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usiness plan of

Homestay angladesh

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report on “Home Tourism Business Plan’’

Submi tted To

Junnatun Naym

Lecturer

Department of Finance

Faculty of Business Studies

University of Dhaka

Submi tted By

Group No. 03

Section- B

18th

Batch


Faculty of Business Studies

University of Dhaka

Date of Submission: 9th

November, 2014.

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Group Profile

Group no.

Serial no. Name ID

1 Sumsul Arafine 18-006

2 Faisal Ahmed 18-012

3 Faria Lisan 18-030

4 Md. Arifur Rahman 18-148

5 Fatema Tabassum 18-172

6 Md. Johurul Islam 18-251

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Letter of TransmittalJunnatun Naym

Lecturer


University of Dhaka.

Subject: Submission of report.

Dear Maa’m,

It gives us immense pleasure to submit the report on “Home Tourism Business Plan” as a

requirement of the regular BBA course of the Department of Finance, University of Dhaka.

Apart from the academic knowledge gained from this course the preparation of the report has

given us the opportunity to acquaint ourselves with the true experience of how to undertake a

business, how to plan for this, and how to execute and make profitable this business consideringsocial welfare. We believe that the experience we have acquired from this study will be an

invaluable asset in our near future professional lives.

It expresses our gratitude to you for providing us the opportunity to check the application of

theoretical knowledge in practical professional field. In spite of various shortcomings, we have

been devoted to preparing this report a sound one. We hope you will appreciate our endeavor and

find the report up to your expectation.

We will be pleased to answer any sort of query you may have regarding this report.

Sincerely yours,

Name ID Signature

Sumsul Arafine 18-006

Faisal Ahmed 18-012

Faria Lisan 18-030

Md. Arifur Rahman 18-148

Fatema Tabassum 18-172

Md. Johurul Islam 18-251

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Acknowledgement

First of all we would like to express our gratitude from heart to the Beneficent, the Merciful, &

Almighty Allah for giving us the strength and patience to prepare this report within thescheduled time. Then we are especially grateful to our honorable course teacher for giving his

valuable suggestions and precious contributions preparing this report. Different aspects

regarding this plan that she taught us in our course have worked as a beacon while preparing

this report.

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Executive summary

The homestay concept is focused on lifestyle and experiential tourism. The uniqueness of the

traditional songs, dances, cuisines and sports as well as rural economic activities are the main

attractions and offers unique experience to the tourists compared to the experience in the

city.Each homestay has something unique to offer visitors and organizes its own special

activities for their guests such as jungle trekking, fishing, kite flying, rubber tapping, fruit

picking, handicraft-making, and more.

Initially we will start homestay in five locations. Those are Cox’s Bazar, Rangamati, Bandarban,

Sundarbans, Bogra.

Internet and mobile phone technology will mainly be used for our business purpose. Tourists will

be informed about us through our website or advertisement. Then they will have the options to

book electronically or through our local booking points.

Homestay service requires continuous development and market analysis. We will expand our

business by exploring more tourist spots, training hosts and guides and upgrading the

environment of houses. The prime concern of our agency is to bring the tourists the real travel

experiences, to offer something genuine, a real taste of life around the world.

Our target market consists of tourist both local and coming from abroad. We have targeted the

local customer of higher or higher middle income peoples aged above 30 and who are interested

in making tour for leisure, passing time with family, entertainment and refreshment purpose. On

the other hand we have also targeted foreign tourists who usually set their tourist destination and

interested in South or East Asia and conduct tour for leisure, cultural, amusement and experience

purpose.

The potential competition faced by our company comes from mainly two sources. The first one

is the local tour operating agencies in our country. Dhaka Holidays, Royal Holidays etc. are

some example of tour operating agencies in Bangladesh. On the other hand home stay tourism

service is available in our neighboring country India, Nepal, Srilanka, Malaysia, China etc.

Various specialized companies are operating in those countries and capturing the biggest portion

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of customers interested in home stay tourism. So they are our most prominent competitors as

they are providing the customers with great deal of efficiency and quality. But still we can

compete vigorously since Tourism in Bangladesh is still very cheap in comparison to other

tourists’ attraction in South or East Asian countries. Our 4 nights and 5 days homestay tourism

package will cost only $225 to $300 but its features will amaze the customers.

Besides this, our homestay products are based on customer priority and convenience. Other

tourist attraction of homestay in Malaysia, Indonesia, Srilanka etc. are already crowded with

tourists in pick seasons. In comparison with those spots our tourists’ spots are less crowded and

our guest can customize their tour in a great extent and enjoy their leisure period with great

excitement and pleasure.

To start the project, we initially need about TK.3800000. Initially we are starting as all equity

firm. However, when we go on expansion, we will use debt about 30% of the capital. Our cost

of capital is 15%. Our firm beta is 1.5 because our business is very much cyclical.

The promoters of the home tourism business are A, B, C, X and Y among whom A,B, C are the

fresh graduates of B.B.A from department of Finance, University of Dhaka and X & Y have

recentlly resingned from their job and provided the capital needed to start the business.

Management team consists of one general manager who is A, one administration manager who is

B And one marketing manager who is X, one financial manager who is C, one operational

manager who is Y and with others staffs needed to run the business. There is also an attorney

general.

Homestay is aimed to increase the participant of the rural community in the tourism industry and

a way to reduce the rural-urban migration. Homestay social responsibility involves sharing the

benefits of the tourism industry with the rural community and encourages their participation in

the tourism sector, boosting household income and improves living standards of the rural

community, which contribute to the reduction of poverty; and developing rural tourismentrepreneurs and provide job opportunities.

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Table of contents

Business introduction …………………………………………… 11

Management aspect ………………………………………..…… 16

Technical aspect ………………………………………………... 20

Marketing plan …………………………………………………. 30

Financial aspect ……………………………………………….. 38

Social aspect …………………………………………………..54

References ……………………………………………………. 57

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Origin of the reportOne of the essential aspects of modern business studies is exposure to the practical experience.

And the purpose of business studies is to make the students wind up their imagination and to be

innovative in this field. As a part of our course F-306, “Entrepreneurship and business project

development” we prepared a report on the topic “Homestay Tourism: Business Plan”. Thisreport has been prepared as the course requirement of the BBA program. We, hope that this

report will provide a clear view on how a business should be prepared.

Objectives of the report

The main objective of the report is how to work on and carry out a new business. Other

objectives are:

Creatively analyze the business environment, opportunity recognition, and the business

idea-generation process;

Know how to acquire necessary resources and organizational matters of new venture

creation process;

Write a business plan that creates and starts a new venture.

Recognize the innate entrepreneurial potential within themselves;

Understand the many ways in which entrepreneurship can manifests itself in different

walks of life;

Are willing to have big dreams and take responsibility for pursuing those dreams;

Appreciate the role than entrepreneurial behavior can play in enhancing their lives and

the lives of others;

Become better creative problem solvers;

Develop a strong knowledge base and set of tools that enables them to act on creative and

innovative ideas; Recognize the critical importance of values and ethics when engaged in entrepreneurial

activities.

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Methodology of the report

From our educational background we have learnt different methodology to collect data from

different sources and analyse them. With the objective to make our report sound one, we havethe opportunity to implicate our educational knowledge in practical field. We have collected data

from many sources.

Discussing the topic with group members and dividing part.

Browsing the internet.

Limitations of the reportEvery study has some limitations. We faced some usual constraints during the course of our

preparation for the report. The major limitations are as follows:

Limited experience and expertise.

