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EXECUTIVE SUMMARY

This following consultancy project is written for the three-star hotel Slunchogled in

Golden Sands Resort, Bulgaria.

Our task was carefully to analyze the existing Macro-, Industry- and

Microenvironment in which the hotel operates, then to evaluated the hotel’ s marketing mix

concept and on the base of the received information to make a thorough SWOT analysis.

We tried to propose rational and substantial ideas for improving the overall performance of

the hotel and reach considerable occupancy and reasonable profits. For that purpose we

choose the most appropriate according to us marketing strategies to be applied and led by

them we developed a new modified marketing plan. There we expose all the innovations

and suggestions we propose for the further enrichment of the Hotel Slunchogled product

and services in the following three years and finally based on the anticipated outcomes of

our actions we evaluate the effectiveness and efficiency of our results.

PREFACE

We are a group of five students studying in International College Albena and this is

our final diploma project for the third year of our education. We are given the assignment

to work out a consultancy project for the three-star hotel Slunchogled in Golden Sands

Resort. The members of our team are –Nevena Zhekova, Irina Mitkova, Boryana Radkova,

Ventsislav Rubanisti and Dmitry Oleinik.

Our task is to analyze the business establishment and to offer feasible and

applicable strategic options for further development during the next three years. Our aim is

to give recommendations which will improve the product and services in the hotel as well

as to improve and achieve reasonable financial results in future. Our analyses are based on

primary information, which is given to us by the Project coordinator as well as on our

personal observations of the product and services of the hotel.

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I. Mission

Our hotel is a small 3-star establishment, offering a variety of relaxation, entertainment and

business opportunities designed to satisfy the needs of both the middle class and upper middle

class, business and leisure tourists. The efforts of our helpful and friendly staff are aimed towards

the provision of high-level professionalism, friendly welcoming attitude, and high quality of

service. Through the achievement of outstanding experience and exceptional customer value, we

want to establish a position on the market and generate reasonable profit. Guests are welcomed to

experience a pleasant stay in Hotel Slunchogled as we will take care of the rest!

We are aware that the staff happiness is a main tool for our success and that is the reason

for us to try to assure a nice and favorable working atmosphere. We want to make each of our

employee feels as an integral part of the establishment and personally involved in the achievement

of our goals, by assuring constant training, competitive payment and employee benefits.

II. Business description of Hotel Slunchogled

Hotel Slunchogled functions as a place for accommodation of leisure and business tourists

as well as for conducting different training courses and conference tourism. It is a 3-star

establishment according to the Bulgarian categorization standards. It is opened in March 2004 and

works with guests all-year-round. It is situated in the resort complex Golden Sands on the Black

Sea coast, only 300m away from the sea, and 14km northwest from Varna on the main freeway

Varna – Golden Sands between hotel complex Journalist and restaurant Trifon Zarezan.

The owners have invested 1 500 000 BGN own capital into land, building and construction,

furnishing and equipment, shuttle bus and a hotel & restaurant software program. For this purpose

they took a long-term debt of 633 600 BGN that should be repaid within 10 years at 10 % interest

rate. The owners do not take direct part in the management of the hotel, so they have appointed a

Hotel Manager who is responsible for the overall operation of the hotel.

Hotel Slunchogled offers comfortable accommodation into 21 double rooms, 1 single room

and 3 suites. The overall capacity is 50 beds. The rooms in the hotel are spacious and furnished in

bright colors. All rooms have balconies with sea view and are equipped with air conditioning,

telephone, satellite TV, minibar, and bathrooms with bathtub. The hotel disposes of a 3-star

restaurant with 50 seats (and during the summer period the capacity could be extended with more

40 seats in the summer garden), and a lobby bar with 10 seats. A free-of-charge parking with 8 lots

is available to the guests. The hotel offers also two conference rooms – with capacity of 30 and 15

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seats. Both rooms are fully equipped with multimedia, overhead projectors, flip charts, and copy

machine; fax machine, computer, and Internet connection. The hotel offers the following extra

services: Internet access, fitness room, sauna, billiards, safe, VCR and video movies, iron and

ironing board placed on each floor. The guests of the hotel can order additionally laundry service, a

hairdryer, hairdressing services, massages and manicure.

The main guests of the hotel are leisure tourists, corporate guests and business tourists. 90

% of them are foreigner mainly from Russia and Germany. In 2004 the hotel reached 40 %

occupancy and the restaurant reached 25 % occupancy.

III. Macro environmental analysis

1. Bulgarian Economy during 2004

The Bulgarian economy continues to demonstrate positive results during 2004. A proof for

that are the main macro economical indexes as well as the assessments of many European

organizations. The interest towards the country has increased considerably in the recent years and

the level of the foreign investments reached €2 milliard in 2004, which are about two times more

than in 2003 and 9.2% of the total GDP for the year. The economic growth of 5.6% in 2004 is even

greater than that in the countries from the EU and with 1.6% higher than in 2003, when it was

4.3%. The government expects the same pace in the national economic growth for the next several

years, as for 2005 the GDP is expected to be with 5.2 – 5.3% higher than in 2004.

The interest rate that was about 5-6% in 2004 and is expected to fall to 2-3% in the future,

which is the average in the other European countries. The improved favorable conditions for

obtaining a bank loan lead to boom in the given credits in 2004 and increase of 49% compared to

2003. That is why the National Bank intends to slow down that process in 2005 and keep it to 25-

30%. The new funds obtained by the businesses give the opportunity new modern technologies to

be introduced and the production cycles to be improved.

The index for the inflation is also an evidence for the steady environment in the country.

The percentage has increased to 6% in 2004, compared to 2.3% in 2003, but it was due mainly to

the increase of the fuel prices on the international market and the electricity, telephone and

transportation on the internal market. The forecasts anticipate price stability in the future and the

level of the inflation to be between 3.5 – 5% in 2005.

