts. The Oberoi Mauritius overview. 2009. Web.

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