Lack of vast knowledge in the respective area.

Lack of primary data.

Lack of time.

Scope of the Study

We feel fortunate to have the opportunity on work on this report. We have worked on the

information given by the course instructor. Because of relevant data and information, the scope

of study this specific area was very broad.

The report covers the following areas.• Overview of tourism industry in Bangladesh.

• Regulatory framework of start-up business.

• Abundance of natural beauty and colorful life of Bangladesh.

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Business Introduction

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Introduction

Bangladesh is a country of natural beauty. She is blessed with endowment of almighty. It hasvariety of natural and cultural destinations suitable for tourist attractions. Tourism is an emergingsector for Bangladesh and it is one of the most growing industries all around the world. But lackof accommodation, security, transportation is some of the major problem in tourism sector inBangladesh. To solve these problems and to attract tourist from home and abroad, we are planning to start “Home Stay Tourism” business in Bangladesh. Tourists will have theopportunity to experience the lifestyle of local people along with visiting the area. The businesswill attract more tourists from home and abroad and it will also involve rural and tribal who willalso be benefitted by this business.

What is Homestay?

The homestay concept is focused on lifestyle and experiential tourism. People living in some

areas away from city surrounded by natural beauty have converted their farm houses, heritage

houses or hill cottages with a view to accommodate a couple of guests. These guests can live in a

homely atmosphere and get a chance to mingle with another local family who are mainly the

host. At some places even more than one family are accommodated at one place.

Besides offering local delicacies in their meals, some Home Stays also offer the guests to learn

some local cuisines. Local visitors and tourist will be able to learn more about close-knit family

relationship enjoy sumptuous home-cooked food and discover the simple lifestyle of people

living in a particular area. It offers tourist a chance to experience the daily life outside the

bustling capital cities and puts the visitor closer to nature, our cultures. This will also increase the

participation of the rural community in the tourism industry and a way to reduce the rural-urban

migration.


traditional songs, dances, cuisines and sports as well as rural economic activities are the mainattractions and offers unique experience to the tourists compared to the experience in the city.

Industry background

Bangladesh is bestowed with beautiful coasts and beaches, archeological sites, historical and

religious places, hills and islands, forests and jungles and attractive countryside with

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innumerable water bodies and green fields of agriculture. These rich natural and cultural

attractions are valuable ingredients for tourism development in Bangladesh. Every year, a large

number of tourists visit these attractive places, which has a significant contribution in the

national economy. That is a better way of generating sustainable GDP for Bangladesh. Real GDP

growth for Travel & Tourism economy is expected to be 5.78% in current situation and to

average 8.64% per annum over the coming 3-5 years.

Since the 1990s tourism has been a small but rapidly growing sector of the national economy.

Nevertheless, Bangladesh is still one of the countries in the South Asian region with the least

arrivals and the lowest revenue earned from the tourism industry. Sustainable tourism initiatives

exist and demand is increasing, but sustainable tourism management is not widespread in the

sector.

Homestay is a new accommodation arrangement in tourism industry. It is an iconic rural tourism

product highlighting Bangladeshi cultural and traditional ways of life. In Bangladesh this tourism

service is not yet prospered. It is almost a new business idea to be flourished and get popularityin our context. Homestay is getting popularity in some neighbor country of us like Malaysia,

Srilanka and India. It could add diversity to Bangladesh’s tourism and help it to meet the

challenges of an increasingly competitive industry. Though a new idea in tourism industry, it has

considerable potentials and if sufficient promotional activities are taken and favorable

government policy are adopted in this sector, homestay industry will tremendously contribute on

the economic development of the nation.

The Project: “Homestay Bangladesh”

Tag line: “get closer to nature, be friend with stranger….’

Company Overview

“Homestay Bangladesh Pvt. ltd” will let the tourists to book accommodation in a local person's

home when they want an authentic travel experience. We have homestays in some popular and

attractive destinations of Bangladesh.

Company Description

The prime concern of our agency is to bring the tourists the real travel experiences, to offer

something genuine, a real taste of life around the world. Through our service travelers will get to

experience life in a traditional village. With an open mind, they will be exposed to a fascinating

culture where they will establish a bond with your friendly foster family and get acquainted with

the village elders. Friendly children and accommodating neighbors will also help show them the

rural ways of life.

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Something extraordinary and unforgettable that takes the tourists to the heart of the culture and

community they are visiting, that shows, what it’s really like to live in that place, what it looks

like from the warmth of a real family rather than the isolation of yet another hotel room or empty

apartment.

We will establish a community of homestay hosts, each of whom welcome visitors to stay in

their home. Each host will give the tourists a really affordable alternative to ordinary tourist

accommodation. They will share a meal, learn customs, hear stories and enjoy traditions with the

people that really make the place what it is.

It will offer so much more than ordinary travel, where visitors observe a place of our country and

its people. It’s an unmissable opportunity to see beyond the usual tourist trail. To not just see the

country, but to experience it as it’s meant to be experienced.

Vision: To turn the homestay industry of Bangladesh into a major and viable sector and also

contributes to the socio-economic development of the local people and the country.

Mission: The mission of our service are to flourish the tourism business in our country by

providing a different travelling service other than traditional; let them to experience life in a

traditional village as well as disseminate and promote our culture and to represent our country

to the outside and through these making economic development.

Objectives of Company

To ensure that host communities have developed a unique experience of the lifestyle of

rural people and are obtaining a fair return for their services and investment;

To ensure that homestays contribute to conserving local cultural and natural heritage

To create a distinctive, authentic, reliable, tourist accommodation and experience -

homestay packages for visitors.

To attract more tourists in other country.

To represent and promote Bangladeshi culture to the other nations. To give some income for the villagers of our country.

To increase Bangladeshi economy.

To enhance the size of business and set up more branches in all over Bangladesh.

To provide job op Short Term Objectives

To attract customers and increase the number of customers as large as possible.

To make sure customers knows us and satisfied with our services.

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To perform a healthy competition with other competitors.

To fulfill market needs.

To increase the number of entrepreneurs who are involved in this type of business.

In order to achieve these objectives, all employee and the shareholders must nwork closelytogether. They must communicate and cooperate with each other. Other than that, all employees

must hold one concept that is 'customers are always right', that is we try to provide the best

services and will not blame customers because of our ownnmistakes or carelessness. Employees

and hosts must always be sincere and serve the customers with great hospitality.

Location: the location of the head office will be at Mirpur 12, Dhaka. We also have five regional

offices at the selected tourist spots initially.

Advantages: the tourists will get many advantages over the traditional tourism service-

Homestay vacations are the type of tourist accommodation that gives visitors the closest

contact and most authentic experiences with locals.

Homestays can be a good way for families to supplement their income, especially in

regions where there may not be enough economic activity for full employment.

They allow communities to come together as hosts for tourists, generate a festive

atmosphere and create memorable moments shared with visitors.

Homestay vacations can also have strong economic spinoffs: a surge in visitors can be

beneficial for local artists, crafts people and tour operators.

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Management aspect

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The promoter: The promoters of the home tourism business are the fresh graduates of B.B.A

from department of Finance, University of Dhaka. They are A, B, C, D,E.

Legal form of Business: Primarily it is targeted the business is to be established as a Private

Ltd. Co. but in future the company will be turned into a public Ltd. Co.

Manament team: Management team consists of one general manager who is A, one

administration manager who is B And one marketing manager who is D, one financial manager

who is C, one operational manager who is E and with others staffs needed to run the business.