The unemployment rate reached its lowest point up to now in 2004 – 12.1%, when it was

13.7% in 2003. It is still higher than the average for the West European countries, but a constant

policy towards reducing it is applied by the government through different programs. The future

positive expectations predict that in 2005 the unemployment will fall to 10.9% although the

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percentage of the long-term and the young unemployed will probably remain an important matter of

concern. Along with this the problem for the real growth in the average income of the population

has to be overcome. The efforts of the government in that sphere are not so successful, having in

mind that the actual growth in 2004 is only 0.2%. The average monthly wage reached 301BGN in

2004 and it was 284BGN in 2003, but compared to the newly employed and the inflation these

figures are not promising. The Bulgarian labor force remains one of the cheapest in Europe –

2.74BGN per hour and the wages in the hospitality industry – one of the lowest – 184.50BGN

average per month. That is the main reason greater part of the young and qualified labor force to be

attracted by the foreign market, which offers more favorable conditions. Those figures cannot be so

reliable, due to the fact that there are many entrepreneurs claiming lower employee wages, because

of the high tax burden. The authorities hope that with the introduction of the new taxation system in

2005 the employers will increase the salaries and the average monthly wage will reach 344BGN

and will indicate a more significant growth in the personal income of the population.

Although the country has to catch up with the other countries from the EU in many aspects,

the figures demonstrate that the situation is improving. The increased productions as well as the

foreign investments are prerequisite for a future positive development. It will lead to more open

working positions and so higher personal incomes. The rivalry between the entrepreneurs will be

enhanced and thus improving the quality of the products and the competitiveness of Bulgaria on the

international market. (Appendix 1- Main economic indexes)

(Sources of information – www.nsi.bg; Capital newspaper, edition 13, p.3; Manager

Magazine - January, February 2005)

2. Bulgarian Politics

Having in mind the future integration of Bulgaria in the European Union (EU) in 2007 and

the supervision of the International Monetary Fund (IMF), each decision that has been taken during

the recent years was in correspondence with the slightly contradictory requirements of these two

organizations. The IMF insists on constant reduction of the national deficit, achievable through the

collection of more taxes, while the EU asks for higher economic growth and the creation of

favorable business environment. That is the reason the reformations that has been introduced the

last several years to be directed towards reduction of the tax burden and stimulating the future

development and enlargement of the businesses. Following that policy, the corporate tax is being

reduced every year. In 2003 it was 23.5%, then in 2004 it was 19.5% and from the beginning of

2005 it fell to 15%. The aim of the government is to attract more foreign investments as well as the

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owners to generate more profit and be able to reinvest it. The intention of the authorities is to lower

it to 12.5% in 2006, which will make it closer to that in the other European countries.

Another tendency in the recent years is connected with the Social Securities. They were paid in

proportion 75: 25 up to 2005, which means that the employer was obliged to pay 75% of them and

the employee only 25%. Since the beginning of 2005 this correlation was changed to 70:30 and the

entrepreneurs can benefit of it by reducing their labor expenses by 1.55 to 2.25%. From 32.2% in

2004, the sum spent on Social Securities fell to 29.55% of the employee’s wage plus additional

percentage between 0.4 and 1.1% paid for labor caused incidents and illnesses, depending on the

risk included in the profession. This percentage is 0.5% for the hospitality industry so the total

amount for Social Securities accounts for 30.05% of the employee’s wages. The government plans

to equalize both parties and turn the proportion into 50:50 and reduce considerably the tax burden

and also urge the entrepreneurs claim their real personnel expenses.

Slowly the level of the minimal salary has also been increased the last several years. In 2003

it was 110BGN, in 2004 – 120BGN and now in 2005 it is 150BGN. This caused many small

businesses using not qualified labor force to think about their future expenses that will increase

considerably. That step will not result in raise in the average salaries or in the personal incomes as a

whole, since its aim is to reduce the poverty in the country. In order the purchasing power to be

increased a reformation in the personal income taxes has also been introduced from the beginning

of 2005. A total decrease of 7% was made. The limit for the minimal taxed sum was changed from

1440 BGN income per year to 1560 BGN. The percentage in the different groups of incomes varies

according to the taxed amounts. (Appendix 2)

The VAT (Value Added Tax) is one of the taxes that have not been changed in the recent

years, although it is comparatively high. In 2005 it stays the same as in 2004 and 2003 – 20%, but

the plans are to be lowered to 15% by the year 2010. According to the Bulgarian law all the

companies whose revenue per year exceeds 50 000BGN are obligatory to register profit amounts of

VAT and the turnover is then taxed with 20%.

One of the ways all those favorable for the entrepreneurs reformations to be compensated is by

introducing increase in other fields for taxation such as the licenses for categorization in the

hospitality establishments and some additional facilities (beaches, ski slopes), which have been

raised by 25% in 2005. (Appendix 3) Categorization has been also introduced for the beaches and

the valid so far three years categorization for establishments was changed for an indefinite period of

time.

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Having in mind that in June 2005 there will be governmental elections in Bulgaria, the entire

situation cannot be considered as so stable and the current projections and expectations about the

future are not so reliable.

(Sources: Capital newspaper, edition 3, 2005, p.9; Manager Magazine, edition 1, 2005;

www.econ.bg, www.government.bg)

3. Social and Cultural factor

The social classes according to the Classification of Social Grades (Source: Hotel

Management reader Module 10) are: Upper-middle class (A), middle class (B), lower-middle class

(C1), skilled working class (C2), working class (D), and people at the lowest level of subsistence

(E). According to this classification we can say that in Bulgaria the most prevailing social classes

are those of the lower-middle, skilled working class and working class in difference with the other

countries, where the representatives of the middle class are the most.

