UPDATE: HUGE MILESTONE ACCOMPLISHED
Over the past six months, the team has been very busy moving the project forward, and we are happy to share the news that we have accomplished a huge milestone.
Reaching the milestone began when Innovasis Hotels CEO, Pawel Alva attended a conference in Dubai. Here he had the opportunity to speak to big players in the hotel industry, a range of different people from general industry investors, to people in upper management working for various hotel funds, and companies such as Atlas and Emaar Properties (the real estate company that built the Burj Khalifa in Dubai). He had the privilege of having a long chat with the founder and chairman of Emaar, Mohamed Alabbar, who absolutely loved Innovasis Hotels. Mohammed has been giving talks at conferences about the need for change in the hotel industry. He believes the industry needs to adjust and offer a new experience and meet the demands of millennial travelers, just like Innovasis is doing.
With Pawel having talked to these people at the conference one thing was made very clear. Everyone wanted to see detailed numbers. This meant that the average business plan budget was not enough. Everything from A-Z had to be presented in an easily digested manner. This proved to be a time-consuming and slightly expensive challenge for the team because every angle had to be looked at and calculated with the help of expert consultants. After six months and roughly $50,000 USD spent, we are happy to announce that we have finished collecting and compiling all the information. The detailed results show that the idea of Innovasis Hotels is highly profitable even when applying conservative estimates. The completion of this document is a major milestone and something that the whole team is proud to have achieved!
Profit&Loss Statement
The sheer knowledge that we have gained from this document has influenced decisions such as the choice of location, priorities, and the way we do business. It was really mind-blowing to find out how much of an impact our solutions have on profitability.
Before we had this document it wasn’t exactly clear which road to take or which starting point would be the most profitable for our hotel. Having this extremely detailed information at hand we were able to make precise calculations for the two hotel locations that we had in mind, Puerto Rico and Hawaii. What we managed to find out is that choosing one over the other would generate three times more profit after taxes. We took help from hotel consultants who were pushing our boundaries in terms of what needed to be included in the calculations, even insisting that we run everything through a stress analysis. Additionally, he reminded us to include things in the budget that are easy to overlook, such as replacing white towels, linen, and broken glass regularly.
One of the highly important goals of Innovasis Hotels is to be self-sustained and generate all the necessary electricity through our solar panels. We had to calculate the amount of electricity needed to power everything and how much this would cost per year. We researched the cost of electricity per year with the help of R&D Labs which we hired on a consulting basis.
We even looked at meteorological research data for our potential locations, finding out information about the amount of sunlight and rain these locations get on average.
When we compared the electricity cost between our two potential locations, we found out that for 3.5–7 GWh per year, the Puerto Rico location would cost us between 0.8–1.5M USD, while the Hawaiian location would cost roughly 1.7M USD. The differences in costs between the locations showed similar results across the board. By looking at all the calculated data in the document, we had enough clear information to help us make a final decision on where to build our first hotel. Hello, Puerto Rico!
As for the amount of land needed to house the solar panels, we requested a calculation based on 7.5 GWh electrical consumption per year and found that 9.5 Acres of land is required.
However, a significant amount of solar panels will be installed above the car park.
Another important goal for us is to pay great salaries. In order to calculate salaries correctly, we had to hire consultants that specialize in estimating salaries for the specific locations. We found out that we will be able to pay salaries that are higher than those paid by the biggest, most luxurious hotels. We even include health care and other great benefits for our employees. This will help make sure that we attract the best people to come work with us, making the guest experience even greater.
With all these costs calculated, one more amazing thing became clear. The numbers show that we will be able to reach an Internal Rate of Return (IRR) of 19%!
This is an incredible result considering the general hotel industry reaches between 8–12%. The data we compiled is generally glowing with positive results and there are so many more details that we could go into, but the fact of the matter is this; creating this document has really changed our perception of everything. We are so excited to share these results and our journey with the community. All the amazing experiences that we will offer guests of Innovasis Hotels will be nothing shy of truly astonishing. On the 16th of January, we will be sharing the next plan for the company along with information about our coin HCI and it's new distribution model that is highly rewarding our contributors.
We invite you to sign up for the webinar today and hope you will join us next week!
Sign up here: https://innovasishotels.clickmeeting.com/unique-opportunity/register