Here positions and activities of each member of management team are described in detail.

Position Activities

General manager - Responsible for the overall running of the organization.

- Provide direction and leadership to motivate her staff to perform the

essential task within the required time frame.

- To ensure that the activities of all departments are integrated and

coordinated for unity of proposed.

- Creating an organization structure that is suitable for achievements of the

company objectives.

- Planning, organizing, directing and controlling.

- Defining and establishing the long-term goals of the organization and

determining the activities to achieve long term goals.

- Make decision and solve the organization problem.

- Decide on organizational structure based suited to achieve the goals.

Administration

manager

- Help organization to achieve company goals.

- Encourage employees to develop performance to maximum potential.

- To put in order and receive the requirements of clients.

- Have a good communication with clients.

- Manage office expenditure, partner's remuneration, organization profit,

holiday of employees, bonus of employees and incentive for employees.

- Organize or take care of entire document, file and corresponding letter.

Marketing - Manager the marketing, promotion and publicity at beginning of business.

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manager - Search for client and develop the market.

- Find the target market, plan and strategy for market, types of services and

amount of service payment.

- Make research about opportunity in market.

Financial manager - Record all organization profit or loss

- To determine types and extend of financial requirements of the company.

- To select the best forms of financing to meet the requirements.

- Concern with acquiring the funds needed to enable the organization to

carry out business activities.

- Seeks to achieve a position

Operational

manager

- Concern with the determination acquisition and scheduling of all facilities

necessary for future production of service to satisfy demand.

- To ensure workers are available where and when required.

- To ensure all activities

Supervisor - Arrange the activities

- Looking to the welfare of the tourist

- Making reports to the manager regarding any matters related to the

activities.

- Assist the activity operation manager when it is necessary- Perform clerical work

- Being as the middle person between villagers and the operation

department

Clerk - Typing documents

- Filing

Consultants & Advisors: our honorable teacher professor Shahjahan Mina and lecturerJunnatun Naym ma’am from dept. of Finance¸ University of Dhaka on is expected to advices our

company for management, financing, strategic and marketing aspect.

Bank: HSBC bank which is prominent in this country for its banking services is selected for

transactions and maintaining bank balance.

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Auditor: Assistant professor Md. Salauddin Chowdhury who is also a renowned ACA from

dept. of finance from Dhaka University has been appointed as Auditor for the company.

HR Management:

Staffing need:

Direct stuff: Total direct stuff needed for the business is primarily seven in number. They are one

general manager, one administration manager, one financial manager, one marketing manager,

one operational manager, one supervisor and one clerk. Since the business will expand with

passage of time, the stuffing requirement will also increase.

Host: Primarily 15 hosting families are selected on the tourist spot.

Staffing budget: All managers’ remuneration is 25000tk monthly and the supervisor will be

paid 15000tk per month and the clerk will be paid 8000tk per month. The hosting families will

be paid according to the number of tourist and the number of days they will serve. It is

determined 3000tk will be given for per day and per tourist they will serve.

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Technical aspects

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Homestay tourism:


traditional songs, dances, cuisines and sports as well as rural economic activities are the main

attractions and offers unique experience to the tourists compared to the experience in the city.

Product and services

Each homestay has something unique to offer visitors and organizes its own special activities for

their guests such as jungle trekking, fishing, kite flying, rubber tapping, fruit picking, handicraft-

making, and more.

Homestay products are however essential to the viability of the couch surfing structure. For

example, travellers could be offered an “all-in” product consisting of bed and breakfast in

different households, so that they can discover different areas of a region, share evening meals

with the host, benefit from transportation and luggage transfer, and enjoy sports activities and

cultural excursions.

Types of activities offered in homestay :

Each homestay program offers different types of activities, depending on the culture, food,

economic activity as well as location. Every tourist spot in Bangladesh has its own uniqueness in

terms of culture, natural beauty and historical background. For example- world’s longest sea

beach is situated in Cox’s Bazar, highest hill in Bangladesh is situated in Bandarban, the largest

mangrove forest “Sundarban” is situated in Sathkhira, Khulna and Bagerhat area etc. Homestay

tourism provides the following activities-

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1. Culture and lifestyle

History

Traditional dances, traditional songs and traditional food

Traditional games and sports

Culture: marriage, assembly of animal sacrifice and festivals

2. Economic activity

Rubber tapping

Fish breeding and catching

Agriculture: paddy, cocoa, oil palm, fruit

Joom cultivation

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3. Recreation

Sightseeing

Jungle trekking

White water rafting

Enjoying traditional food

Visit to nearby tourism products

Utilities

As a minimum requirement, homestay accommodations must be near town as much as possible,

located in a pleasant environment, impeccably clean rooms with access to a full bathroom,

whether private or shared. Host(s) must be available and hospitable and must provide breakfast,

lunch and dinner. Optional services could include a family supper made with locally sourced

ingredients; a private bathroom would be an asset. Evening gathering can be made through

which tourists will be able to learn about the local culture. This type of event could be organized

by the host or our company.

Tourists will use our own transport for visiting purpose. Trained hosts will work as guide to the

local visiting spots.

Security

Every tourist visiting Bangladesh has the biggest concern about his/her security during the trip.

Our homestay program gives top priority to tourist’s security and right from the moment they

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arrive in our offices till they leave, we will accompany them throughout the trip for their safety.

As misbehavior of local people is the main threat to tourism business, involving local people and

their interest ensure security from them. Our guides and hosts, preferably from locals, are always

there to attend to every whim and fancy of our customers.

Locations

Initially we will start homestay in five locations. The locations and their attractions to tourists

are:

Hill tracking and tribal tourism

We will build several homestay spots in hilly regions of our country in Bandarban, Khagrachariand Rangamati district. Customers can have real taste of natural beauty and blessing by livingwithin the nature in our hosts’ houses. Highlighting features of this product-

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Natural beauty and site seeing in different spots such as Nilgiri, Nilachol, Kaptai lake,Chimbuk hill, golden temple etc.Opportunity to observe life style of tribal people and build friendship with them andtake their warm hospitality.Hill tracking and camp firing

Enjoying different cultural and religious festivals

Coastal area

We will build some host spot in area near to the longest sea beach of Cox’s bazar. This productincludes site seeing of natural beauty of world’s longest sea beach and observing l ife style oflocal people and sea creatures. Highlighting features of this product-

Site seeing and sun-bath in sea beach

Water surfingUnder water diving and observing life cycle of sea creatures.Observing lifestyle of people who depends on sea.

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Natural beauty of tea garden and lifestyle of tribal people

we will build some spot in hilly area of Shyleth with in different tea garden. Highlightingfeatures of this product-

Site seeing of natural beauty of tea gardenEnjoying authentic taste of teaObserving life style and culture of local peoples and tribal peopleCamp firing and hill tracking

Largest mangrove forest in earth- the Sundarban

customers can enjoy the natural beauty of Sundarban the largest mangrove forest in world bychoosing different spot in southern part of bangladesg. Highlighting features of this product

Enjoying profound natural beauty of Sundarban

Observing the forest life of Sundarban by staying nearby host villages

Surfing the forest ensuring highest security

Observing the life style of local people who depends on the forest

River cruising in various rivers in the area

Observing the one of the most challenging job of sundarban –“honey collecting”

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Traditional Banglali culture and natural beauty in North-bangle

this products include observing and participating in the traditional life style of Bangali people

and natural beauty of Bangladesh in different host spots in Bogra one of the northern district in

Bangladesh. Highlighting features of this product-

Site seeing of historical important and world heritage sites such as “Shompur Bihara”,

“Mohasthangar” and various ancient temples situated in different northern distict of

Bangladesh

Observing the life style and culture of Bangali people.