A negative tendency in the last years is the overall ageing of the population which leads to

more senior citizens, who in Bulgaria compared to other countries are with very low incomes and

this makes the entrepreneurs loose a great number of potential customers. The educational

system in Bulgaria is undergoing changes during the last years, bringing up to date many

educational programs and designing them according to the needs of the labor market. These

changes are made in order to improve the quality of education and reach the standards of the

countries in the EU. The result is better educated people with higher expectations and increased

demand for quality products and services. The improved working conditions worldwide give the

opportunity for traveling to more people and they are willing to try something new and interesting.

The issues about healthy way of leaving are becoming more popular and therefore the customers

are ready to pay more money for better quality and service.

(www.nsi.bg, www.mi.government.bg)

4. Demographic factor

In 2004 the total number of the Bulgarian population is 7 761 049 people. It is decreased

compared to the previous year by 0.5% to 7 537 929 people. The tendency of decreasing of the

population of the country continues also in the year 2005.

The average age of the population is 41 years. In 2004 the average life expectancy of the

population was 72 years. The age structure in 2004 is the following:

0 – 14 years: 15.1%; 15 – 64 years: 61.6%; 65 years and over: 23.3%;

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The economically active population by the end of 2004 is about 4 782 000 people which is

61.6 % of the total population. Compared to the previous year, this category has increased with

about 35 000 people.

As a whole, Bulgaria faces serious demographic problems in the last few years. The

strongly advancement in age of the Bulgarian population could be a problem after several years in

finding work force. The large number of people who emigrate in other countries in order to find a

better working and payment conditions as well as options for careers causes one of the reasons for

the decrease in the population for the last years. Some forecasts project that after 2007 the

emigration process will become higher because of the expected jump in the prices without equal

increase in the income of the population. Another reason is the low birth rate in the country 9% in

2004.

5. Technological factor

Nowadays technologies are very important issue in the hospitality industry. Many hoteliers

and restauranteurs use more and more technologies in their working process. Today’s technology

increases effectiveness and efficiency, increases the quality of the offered products and services,

increases safety and security, saves guest service time, and eases human resources issues. Almost

every hotel uses computerized technologies and systems for documentation, online reservations,

accounting and other important matters. In order to be competitive on the market hospitality

establishments have to follow frequently the trends in technologies and innovations and constantly

improve and update their products and services.

The most widespread and good hotel software is Fidelio. In Bulgaria this computer program

is not very often used due to financial considerations. Lately, Point of Sale (POS) software

programs became more popular and used in the country. The newest product of that kind on the

market that is sold by the company UCS that offers a software programs divided into mobile

modules for each department with possibility to be connected into one system. These modules are

Shelter – for hotels, R-Keeper – for restaurants, Storehouse – for storehouses and Timekeeper – for

the personnel. Another company on the Bulgarian market is the company Dolphin that offers a

large variety of software programs for different establishments. The one for the catering

establishments and for the accommodation establishments is Elit ™ that is widely used by many

hotels and restaurants in the country. Both companies offer training and support.

A negative fact is that the worldwide trend of paying by credit cards is not so well

developed in the country yet. Such terminals have only the bigger hotels and restaurants as well as

few international shops that have branches in the bigger cities. Problem in Bulgaria is that buying

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new equipment or software products is often expensive and sometimes there is no support service

after that. Also there are not so many companies offering spare parts and hotels and restaurants

have to wait weeks for their delivery.

IV. Industry analysis

Bulgarian tourism is continuing to develop dynamically. Both the continually increasing

number of tourists and therefore the revenues from tourism approves this. The World Tourism

Organization that shows Bulgaria as a successful tourist destination in Europe confirms these

favorable results also. The tourism industry in Bulgaria gives the opportunity to entrepreneurs for

starting new business, creating new job positions and thus creating conditions for economic growth.

During 2004 Bulgaria was visited by 4 629 854 foreign tourists which is with 14.38% more

than in 2003. About 87% of all visitors entered the country with the purpose of leisure – 4 010 326

people, which is 13.56 % more than in 2003. 271 857 people visited the country for business as

their number increased by 26 % in 2004 compared to 2003. The tourists from Central Europe and

EU continue to increase, as the countries from EU are the most important tourist market for

Bulgaria, led by Germany and Greece. The interest from British and Scandinavian tourists

increased recently, indicating an increase of 60 % in 2004, which is a promise for Bulgaria to host

new great flow of visitors in the future.

The Bulgarian tourism industry is mainly private owned – 98 % of it, characterized by

modern tourist infrastructure and continuous improvement of the product quality. The standard of

the establishments is still medium, but currently about 70 % of them are already renovated and

modernized. Another option for achievement of better quality is the opportunity many hotels to join

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the big international chains through franchise and/or management contract. The places for

accommodation have increased by 50 000 beds only the recent several years as a result of the

intensive building processes. In 2004 there were about 330 000 beds, 180 000 of which in 3-, 4- and

5- star big hotels and the other 150 000 beds are dispersed between the small family owned

properties, and the lower class places for accommodation. The Black Sea coast still keeps its

leading position in the Bulgarian tourism industry and about 70% of the beds are located there, 20%

are in the city hotels, and 10% are in the winter resort. During the last 2-3 years the tendency

changed and the hotel investments became more dynamic inside the country, especially in the

winter resorts, as they are one of the new popular destinations for skiing in Europe. In case that the

investments and the development of modern sport infrastructure in them continue with the same

pace in the next few years, the Bulgarian winter resorts have the potential to become as popular

tourist destination as the summer resorts and therefore generate similar revenues.

(Hotels & Restaurants Magazine, edition 20/ May 2005, magazine Tourist Markets – edition

5/May 2005)

The expected entering of Bulgaria in the European Union in 2007 will bring many changes

in the country some of them in the hospitality industry. One of them is the newly accepted law,

which states that all F&B establishments must have separate seating areas for smoker and non-

smokers. Bulgaria accepted this law on January 2005 but there is a grace period till 1 July 2005.

The Union of private hoteliers and restauranteurs forecasts that at least 20% of the all F&B

establishments would bankrupt because they will not manage to allocate their seats in accordance to

the new law.