Observing agricultural process and practices in this area and enjoying agricultural

festival the “Nobanno uthshob”.

Enjoying traditional Bangali food, Pithas (cake), drinks and having opportunity to learn

it

Taking part in the rural and naïve lifestyle of Banglali people, enjoying various culturaland religious festivals and experiencing the world famous hospitality of Bangladesh

Enjoying taste of “Hilsha fish” and learn the traditional process of fish catching and

cooking.

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Information and communication technology

Internet and mobile phone technology will mainly be used for our business purpose. Tourists will

be informed about us through our website or advertisement. Then they will have the options to

book electronically or through our local booking points. Tourists will be transported to the site

through our own transport. Trained guide will be always with the tourists for security purpose.

There are some places where network may not be available. In that case, we will inform the

tourist about this beforehand so they can be aware of the fact.

Supplies and sources of raw materials

We will collect raw materials for building houses and providing tourists daily necessaries from

local market. Hosts will purchase daily necessaries for them and for tourists according torequirements. Foods will be provided according to customer’s choice keeping in mind the

traditional appeal of the food.

Manufacturing and service cost declaration

The cost of building and updating houses will be provided by our company. The service charge

that will be collected from visitors will depend on specific tour and spot. So no specific price can

be stated here. On an average, there will be a general 5 days 4 nights tour package for all tourists.

For this types of package service charge will be 15000 to 20000taka. If a tourist wants to stay

more or less, extra daily charges will be applied.

R&D plan

Homestay service requires continuous development and market analysis. We will expand our

business by exploring more tourist spots, training hosts and guides and upgrading the

environment of houses. Local museum which will represent the specific locality and culture will

be built. Souvenir shop in every tourist spot will help visitors to keep their experience alive and

help us to expand our business. Steps will be taken to protect and enrich the environment.

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Marketing plan

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Marketing plan is the most significant part of a business plan. It explains the market conditionof the products, the target market in which the company will exercise its offerings, analysis of

present and potential competitors, buying behavior of possible and potential customer, how the

product will be positioned in the competitive market and the marketing mix of the product or

service being developed.

Market analysis and target market

Tourism in Bangladesh is a developing foreign currency earner. The country was listed byLonely Planet in 2011 as the "best value destination". The whole tourism market consists of allkind of travels and tourism service and all kind of tourist in the world. Relevant market oftourism for our company comprises with number of local tourists who travel and makeentertainment tour inside and outside of our country, numbers of travellers coming to our country

for various purposes and number of travellers and tourist coming to south Asia and south EastAsia in a year. Tourism board of Bangladesh reports that the numbers of travelers coming toBangladesh is approximately 300,000 in recent years. On the other hand 1 billion and 8 milliontourists come in south East Asia and south Asian region for tourism purpose and it is growing ata rate of 8.5% which is highest in all over the world. On the other hand in Bangladeshapproximately 1million tourists make tour in home and abroad in each year. So our whole marketconsists of both local and international customers.From the whole local market we have targeted only .04% of total tourist traveling in a year andhave expected 400 customers for our packages. On the other hand we have targeted only 600customers coming from abroad. So for our service we have targeted approximately 1000customers in a year. From local market our target customers are mostly customers’ of high or

middle income margin and businessman, professionals and corporate persons who have very fewtime to spend with their family and thus searching for tour opportunity where they can spendenough time with their family in a homely environment and enjoy beautiful sites. On the otherhand for foreign customers we have targeted tourist coming to south or East Asian continents.We have to reach 10% of total market and that is 1.08 million. We will reach 1.08 million by our promotional package and are expecting approximately 600 customers coming from abroad.

So our target market consists of tourist both local and coming from abroad. We have targeted thelocal customer of higher or higher middle income peoples aged above 30 and who are interestedin making tour for leisure, passing time with family, entertainment and refreshment purpose. Onthe other hand we have also targeted foreign tourists who usually set their tourist destination and

interested in South or East Asia and conduct tour for leisure, cultural, amusement and experience purpose.

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Competitor analysis

The potential competition faced by our company comes from mainly two sources. The first oneis the local tour operating agencies in our country. There are various tour operating and travelagencies in our countries which offers different tour in different location of our country. Dhaka

Holidays, Royal Holidays etc. are some example of tour operating agencies in Bangladesh. Theyoffer package tour such as 4 days 3 four nights, 3 days 2 nights in different location ofBangladesh. Reports show that about 1300 travellers made tour in “Bandarban” last year whichwas operated by different local tourists’ agencies. They offer their packages at a price within15000 tk to 40000 tk according to location, hotel services, transportation, securities etc.

On the other hand home stay tourism service is available in our neighboring country India, Nepal, Srilanka, Malaysia, China etc. Although this service is not available in our country in thatextend, this product is thriving in Malaysia, France, Thailand and contributing a significantamount in their national income. Various specialized companies are operating in those countriesand capturing the biggest portion of customers interested in home stay tourism. So they are our

most prominent competitors as they are providing the customers with great deal of efficiency andquality.

Customers’ behavior analysis

Consumers’ behavior analysis is important to understand and predict what customers will buy,how and why. We also need to understand the processes consumers go through in buying andconsuming hospitality products. By understanding and meeting customer expectations we canexpect ensuring customer satisfaction. Tourists choose homestay vacations as a way of meetinglocals, immersing themselves in local life, learning about the history of the region, anddiscovering other ways of living. Price can also be an important factor, if it is less expensive than

a hotel, and the services provided by hosts can also be a big plus. As a minimum requirement,homestay accommodations must be near the center of town, located in a pleasant environment,impeccably clean rooms with access to a full bathroom, whether private or shared. So siteselection and host selection must be done with due case considering above factors. On the otherhand economic aspect of tourism industry must be understood. Homestay tourism is consideredto be a luxurious product. Customers of this product are people of high income margin andaffluent with communication technology. So before purchasing a package they search fordifferent packages in different company’s websites and compare the price with features andconvenience of the service. Foreign visitors also want to be ensured about the safety, security,environmental and legal system about the visiting country. The buying behavior of the customersof this industry is highly influenced by financial and economic condition, socio-cultural factors

and psychological factors. So in time of economic growth and higher customers’ confidencethere is an increase in consumption of this product. On the other hand people do not feelcomfortable and safe in making tour in such country which socio-cultural condition contradictsthem. On the other hand psychological factors affect consumers to be loyal in certain brand orcountry. Our marketing strategy must consider the customers’ buying behavior of tourism sector.

In case of visiting Bangladesh about 45% foreigners expressed negative view about Bangladeshsuch as poverty, politically disturbed, load shedding, overcrowded corruption, traffic congestion,

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illiteracy etc. on the other hand about 38% foreigner expressed positive view about Bangladeshas they were excited about the natural beauty of Bangladesh and riding rickshaw and delighted athospitality and friendliness of Bangladeshi people. Different survey show that among all theforeign tourist visiting in Bangladesh 31% described their tour as exciting and 42% of themdescribed Bangladesh as fascinating tourist spot. So, all the data and variables suggest

Bangladesh as potential tourist attraction to the potential customers.