Another change for the Bulgarian F&B establishments is the new obligatory requirement to

update their kitchen equipment according to the European standards of the systems ISO 9001 and

HACCP till the end of 2006. Now this equalization is difficult for the Bulgarian restauranteurs and

hoteliers because first, there is a shortage of certified companies who are able to introduce the

system and maintain the training programs to the personnel and second, because this leads to extra

expenses for the owners of F&B establishments. If all establishments do not fulfill the requirements

of the EU in time, Bulgaria will have to pay fines. (www.cash.bg/br07-05/iko-4)

Another requirement that owners of hospitality establishments must fulfill was accepted

February 10, 2005. It forbade the existence of two different price lists (with two different

currencies) for local people and for foreigners. This was a common practice in many hotels in the

recent years, especially in the resorts, visited mainly by foreigners. The reason for it was the great

differences in the social status between the Bulgarians and the foreigners and the will of the

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entrepreneurs to be attractive for both markets. Bulgaria will have to manage with them before the

entering in the EU, if not there will be fines again. (www.netinfo.bg)

Bulgaria strives to be more and more competitive on the world tourist market and to offer

quality product and services by attracting tourists in new interesting destinations everywhere in the

country. The high level of competition in most of them gives good opportunity for their fast

development in accordance with the international standards.

Tourism Industry in the Region of Varna

The tourism is one of the main economic branches in the region of Varna. The region is a

popular international destination offering favorable climate conditions, 17 km long beaches,

recreational, rural, congress and spa tourism opportunities, many natural reserves and interesting

historical spots. The city and the whole region offer great variety of entertaining places that

supplement additionally the natural resources and assure nice stay of the visitors. There are many

restaurants of all kinds, discos, amusement parks, casinos, bingos, and sport opportunities. Varna

hosts several significant national and international events during the summer each year. There are 5

big sea resorts in the district - Golden Sands, Saint Konstantin and Helena, Riviera, Sunny Day and

Kamchia and three of them have won the best beach international award – “Blue Flag”. They

comprise 264 hotels, 128 of which 3, 4 and 5-star most of which operate only short period of the

year due to the seasonality in the customers’ demand (May-October). About 30% of the total

overnights in the country are realized in the region of Varna each year and between 85-90% of them

are realized by foreigners. In 2004 645 381 tourists visited those resorts, 453 678 of which

foreigners. Golden Sands, St. Konstantin and Helena, Riviera and Sunny Day are popular

destinations on the international market since long time ago and during the years they have built up

their reputation as an average class cheap ones. That is why in the current situation the prices of the

services offered can not be increased, although that the tendency is most of the newly built hotels to

be high class and their quality to be in conformity with all the international standards. The greatest

parts of the foreign visitors coming to the Black sea coast are representatives of the mass tourists

and are very price sensitive. On the other side the European tourists are actually the reason these

resorts to become too expensive for the average Bulgarian and small percentage of the locals to

prefer them.

Golden Sands is the biggest resort on the North part of the Black Sea coast, located on 17km

away from Varna. Except for the long 3.5km beach strip, there are a lot of very famous and ancient

mineral water springs in it, combined with very beautiful forests protected as a National park. There

are 5 five-, 24 four-, 35 three- and 15 two-stars hotels, holiday clubs, two villa complexes and 10

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luxury villas in Golden Sands. Most of the hotels are private, corporation or consortium properties

that are either totally new constructions or completely renovated and modernized old ones. The

mass building recently in that area and in St. Konsatntin and Helena resort have led to a high

density and overpopulation and at the same time to endangering of the ecological balance in them.

The purifying water systems and the electricity stations are not planned to carry out such a great

capacity. Currently they have to handle about 34 000 beds with the tendency to reach 50 000 in the

next few years, when they are designed only for 19 000 and the municipality did not undertake any

actual actions up to that moment. Although the great potential of the area and the desire of the

entrepreneurs to build up its new image as destination on the international market, the existing

discrepancies become a reason the foreign tourist to leave the county disappointed in many aspects

and thus Bulgaria to lose many funds. Such frustrations cause the working processes of the

constructions that continue even during the tourist season, because of the lack of control. This leads

to enormous amount of refused reservations and shrinkage of the anyway not long season. Another

part of the tourist product that the guests often dislike is the bad infrastructure in the country

(airports, highways, and the lack of clean and maintained green areas). A problem that has existed

for many years in the spot of Golden Sands is the landslides. Many hotels are built in a short period

without thoroughly designed plans and now they suffer problems with landslides; the roads are also

being closed very often as it going to happen during the summer 2005 and the attractive “Panorama

Road” probably will not be opened. The result of the different pace of progresses between the

private and the social institutions results in many financial losses for both parties. The municipality

of Varna accepted a strategy for the future development of the tourism in the region, which is

planned for the years between 2006 and 2013. As the most prioritized points for investments are the

infrastructure, the superstructure and the transportation improvements and accessibility, but up to

that moment the entrepreneurs can just hope that there will be left any tourists who still desire to

visit Bulgaria until that time comes.

(Sources of information: : www.varna.bg, www.goldensands.bg, www.varna.info.bg, ,

www.moreto.net, magazine HoReMag, Jan., March , May2005www.barda.bg)

V. Micro Analysis

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General overview of the city

The city of Varna is the third largest city in Bulgaria and the largest city in the northeastern

part of Bulgaria. It is composed of 12 municipalities with а total population of 465 012, which is

5.4% of the whole population in the country. The greatest part of the people live in the city of

Varna - 70 % (346 000 people).

Varna is an important communication, economical and tourist center, generating 5.4% of

the total national GDP in 2004. The city takes third place in the country by international

investments. The level of unemployment is 5.26 % in 2004, which is about two times less than the

average for the country (12.1%). Another positive index is that the level of education in the so-

called “sea capital of the country” is comparatively high – 25% of the people have graduated

universities and 50 % have graduated high schools. There are 30 600 students now studying in 8

universities in Varna. The figures demonstrate that the city of Varna is an attractive place for future

investments and one of the cities that offer favorable environment for operating a business and for

living.