Strategic position analysis

SWOT analysis

StrengthPioneer brand in homestay tourism service sector in Bangladesh.Tax holiday and rebate facilities for belonging in tourism industry. Natural beauty: Bangladesh is renowned for its natural beauty, greenery, archeologicaland historical places and hospitality of people, it has numerous rivers and longest sea

beach of the World.Pollution free environment.Cost effective transportation facility.Rich history and heritage.Liberal behavior of local people towards tourist.Rich Cultural heritage.Low cost of products and services

WeaknessProblems related to safety, security and hygiene.lack of Infrastructural development

Non-Professional tour operators and lack of skilled hostsPoor transportation systemLots of investments in registration and other non-productive activity and systematicdifficulty to start business

OpportunityJob creation and enriching the standard of people of remote areas by giving themopportunity to be host along with their usual professionSynergy for promotional strategy of TourismDevelopment of tourism cultureBuilding awareness among tourist, policy maker and local communityHuge campaign to create a positive attitude toward tourism, Building positive attitudetoward country like Beautiful BangladeshIncreasing strong security system for both inbound and outbound tourist.Increasing emphasize and encouragement of government in this sector.

Threats Political instabilityForeign tourist may not communicate with local people due to lack of language problem.

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May face Strong competition with already established giant company in tour operatingindustryBarriers to overcome image crisis of BangladeshMisinterpretation or misconception about tourism in local communities.

Overall marketing strategy and product positioning

This section of the report deals with the strategy by which the company will position its productor service in the competitive market. There are different positioning strategy for product andservice depending on the features of the product and condition of the market. Productdevelopment, market development, market penetration and product differentiation are fourmarket positioning strategy based on the degree of uniqueness in product and service andcondition of market in which the product or service is going to place. Some fascinating featuresof our product which will help our brand to positioned itself in market are described bellow.

UniquenessWe are developing an apparently new and unique product. Though home stay tourism is anexisting product in different counties. We are going to rebuild it with some exceptional featuresand services. On the other hand this product is a new concept in tourism for our local customers.So our positioning strategy will be product diversification strategy. For the foreign tourist somecultural aspect and food will be an unique experience.

Product identificationOrganizations identify their products in the marketplace with brand names, symbols, anddistinctive packaging. Almost every product distinguishable from another gives buyers some

means of identifying it. Choosing how to identify a firm’s output represents a major strategicdecision for marketers. The name of our company is “Homestay Bangladesh Pvt. Ltd” and wewill promote our product to the possible customers using the brand name of “HomestayBangladesh” with its creative logo. This strategy can differentiate our brand from the competitors

and the customers will prefer our brand for its amazing packages and products, world classhospitality service and distinctive brand identification.

Cultural tourismHomestay tourism is distinctive from other tourism products for its cultural aspect. By this product we are not only branding our natural and historical sites but also creating an opportunityto spread a cultural bondage among our guests and our hosts. Our customers can not only enjoy

profound natural beauty and blessings of our country but also be very much closed to our cultureand people by participating it within the events. In usual tourism this opportunity is not veryample. In our country various cultural and religious festivals of rigorous colors and enjoymenthappen time to time such as “Boishakhi uthshob”, “village fair”, “BOISHABI uthshob of tribal people”, “Nobanno uthshob”, religious festivals such as “Eid-ul-fitar”, “Eid-ul-azha”, “Durga puja”, “Bouddho purnima’’ etc. Customers from different parts of world interested in cultural tourism will take the opportunity of having taste of real Grameen Bangla and natural beautyalong with lifestyle of tribal people by our homestay packages.

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Costs and benefitsTourism in Bangladesh is still very cheap in comparison to other tourists’ a ttraction in South orEast Asian countries. Our 4 nights and 5 days homestay tourism package will cost only $225 to$300 but its features will amaze the customers. A tourist can stay longer or shorter according to

his or her wish. Per day extra charges will be applied in that case. All our packages can becustomized according to customers’ need and promised to provide highest service in exchange oflow price compared to other homestay destination around the world.

Customer priority Our homestay products are based on customer priority and convenience. Other tourist attractionof homestay in Malaysia, Indonesia, Srilanka etc. are already crowded with tourists in pickseasons. In comparison with those spots our tourists’ spots are less crowded and our guest cancustomize their tour in a great extent and enjoy their leisure period with great excitement and pleasure.

Integrated marketing strategy

Integrated marketing strategy consists of some activities, processes and ideas which will help theorganization to reach our product to every potential and possible customer, create a positivemindset about our brand, make the potential customers into actual customers, build a long term profitable relationship with them and achieve our corporate goals. Now, the first step in the process of integrated marketing strategy is to search and identify targetcustomers’ group and analyzing strategic position of our brand. Target customer section of this

report described this part. The second step in this process is continuous development of productsand features according to the changing aspect of customers’ demand, taste, trends and

environmental forces. We will build a R&D team consists of expert in this industry forcomprehensive research and continuous development of products and their features over time.The duty of the R&D team is also to search for new opportunities and gaps in the market anddevelop more exciting products to enrich our product portfolio.The third step of our integrated marketing plan is to identify and develop central marketing

philosophy of our brand according to which our brand will position in the mind of our customers.The philosophy of our brand is “delighting every customer”. Execution of our service will ensure

and maintain our marketing philosophy in four layers on our entire homestay package. The firstlayer of our product is “basic level or core service”. This includes the core attributes of our

product such as hygienic accommodation, healthy as well as tasty traditional food and the entirehomestay experience. The second layer is the “expected service”. These attributes of our product

is expected by customers and take them as granted. This level consists of comfortabletransportation facilities, securities and other utility services. The third layer of our product is“desirable service” which customers are known about but do not expect generally. This level ofour service includes helping customers in collecting Airway ticket, ensuring customers’ safe

return journey, helping customers in processing visa etc. the fourth layer of our product is“unanticipated or surprise service” which is designed to delight and surprise the customers anddemonstrates our outstanding service quality. This service includes surprising gift, shopping

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opportunity, discounts, exceptional service of operators and hosts which will make the trip amemorable experience to the customers and delight them in great extent.

The fourth step of our integrated marketing strategy is to develop a marketing mix and promotethe brand to the possible groups of customers. This strategy will be discussed in marketing mix

part of this report. The fifth step of the integrated marketing strategy consists of execution andcontrolling activities. The execution and operation part of this business plan is jointly done bythe management and hosts of the business. The management must supervise the operation ofeach tour and ensure better service of the whole operational team. Management must develop acontrol system to get the feedback of the customers and develop strategy to ensure qualityservice.

Marketing mix

Product mixMarketers define a product as being a bundle of benefits. Our product is homestay and cultural

tourism. According to Kurtze (2010), our product can be considered as service for itsintangibility, inseparable from providers, perishability etc. what so ever we have 5 products inour product portfolio. Our products are divided according to the spot of tourism. All the productsrepresents different traditional, cultural, natural aspect of Bangladesh which can delight thecustomers and make the whole package a memorable experience.

Price mix

Pricing may not be exciting, but it is one of the most important issues for marketers and it is

crucial not only to the profit that is to be made, but also to the quantity of the products that will

be sold. The price of our product will be within $225 to $300 and it will reflect the real value of

the customers. In initial stage of the business we will follow cost plus mark up base pricing but

eventually by popularizing and branding this product we will go for value based and demand

based pricing.