Infrastructure

The infrastructure in the region is one of the well developed in the country, accessible by

road, rail, sea and air transportation links by many national and international destinations. Despite

that it is much beyond the international standards and those flows in it bring a lot of unpleasant

emotions to the tourists visiting the region. Since there is no subway, the buses are the means of

public transportation. They cover all the neighborhoods and the near resorts and villages but they

run in inconvenient hours (not enough early and late transportation).

Since the beginning of 2005 the Varna International Airport, which is the second biggest

airport in the country and is the main carrier of tourists, was given on concession to the

international company Copenhagen Airport. It plans to make improvements in the amortized, old

technology and fields, to improve the slow level of services and up to the end of 2008 to open a

completely new terminal. The number of its passengers has increased by 20% in 2004. In 2005 33

international companies are going to assure charter flights for the visitors.

The port of Varna is the largest port complex in Bulgaria. Its strategic location makes it a

gateway between Europe and the Middle East. Shipping companies operate regular lines to

Istanbul, Athens and other cities in the Western Mediterranean. The city is connected with Western

Europe by railway (Varna-Rouse) and the corridor "Rhein-Main-Danube".

Marketing intermediaries

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There are quite a lot of representative offices of all the national and regional media

intermediaries in Varna, such as radios, televisions, newspapers and magazines. There are several

magazines specialized on topics and trends in the field of the hospitality industry, which have

offices in the sea capital of the country. These are Tourist Market, HoReMag, Happy Weekend,

Bacchus, Gulliver, etc. A variety of advertising agencies on the Varna’s market is also available.

Some firms are specialized in the preparation of advertising materials - “Extreme Bulgaria”,

“Euroreklama”, “Tiholov” etc.

Financial intermediaries

The financial intermediaries are of great importance for those, who operate in the field of the

hospitality industry, because most of them need a financial support in order to start their own

business. Varna’s region offers great variety of financial institutions such as banks, which give a

variety of possibilities to the entrepreneurs, so they can choose the most appropriate for them. In

Varna they are 28 and some of the most famous are SG Express bank, Raiffeisen Bank, Central

Cooperative Bank, etc. The main representatives of the financial sectors have their own offices in

the sea resorts such as “Golden Sands” in order to ease both the foreign visitors and the

entrepreneurs.

Suppliers

There are many supplying companies, operating in the Varna region, delivering all kinds of

goods and working with their own means of transportation in order to facilitate the supplying

process. There is a strong competition among them, so they regularly offer promotional prices of

the products. The main chain supermarkets, operating on Varna’s market are Metro Cash & Carry,

Piccadilly, Burlex Ltd., etc. Some of the most popular supplying companies for food and beverage

goods are “Mekom”, “Boni Oborot”, “Festa Holding”, “Bulbrew”, “Phoenix”, “Chicko”, “Ice

Food”, “Richie”, etc. Leader on the market of selling alcoholic beverages are “Begein” Ltd. and

“Vodolei”, which offers most of the high-class beverages known on the Bulgarian market. All of

them have good reputation and are preferred, because of the quality of their products and the

frequency of the deliveries.

Distribution channels

As a sea capital of the country, the city hosts the main headquarters of many tour operators

and travel agencies. Famous international brands operate in Varna and in the near resorts - “TUI”,

“ITS”, “Thomas Cook” and they bring the major foreign tourist flow to the country. Some of the

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Bulgarian companies specialized in planning and organizing of leisure and congress trips in Varna

are “New Balkan Tours”, “Alma Tour”, “Prista Tour”, “Inter Tour”, “Elita Travel”, and

“Bohemia”. Important advantage of each of these tour agents is their good image on the

international tourist market and the variety of their proposals.

Current competitors and assessment of their strengths and weaknesses

The sea resort Golden Sands is a place where many hotels are located and their target

markets are leisure tourists, which leads to a strong competition in the region.

We determine as our main competitors: hotel Exotica, hotel Rai, and park hotel A la Fiesta.

These hotels are situated near hotel Slunchogled. All of them are 3-star hotels, and offer capacity,

facilities, services and prices similar to those offered by hotel Slunchogled. (Appendix 4)

We think that hotel Exotica is the major competitor of hotel Slunchogled because it has

almost the same capacity, similar facilities and is offering the same services. That hotel has even

more advantages as it disposes of a swimming pool, sports facilities and greater number of

additional services. Hotel Rai and hotel A la Fiesta are in a cloze proximity to hotel Slunchogled

and are offering similar capacity, facilities and services, but both do not have conference facilities.

So they are also competitors but their strengths are more expressed concerning the leisure visitors

not the business and conference visitors.

(Sources: www.goldensandshotels.bg, www.goldensands.bg, www.varnahotels.net)

Threat of entry of new competitors

The ever growing popularization of Bulgaria as a tourist destination made it preferred

investment opportunity both for Bulgarians and foreigners. Currently, there is interest towards the

sea resorts and more specifically those in the Varna region and the Sunny Beach (district Bourgas),

but this process is going to slow down soon, since the market is already over saturated. Another

reason for that is the seasonal character of these hotels and the difficulties for every new

establishment to create a brand name and to gain market share in that competitive environment.

Only the big hotels or those that are parts of popular international chains will continue to invest in

the field. Many of them have the brand name of the main tour operator companies carriers of the

main flow of foreign tourists on the national market – TUI, ITS (Iberostar, RIU, Primasol) and

Thomas Cook. Different is the situation with the small hotels. Less are the ones who dare to enter

the market and compete with the famous consortiums, even those who exist on the market long time

ago are endangered of losses. The statistics show that 90 % of the visitors on the Black sea coast

prefer to stay in larger hotels and only 10% in small family hotels. In this case only the unique

15

features and the aggressive promotional campaign, combined with the search of new markets can be

the base for their success.

(Sources for the whole analysis: www.varna.bg, www.moreto.net, www.varna.info.bg, www.varna-

bg.com, HoReMag magazine, Tourist Markets magazine)

VI. Internal analysis

1. Market segmentation and target markets

The fact that hotel “Slunchogled” offers leisure and conference facilities, means that it is

appropriate place for accommodation for a wide range of people. The prices as well as the services

offered are purposed to satisfy the taste of the middle class foreigner and the Bulgarians with

income above the average. The leisure tourists are the basic target market in the summer and in the

other seasons the hotel operates mainly in order to attract business and corporate clients. During the

first operational year the visits of the corporate clients were the most and 90% of the guests were

foreigners, mostly from Russia and Germany. The main purpose of their stay was conducting of

different types educational courses, which shows that the management of the establishment did not

manage to take advantage of its location and the potential leisure group of customers.

2. Evaluation of the product – Product mix

2.1. Place

Hotel Slunchogled is situated in a popular as tourist destination area that offers a wide

range of entertainments combined with many natural treasures and that is one of its greatest

advantages. The entire zone is easy accessible and public and private bus lines run through it on a

regular basis, connecting it with all the cities and resort in the region.

The hotel is placed on a small hill, 300m away from the sea. It is in close walking distance

to all the attractions in the resort, the bus stations as well as to the beach itself and at the same time

16

away from the main stream from the noisy construction spots and the crowd. The main

disadvantage of the hotel’s location is that it is built near to a risky zone endangered by earth slides.

2.2. Product

Hotel Part - Hotel “Slunchogled” offers the guests accommodation in 21 double rooms, 1

single room and 3 suites. The total capacity of the hotel is 50 beds. All the rooms are large,

furnished in bright and warm colors that predispose to nice and calm rest. Each of them has balcony

with incredible sea view and is noise isolated, which is a great advantage for the hotel. The rooms

are equipped with air conditioner, satellite TV, mini bar, direct dial telephone, Internet connection,

and bathroom with bathtub. There are rooms for non-smokers, which is conformity with the new

requirements of the quests. The facade of the whole building is colored into orange-yellow, light

beige and green colors that are explicable by the name of the hotel, which means sunflower. The

property of the hotel is very well maintained. It possesses own hydrophore, which solves its

problems with the water pressure. The electricity is the main source of energy, which results in

more expenses for the establishment. The hotel daily operations are eased by the use of a software

program of the company Dolphin – Elite ™ that consists of two connected modules for the hotel

division and the restaurant division. This program is exceptionally fitting the needs of the hotel and

the restaurant and is user-friendly.

Restaurant and Lobby Bar - The hotel disposes of restaurant with a capacity of 50 seats,

corresponding to the beds capacity and more 40 seats are planned to be available in the summer

open-air terrace from 2005. Its interior and atmosphere predispose to a pleasant and delightful time,

but its hall is too small and this may cause problems when 50 persons have to be hosted at once.

Despite this, the separation for non-smokers already exists in the restaurant. The menu is well

arranged and designed, offering a rich assortment of Bulgarian dishes, fish specialties as well as

European cuisine. Guests can present their own recipes to be prepared by the Cooks or even to cook

themselves if they wish. The equipment in the kitchen is modern and easiness the staff in their

every-day work. All the hygienic regulations are kept strictly and the HAACP system is already

introduced. Proper storage and use of fresh products maintain the healthy and nutrition value of the

food.

The lobby bar of the hotel has a capacity of only 10 seats, as it is placed very close to the

reception desk and right next to the restaurant’ entrance. It offers a variety of Bulgarian and

imported beverages. Actually, there is only one bar area, which serves the needs of the restaurant

and the lobby bar, and the summer garden is also on the disposal of both. Their close location

permits such a combination, without slowing down the service time.

17

In spite of the fact that it is a new establishment, the occupancy rates reached in 2004

demonstrate unsatisfactory results. The restaurant had only 25% and the hotel part only 40%, which

is quite insufficient having in mind also its small capacity.

Conference Facilities -The hotel disposes of two conference rooms. The big one is with a

capacity of 30 seats and the other 15. The seats can be distributed and arranged according to the

needs of the guests. Both rooms are fully equipped with multimedia, overhead projectors, flip

charts, copy machine, fax machine, computer, and Internet connection. Business and mail services

are also available upon request.

Additional Facilities and Services - Hotel guests can use the free-of-charge parking with 8

parking lots - not enough for the 25 rooms. On every floor are situated an iron with an ironing

board. Safety deposit boxes are also available to the guests against payment. It is good that there is

an opportunity for payment with credit cards, which is of great use by the foreigners and is still not

very well spread system in Bulgaria. But the thing that is missing in the hotel is a currency

exchange service, when the main stream of customers definitely needs such. A 24-hour room

service is available – during the day from 6.30 a.m. till 23 p.m. guests can order from both the

restaurant and the lobby bar and from 23 p.m. till 6.30 only beverages are served. The orders for it

are taken on the reception desk. Fitness room and VCR can be used free-of-charge. Guests who

wish to use a swimming pool benefit such free of charge in the nearby hotels Astera or Grand hotel,

where they are driven the hotel shuttle bus. In that way the establishment has solved the problem

with the lack of that facility. Billiards, sauna, and a hairdryer, laundry, dry cleaning service,

hairdressing, professional massages, manicure, and pedicure are also on guests’ disposal upon

request and against payment. There is a wheelchair for disabled people, but there are not any rooms

designed for them.

PRODUCT LIFE CYCLE ANALYSIS:

Sales &

Profits (BGN)

Sales

Profits

0

Time

Losses/

18

High Low

Relative market share

M

ark

et g

row

th r

ate

Lo

w

H

igh

Investment (BGN Product Introduction Growth

Maturity Decline

Development

Stage

The hotel is opened for guests since March 2004 and is now in the product development

stage where there are still no profits because of the big investment and the short period of operation.