Promotional mix

Promotional mix of products deals with building strong relationship with customers. It is the

most crucial part and significant strategy of a new venture. Our strategy is to reach every

possible targeted group of customers by our various promotional mixes. The tools we will use to promote our product

Official website

Social networking sites

Internet based advertising and e-commerce sites

Magazine and newspaper advertising

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Tourism fair and promotional events

Sponsoring events and social awareness programs

Recruiting promotional experts of this sectors for promotion and branding

The target customer of our brand is people of high or higher middle class. Most of our target

customers are handy with communication technology. So our promotion program will emphasizein social communication network based media such as Facebook, Twitter, and LinkedIn. We can

promote the features and attributes of our products through such social networking site’s pages

and the potential customers can satisfy their queries about our products and even can book a

package immediately. This strategy can popularize our product by posting notes, status, offers,

photos, videos and promotional contents about our products by costing a very minimum amount.

We will also encourage our current customers to share their views and experience through our

pages and this promotional strategy will make it more vibrant and attractive to the potential

customers. Other promotional mix such as TV commercials and magazine ads can also be

considered. Booking a stall in different tourism fair can also help to promote the brand and

getting instant booking. Recruiting promotional expert can also increase sales of our product by

means of direct sales and personal relationship.

Distribution mix

We will build a quality distribution and logistics service to provide the customers with our

service and products. In initial stage of our business we will build strategic alliance with different

transport agencies to carry our customer from airport or our corporate office to different spots.

An integrated supply chain system must be developed in this purpose to ensure safe journey,

availability of desired food of customers and other convenience service required. Our hosts are

the main service provider of our customers. So host selection and training must be done with

great care so that the hosts can provide quality service. Hosts and our professional team will

always ready for any situation and security needs of our customers.

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Financial analysis of the project

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Cost of the project:

to start the project, we initially need about TK.3800000. This amount will be spent for the

following purposes:

Item quantity cost per Amount Total

Building & civil work 5 200000 1000000Preoperative expenses

Training & host development 30 10000 300000

promotional cost 1500000

R & D 100000

Registration &License 1000000 2900000

Total 3900000

We will spend TK. 900000 for building and civil work. We will have these at five locations. We

will not have our own land, rather we will lease it from indigenous people. A huge amount of

money will be spent as preoperative expenses. Among them, TK. 300000 will be spent for host

training and development purpose. It is very much important because through it hosts will know

how to deal with our customers. As the firm is new in our country, a large fund is allocated for

promotional purpose. We will have website, internet domain, social network site . we also have

an allocation for R&D and Registration & license purpose.

Means of Financing:

Initially we are starting as all equity firm. However, when we will go on expansion, we will use

debt about 30% of the capital. Our cost of capital is 15%. Our firm beta is 1.5 because our

business is very much cyclical. It should perform better when the is booming and perform poorly in case of bad time of the economy like recession.

Cost of capital (Ke )= 6%+1.5(12-6)%

=15%

means of financing equity debt

proportion 100% 0

Initially we are going to use no debt. Generally debt is used for tax advantage purpose. Our firm

will have to pay a little or no taxes for initial years. It is one reason for which we don’t use debt

initially. However, when we go for expansion, we must use debt and get listed as public limited

company after four to five ears.

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Cost of service per client:

The cost of servicing one customer include transportation cost- taking to our location and

showing various sites, food and service & host cost-the compensation to be paid to the persons

involved in looking after customers.

The amount is shown below:

Particulars Cost

Transportation 3000

Food 4000

service and host 3000

Working Capital Requirements:

All of our sales are on cash. In this case, our working capital requirements will be low. It is about

1.5% 0f total sales.

Here the requirements are shown for three possible scenarios.

Normal situation:

Favorable situation:

Year 0 1 2 3 4 5

Revenue 21000000 23100000 25410000 27951000 30746100

%ofrevenue

0.015 0.015 0.015 0.015 0.015

TWC 200000 315000 346500 381150 419265 461191.5CNWC 200000 115000 31500 34650 38115 41926.5

Working capital requirement (1.5% of sales)

year 0 1 2 3 4 5

Sales 17500000 21000000 25200000 30240000 36288000

amount 200000 262500 315000 378000 453600 544320

CNWC 200000 62500 52500 63000 75600 90720

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Unfavorable situation:

Year 0 1 2 3 4 5

Revenue 14000000 15400000 16940000 18634000 20497400

% of

revenue

0.015 0.015 0.015 0.015 0.015

TWC 200000 210000 231000 254100 279510 307461

CNWC 200000 10000 21000 23100 25410 27951

Income statement: there are three I/S for three possible scenarios. The scenarios are normal

(1000 customers per year), favorable (1200) and unfavorable (800).

The following I/S is for 1000 customers per year. Sales growth is 10% for first five years and

becomes constant for 2%.

HOMESTAY BANGLADESH

Income Statement

For the year ended 31 December, 2014

Number ofcustomer

1000

Revenue per 17500

cost per 10000

Growth 10%

Terminal growth 2%

Year 2015 2016 2017 2018 2019

Revenue 17500000 19250000 21175000 23292500 25621750

cost of service 10000000 11000000 12100000 13310000 14641000

Gross profit 7500000 8250000 9075000 9982500 10980750

Operating expenses

SG&A 5950000 6545000 7199500 7919450 8711395

EBITD&A 1550000 1705000 1875500 2063050 2269355

D&A 614250 554288 506537 469488 441890EBIT 935750 1150712 1368963 1593562 1827465

financing cost 0 0 0 0 0

income before taxes 935750 1150712 1368963 1593562 1827465

income tax 0 0 154008.3 426138 411179.6

net income 935750 1150712 1214955 1167424 1416285

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DEPRECIATION calculation:

In case depreciation, we use 15% flat rate on all assets. Depreciation calculation for five years is

shown below:

year Beginning value Addition total D&A EV1 3900000 195000 4095000 614250 3480750

2 3480750 214500 3695250 554287.5 3140963

3 3140963 235950 3376913 506536.9 2870376

4 2870376 259545 3129921 469488.1 2660433

5 2660433 285499.5 2945932 441889.8 2504042

Tax Calculation: as ours is a private limited company, we charge 37.5% tax on our taxable

income. However our company will get tax rebate for the first seven years at a predetermined

rate.

EBT 935750 1150712 1368963 1593562 1827465

tax applied on(%) 0 0 0.3 0.45 0.6

Taxable income 0 0 410688.9 717102.9 1096479

Tax(.375) 0 0 154008.3 268913.6 411179.6

Selling, General & Admistrative expenses allocation:

Particulars amount % 5950000

wages and salaries 3500000 0.588235rent & lease 1000000 0.168067

Promotion 1200000 0.201681

Others 250000 0.042017 100%

Firm Valuation:

Profitability Analysis:

To measure the profitability of the new venture, we calculate NPV & IRR of firm’s cash flows.

We use 15% discount rate as it is our cost of equity. Our first year caital expenditure is %% 0f

initial Capex. Then it will grow at a rate of 10% for subsequent years.

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year 0 1 2 3 4 5

OCF:

NI 935750 1150712 1214955 1167424 1416285

D&A 614250 554288 506537 469488 441890

CNWC 200000 62500 52500 63000 75600 90720

NCO 3900000 195000 214500 235950 259545 285499.5PCFs 4100000 1292500 1438000 1422542 1301767 1481956

Discount rate 15%

Terminal growth rate 2%

PCF @ year 6 1511595

PCF for year 6 to onwards 11627654

Total CF at year 5 13109610

NPV Calculation

year 0 1 2 3 4 5

PCF -4100000 1292500 1438000 1422542 1301767 13109610

DF@15% 1 0.869565 0.756144 0.657516 0.571753 0.497177

PV -4100000 1123913 1087335 935344.2 744289.5 6517793

NPV 6308674

IRR Calculation

year 0 1 2 3 4 5

PCF -4100000 1292500 1438000 1422542 1301767 13109610

IRR 48%

According to this calculation, we should step forward.