The establishment is unknown and in order guests to be attracted the advertising costs should be

high. After doing this the hotel will be able to host more customers, generates more profit and reach

the introduction stage of its lifecycle.

BCG PORTFOLIO:

According to the BGG portfolio analysis Hotel Slunchogled is a question mark because it is

a newly opened establishment which needs a lot of investment and is not yet well positioned, not so

well known on the tourist market and there is still low consumer interest. The hotel should be well

advertised and customers should be intrigued in order to turn it into a star and start to be a profitable

business.

2.2.1. Price

A common used method in Bulgaria for the accommodation establishments is to set their

prices on the competition based method. The same is the situation with hotel Slunchogled, whose

prices are competitive and close to those of its rivals in the area. They correspond to the

categorization, the quality of service and the facilities offered by the hotel. The one night price

includes also breakfast, the use of the fitness hall, use of another hotel’s pool and transportation.

For the organized groups and the corporate clients the management offers other prices that usually

are on the all inclusive principal and are lower than the regular ones. In such cases the conference

rooms and the equipment can also be included in the payment, but those rates are usually

Stars

Question

marks

Cash cows

Dogs

19

negotiated. All the other prices are claimed in Euro on the reception desk and differentiate by

seasons. A problem is that the already illegal practice to change them in BGN for the Bulgarian

guests still exists in the hotel. In that case the ones offered in BGN are a little bit lowered and this

may result in under positioning of the product.

When setting the prices in the restaurant except for the competition-based method, the cost

based method is also used. The meals and beverages in Slunchogled cost almost as much as those

in the other 3-star outlets in the area and are usually with a high mark-up. They correspond to the

customers’ expectations and are well perceived since they are already used to their levels.

The prices of the room service items and those in the mini bars are calculated on the base of

the restaurants’ ones. They are a little bit higher due to the fact that the guests expect to pay more

for the convenience to have their order in the room.

2.2.2. Promotion and advertising

The promotional strategy of hotel Slunchogled seems to be not well developed. According

to the information we have the hotel was not aggressively promoted on the market, when it is still in

the product development stage and the advertising is the way to inform the potential customers

about its existence. Up to now the hotel was advertised in the both most popular national daily

newspapers, but only with its New Year offers. These two media tools can be seen as appropriate

and assuring a wide range of audience that corresponds to the potential customers of Slunchogled

on the Bulgarian market. Recently the hotel started to promote itself in the magazine Happy

Weekend. It is specialized in the field of the hospitality industry and is becoming mire popular

although that is comparatively new on the market. Another tool for advertising is the presentation

of the hotel in the business and tourism site www.kras.net. The site is very well designed and is

already famous among the representatives of the different business fields. The hotel has its own

web site on the Internet but the information inside is not so fully presented.

The hotel is not included in any catalogue or website, purposed for the foreign market,

which means that the management of the establishment should focus on the ways to reach this

audience too.

As a whole the taken actions for promotion during the first year of operation of the hotel are

insufficient. For every new establishment the well-designed promotion can be seen as a long-term

investment that has to position it in the mind of the potential customers. Maybe the hotel

management started to think about the ways to advertise their product for leisure and non-corporate

clients only after the opening of the hotel, which influenced negatively their occupancy and

financial results in 2004.

20

3. Management and Human resources

The capacity and the services offered by hotel Slunchogled predetermine small number of

personnel and positions that combine the responsibilities of more than just one. Although there is a

lack of developed organizational structure, which is advisable to present in every establishment, it

is not difficult to follow the flow of authority and communication. There are 17 employees

altogether working in the establishment, which is in conformity with the occupancy and the

capacity of the hotel. As an obligatory requirement for them is the knowledge of Russian and one

other foreign language, especially for those serving the guests. Each of them has a developed Job

description and specification, which can avoid misunderstandings in the distributions of the duties.

It should be noticed that the management pays attention to the constant training. Every-day

discussions on some problematic issues are performed with the restaurant staff and every employee

has been cross-trained.

The owners of hotel are Russians and Bulgarians. They do not manage the everyday

operation of the hotel, only one of them visits the establishment on a regular basis and helps the

manager that is hired in order to take care of this. He is also an accountant and sales and marketing

person. Actually the middle management level is missing and that makes the information flows

easy and avoids misunderstandings in the set goals and objectives. The Chef Cook, who is an

experienced person in the field of the F&B operations, is the only one responsible for the proper

operation of everything connected with the restaurant. He is also Maitre d’hotel in the guest’s hall,

trains the personnel, orders the deliveries, participates in the preparation of the meals, organizes and

takes part in the guest’s amusement program. Among the responsibilities of the other 4 cooks are

those of dishwashers, since the hotel does not have any. There are 4 waiters in the lobby bar and the

restaurant, who are also bartenders at the same time. During the summer season when the capacity

of the seats will enlarge, the management predicts to hire 2 more waiters and 1 bartender as

seasonal employees. The receptionists have probably the broadest scope of duties. They have to

perform all the possible operations on the reception desk and should have some knowledge in the

field of the F&B services as well, since in the cases the waiters are busy the receptionists carry out

the bartenders' work. In the policy of the hotel lays the practice the front desk personnel on night

shift to be male. They have to be able to take care of the lobby bar, the room service orders and

some guests' needs. That means that in some cases there is no one on the reception desk, which is

unacceptable even for such a small establishment. There are also 3 housekeepers working in the

hotel, who are under the supervision of the receptionists and the hotel manager. The laundry, the

maintenance, the care for the green areas and the deliveries are performed by outside companies. It

21

is a rational decision for such a small hotel and is definitely less expensive. Also the additional

beauty services offered are performed by contracts with professionals called upon guests’ requests.

The management of the hotel has a good policy, concerning the motivation of the staff. The

wide range of duties of each employee actually motivates them. They feel more important for the

organization and make them feel more integrated in it. The wages are competitive and adequate.