Free cash flow valuation:

General formula for determining free cash flow is as follows:

EBIT(1-Tax Rate)+ Depreciation expense-Capital expenditure-change in net working Capital.

mailto:DF@15%25mailto:DF@15%25mailto:DF@15%25

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We use this formula to determine free cash flow for first five years and assume a flat growth rate

of 2% for subsequent years.

year 1 2 3 4 5

EBIT(1-T) 935750 1150712 1214955 1167424 1416285

D&A 614250 554288 506537 469488 441890

CNWC 62500 52500 63000 75600 90720

Capex 195000 214500 235950 259545 285499.5

FCF 1292500 1438000 1422542 1301767 1481956

Discount rate 15%

Terminal growth rate 2%

FCF @ year 6 1511595

FCF for year 6 to onwards 11627654

Total FCF at year 5 13109610

Year 1 2 3 4 5

Free Cash Flow 1292500 1438000 1422542 1301767 13109610

Discount Factor 0.869565 0.756144 0.657516 0.571753 0.497177

PVFCF 1123913 1087335 935344.2 744289.5 6517793

Balance sheet: balance sheet shows the financial condition of a firm on a particular day. We

have prepared B/S for our firm at the beginning and ending of accounting year 2014. As we are

an all equity firm, we don’t have any long-term debt. Besides we have no short term liability as

our transactions are in cash and initial working capital will be met by initial investment. Weexpect to have an handsome amount of cash at hand at year 2015 that will be invested initially

and will be used for expansion purpose. The B/S is as follows:

Value of the Firm

10408674

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Homestay Bangladesh

Balance sheet

For 31 December , 2015

ASSSETS 1/1/2015 31/12/2015

current assets

Cash & cash equivalents 200000 355000

Account receivables 0

Total current assets 200000 355000

Non-current Assets

Building & equipment 1000000 1015750

preoperative expense 2900000 2465000

Investments 0 1200000

Total non-current assets 3900000 4680750

TOTAL ASSETS 4100000 5035750

Liability & Stocholders' Equity

current assets

account payable 0 0

Accrued expenses 0 0

short-term loan 0

total current liabilities 0

Non-current Liabilities 0

long term debt 0

shareholders' Equity

common stock 4100000 4100000

retained earnings 0 935750

Total shareholders' Equity 4100000 5035750

Total Liability & Stocholders' Equity 4100000 5035750

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Ratio analysis

Ratio Formula Result

current ratio current assets/current liabilities -

return on Assets net income/total assets 0.228232

Return on equity net income/stockholders' equity 0.228232GPM Gross profit/revenue 0.428571

profit margin net income/revenue 0.053471

Debt debt/total asssets 0

Debt to equity debt/total equity 0

Total asset turnover revenue/total assets 4.268293

The above table shows some important ratio for the company. However this information is

useful only if we have a benchmark like industry average to compare with.

Current ratio: We don’t get any current ratio because we don’t have any current liabilities.

Return on Assets: ROA for the first year is expected to be 22.82% which is satisfactory.

Return on equity: as we have no debt capital, our ROE is the same as return on Assets.

GPM: our gross profit margin is relatively low compared to other business. It is only 43%. We

have to take steps to decrease variable cost and increase gross profit margin.

profit margin: our net profit margin is expected to be 5.34% in first year which is quite low.

Total asset turnover: it shows the efficiency with which the company is using its assets togenerate revenue. Our calculated ratio says that company generates an amount of revenue of

tk.4.26 against 1taka asset.

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Financial Analysis(profitability) for 800 customers per year:

Income Statement

2015 2016 2017 2018 2019

Revenue 14000000 15400000 16940000 18634000 20497400cost of service 8000000 8800000 9680000 10648000 11712800

Gross profit 6000000 6600000 7260000 7986000 8784600

Operating expenses

SG&A 4760000 5236000 5759600 6335560 6969116

EBITD&A 1240000 1364000 1500400 1650440 1815484

D&A 614250 554288 506537 469488 441890

EBIT 625750 809712 993863 1180952 1373594


income before taxes 625750 809712 993863 1180952 1373594

income tax 0 0 111809.6 199285.7 309058.7net income 625750 809712 882053.4 981666.4 1064535

Tax calculation:

EBT 625750 809712 993863 1180952 1373594

tax appliedon(%)

0 0 0.3 0.45 0.6

Taxableincome

0 0 298158.9 531428.4 824156.4

Tax(.375) 0 0 111809.6 199285.7 309058.7

NPV Calculation

year 0 1 2 3 4 5

OCF:

NI 625750 809712 882053.4 981666.4 1064535

D&A 614250 554288 506537 469488 441890

CNWC 200000 10000 21000 23100 25410 27951

NCO 3900000 195000 214500 235950 259545 285499.5

PCFs 4100000 1035000 1128500 1129540 1166199 1192975

Discount rate 0.15

Terminal growth rate 0.02

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PCF @ year 6 1216834



year 0 1 2 3 4 5

PCF -4100000

1035000 1128500 1129540 1166199 1192975

DF@15% 1 0.869565 0.756144 0.657516 0.571753 0.497177

PV -4100000

900000 853308.1 742691.2 666778.3 593119.3

NPV -344103

IRR Calculation:

year 0 1 2 3 4 5

PCF -4100000

900000 853308.1 742691.2 666778.3 593119.3

IRR -3%

Financial analysis for 1200 customers:

Income Statement

year 2015 2016 2017 2018 2019

Revenue 21000000 23100000 25410000 27951000 30746100

cost of service 12000000 13200000 14520000 15972000 17569200

Gross profit 9000000 9900000 10890000 11979000 13176900

Operatingexpenses

SG&A 7140000 7854000 8639400 9503340 10453674

EBITD&A 1860000 2046000 2250600 2475660 2723226

D&A 614250 554288 506537 469488 441890EBIT 1245750 1491712 1744063 2006172 2281336


income beforetaxes

1245750 1491712 1744063 2006172 2281336

income tax 0 0 196207.1 338541.5 513300.6

net income 1245750 1491712 1547856 1667630 1768035

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Tax calculation:

EBT 1245750 1491712 1744063 2006172 2281336

tax appliedon(%)

0 0 0.3 0.45 0.6

Taxableincome 0 0 523218.9 902777.4 1368802

Tax(.375) 0 0 196207.1 338541.5 513300.6

NPV Calculation

year 0 1 2 3 4 5

OCF:

NI 1245750 1491712 1547856 1667630 1768035

D&A 614250 554288 506537 469488 441890CNWC 200000 115000 31500 34650 38115 41926.5

NCO 3900000 195000 214500 235950 259545 285499.5

PCFs 4100000 1550000 1800000 1783793 1839458 1882499

Discount rate 0.15


PCF @ year 6 1920149



year 0 1 2 3 4 5

PCF -4100000 1550000 1800000 1783793 1839458 16652879

DF@15% 1 0.869565 0.756144 0.657516 0.571753 0.497177

PV -4100000 1347826 1361059 1172873 1051716 8279424 NPV 9112898

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IRR calculation

year 0 1 2 3 4 5

PCF -4100000

1550000 1800000 1783793 1839458 16652879

IRR 58%

Sensitivity Analysis:

Sensitivity of NPV with number of customer:

SENSITIVITY OF NPV WITH NUMBER OF CUSTOMERS

Scenario Number of customers NPV

Favorable 1200 9112898

Normal 1000 6308674

Unfavorable 800 -344103

From our calculation, we see that if our number of customer is increased by 20% that is

1200, NPV of the firm will increase by 44%,

Sensitivity of NPV with Selling, General & Administrative expense:

To test sensitivity, we reduce SG&A expenses by 20%. The result is as follows:

Income Statement

Year 2015 2016 2017 2018 2019

Revenue 17500000 19250000 21175000 23292500 25621750

cost of service 10000000 11000000 12100000 13310000 14641000

Gross profit 7500000 8250000 9075000 9982500 10980750

Operating

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expenses

SG&A 4760000 6545000 7199500 7919450 8711395

EBITD&A 2740000 1705000 1875500 2063050 2269355

D&A 614250 554288 506537 469488 441890

EBIT 2125750 1150712 1368963 1593562 1827465


income beforetaxes

2125750 1150712 1368963 1593562 1827465

income tax 0 0 154008.3 268913.6 411179.6

net income 2125750 1150712 1214955 1324648 1416285

NPV Calculation:

Year 0 1 2 3 4 5

OCF: NI 2125750 1150712 1214955 1324648 1416285

D&A 614250 554288 506537 469488 441890

CNWC 200000 62500 26250 28875 31762.5 34938.75

NCO 3900000 195000 214500 235950 259545 285499.5

PCFs 4100000 2482500 1464250 1456667 1502829 1537737

Discount rate 0.15


PCF @ year 6 1568492



Year 0 1 2 3 4 5

PCF -4100000 2482500 1464250 1456667 1502829 1360305

9

DF@15% 1 0.86956

5

0.75614

4

0.65751

6

0.57175

3

0.497177

PV -4100000 2158696 1107183 957782 859247.

3

6763125

NPV 7746033

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year 0 1 2 3 4 5

PCF -4100000 3292500 3664250 3604417 3715616 33678123

DF@15% 1 0.869565 0.756144 0.657516 0.571753 0.497177

PV -4100000 2863043 2770699 2369962 2124416 16743979 NPV 22772100

Our calculation shows that if Variable cost per customer decreases by 20% that is

TK.2000, NPV will increase by 260%.

So we can say that NPV has the highest sensitivity with variable cost compared to other two

variables because in this case the change in NPV is the highest.

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Socio Economic Aspects

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Social Responsibility

Homestay is aimed to increase the participant of the rural community in the tourism industry anda way to reduce the rural-urban migration. Homestay social responsibility involves sharing the benefits of the tourism industry with the rural community and encourages their participation in

the tourism sector, boosting household income and improves living standards of the ruralcommunity, which contribute to the reduction of poverty; and developing rural tourismentrepreneurs and provide job opportunities.

Business Ethics

The project will focus tourism industry ethics as well as standard ethical code adopted. So as toregards, furniture and furnishings should be adequate, clean and well maintained. Standard foodwill be provided. For the ethical code to maintain, the Halalfood will be supplied to the Muslimstourists. Kitchen would have adequate supply of clean water, lighting, and food storage, properwaste collection and disposal methods, clean& well maintained, free of smoke, odor and pest.

Where water for drinking is not available from a public source the host would ensure purifiedwater. Fresh, well cooked, clean utensils follow approved health standards; avoid food poisoning, consistent supply of food, local delicacies will be provided to maintain businessethics.

Environmental Impact of the Project

The location would be suitable to receive and host paying guests depending on the themeconcept of the Home stay. It also would be attractive, in harmony with the Natural, cultural and built up environment, and in compliance with the local government

regulations, well maintained environment, excellent sanitation and refuse disposal. There willhave eco- friendly practices such as Energy saving, alternative energy sources, waterconservation &harvesting techniques, waste management, recycling and pollution.Environmentally friendly Toilets/Pit latrines should be provided. Not less than 5m deep. Safe &washable floors and walls.Clean, well lit and ventilated. Freeform fly/mosquito. Train visitors to use the different types offacilities e.g. Pit latrines. Guests be provided with running water where not available improviselike “Tip tap” tissue paper & liquid soap. Alternatively acquire plastic toilet seat to improvise for

those who cannot squattingThere should be appropriate waste storage, collection and disposal facilities, in line with healthstandards and environmental protection regulations of the area. In addition should exercise waste

separation and proper management Encourage separation of waste e.g. plastic, metal, glass andthe biodegradables. Animal waste be used for energy like Bio gas and sludge (organic farming).Adequate and appropriate firefighting equipment should be provided. At least (Buckets with dryand looses and/soil) should be available. Host/Family should be familiar with fire fighting skills.Fire extinguishers be introduced where applicable and a water source be available. Designate andmark a fire assembly point.

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Environmental Opportunities of Homestay

conducted

areas.

Contribution towards the Economy

Bangladesh is a country of natural beauty. She is blessed with endowment of almighty. Propernurturing of natural beauty can attract tourists from across the world as well as Bangladesh. Thetourism sector can be a major contributor in Gross Domestic Product (GDP) of Bangladesh. As anew concept of tourism industry, Home stay can play vital role by attracting tourists towardcontribution of our economy. Home stay offers immense potentiality for employment generation,

poverty alleviation and maintaining ecological balance. It is relatively a modern phenomenon,which plays an intensely important role in the economic development of our country. Tourism isa part of service sector which is contributing a major part of total GDP of Bangladesh. Thoughthe contribution of tourism in GDP is only 7% in 2004-05, it has increased to 9.44% by the year2009-10. This simple data could be helpful to understand how promising the sector is forBangladesh. A large number of employment opportunities are being created by this project. Touroperator business is doing well in Bangladesh. Thousands of young people will have engagedthemselves as tourists’ guide in this project. Moreover some other induced impact of truismresults in economic progress in local area and the country as a whole. Communication,throughout the country, will develop because of the project. As a result, other economic activitieswill be augmented.Solar, wind and other renewable energy sources installation highly preferable for the project,thus contributes to economy. Homestays can be a good way for families to supplement theirincome, especially in regions where there may not be enough economic activity for fullemployment. This project creates consciousness among villagers, the way of living, the reductionof income gap between the urban and the village. The government can earn handsome revenuefrom this sector. Besides the other economic opportunities of the Homestay as follow:

Economic Opportunities of Homestay

ransforming economic and employment opportunities to rural areas and thus alleviating poverty.

hip in tourism and its many other related sectors.-consumption of food, accommodation and purchase of souvenirs.

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References

Lectures and handouts provided by the course teacher.

http://www.banglayp.com/category/Homestay

http://www.thefinancialexpress-bd.com

http://www.dhakaholidays.com http://en.wikipedia.org/wiki/Homestay

https://www.academia.edu/6800362/Home_Stay
http://www.banglayp.com/category/Homestayhttp://www.banglayp.com/category/Homestayhttp://www.thefinancialexpress-bd.com/http://www.thefinancialexpress-bd.com/http://www.dhakaholidays.com/http://www.dhakaholidays.com/http://en.wikipedia.org/wiki/Homestayhttp://en.wikipedia.org/wiki/Homestayhttp://en.wikipedia.org/wiki/Homestayhttp://www.dhakaholidays.com/http://www.thefinancialexpress-bd.com/http://www.banglayp.com/category/Homestay

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