The employees also receive meals, beverages (coffee, tea, water) and transportation from and to

work. The personnel also can use the restaurant on discounted prices – the employee receives 30%

and his/her guests- 10% discount. The fact that up to now there is a 0% labor turnover, when this

kind of industry usually demonstrates the highest figures in that field shows that the working

conditions are really good. The other index the one of the labor cost is not so favorable - 27%. It is

a normal percentage but for the establishments in the West European countries. For Bulgaria it is

still very high and is much above the average of 10- 15%.

SWOT analysis Appendix 5

VII. Short term and long-term goals

Short-term goals

- To increase hotel and restaurant occupancy by 5 % till the end of 2005

- To keep to the standard level of food cost of 30 %

- To keep to the standard level of beverage cost percentage of 18 %

- To reduce the labor cost percentage by 5 % till the end of 2005

- To keep minimum labor turnover percentage

- To attract Bulgarian business and leisure tourists

- To sign contracts with at least 5 corporate companies

- To keep constant advertising expense of 3 % from the total revenue

Long-term goals

22

- To reach hotel occupancy of 70 % by the end of 2007

- To update the hotel product by presenting new packages in 2006

- To make the required facilities for disabled people by the end of 2007

- To keep the same level of food and beverage cost percentage of 24 %

- To continue to keep minimum labor turnover percentage

- To pay off the loan by the end of 2014

- To organize more corporate and family events in order to attract more guests

VIII. Proposals for future strategic options

After a careful observation of the current situation in hotel Slunchogled and analyzing the

environment we have come to the conclusion that the property needs to make several changes and

to implement some innovations in order to establish a stable market position and to improve its

performance. It has built up the main aspects for its future development, but the ideas still need to

be worked out and applied. For the achievement of its goals we recommend the following intensive

grand marketing strategies to be applied:

Market Penetration Strategy - The usage of that strategy is appropriate for hotel

Slunchogled because it is a new establishment that aims to attract more customers from its current

target groups by slightly enriching its product. Its implementation we suggest to be done through

the diversification of its current offered products and services and more aggressive promotional

campaign. We think that the development of some leisure, holiday and weekend packages on

preferable price levels as an addition to the existing ones is an appropriate way for the hotel to

catch the attention of more Bulgarian leisure and business tourists. Also the summer garden with

the barbecue gives the opportunity to diversify the product offered by the restaurant and to attract

more guests. We also propose the development of some daily excursions in the region as part of the

existing products for the foreign and Bulgarian leisure visitors.

23

Market Development Strategy - It means that the actions of the hotel will be directed

towards the attraction of new market segment, by offering them the same range of products and

services. The new group of potential customers is the Bulgarian business people and corporate

clients to whom we will sell the already existing conference facilities and business packages that

are just slightly modified and adjusted according to their needs.

IX. Implementation plans

1. Marketing plan

Market segmentation - According to us the current target markets, represented mainly by

foreigners, greater part of which – Russians are well chosen and appropriate for hotel Slunchogled.

We recommend the management to try to keep them but to pay more attention to the Bulgarian

leisure tourists and to increase their percentage. The potential customers among the Bulgarians are

both young families and couples as well as middle-aged people with incomes above the average.

The new potential market for the establishment that has to be included and worked out is that of the

Bulgarian business people. The representatives of big and middle size national and international

companies can benefit the business facilities of the hotel and conduct different meetings and events

on regional level there. The offers of the restaurant are suitable for all the citizens of the Varna

region.

1.1. Place

We do not foresee any changes in the location of the hotel, first because it is in a favorable

for development of tourism business area and secondly because it cannot be accomplished. The

popularity of the region and the easy accessibility of the establishment are only the advantages from

which it should benefit in achievement of its future growth goals.

1.2. Product

Hotel Slunchogled is a comparatively new establishment on the market that as a generally

does not have any major gaps in the product it offers. That is why we think that there is no need of

some basic alterations in the overall concept of the hotel. Our suggestions are directed mainly

24

towards the introduction of some changes aimed to enrich and redevelop the current diversity of

facilities and services and thus to meet the needs of greater number of potential customers.

We do not predict any changes in the interior of the establishment. The only thing that is

missing in the guestrooms is the availability of hairdryers in each of them. They can be bought and

put in the bathrooms at the beginning of October 2005 for greater customer convenience and till

that moment we recommend they to be given at the reception desk but free of charge. In 2006 as

an alteration of the interior can be added some more or different decoration attributes. In 2007 we

advise the management to close the establishment for 10 days in January and make a light touch

up in the rooms and the public area. At that period we suggest them two of the double rooms to be

adjusted for the needs of disabled people.

The restaurant also is managed and designed in an appropriate way. Its small area is used

rationally and it disposes of the necessary 50 seats. The management of the establishment already

has the idea to enlarge its capacity by opening its nice garden during the summer. The space is big

enough for the placement of 40 seats as well as a bar and a barbecue. The garden area is covered

so it can be used a whole summer round and the wooden benches and tables we suggest to be

placed assure pleasant atmosphere for lunch or dinner. Thus not only the guests of the hotel can

visit the restaurant, but also some of the tourist of the resort and citizens of the city of Varna. The

musician and the inviting smell of the barbecue in the evenings can easily catch the attention of

the people passing by. The bar will be opened 24-hours. The chef cook will be taking care for the

entertainment of the guests by cooking in an attractive manner on the barbecue and some new

items will be added to the current range of meals. The opening of the designed in this way summer

garden can be accomplished till the beginning of July.

In order to increase the restaurant occupancy we propose events as marriages, birthdays,

anniversaries and company holidays to be organized in the restaurant of the hotel all year round.

There are special offers depending on the number of the guests and the season in which the events

can be carried out. Various types of menus will be presented to the guests in advance in order to

choose the one they want for the gala dinner (Appendix 6 Sample offers). In December 2005,

2006, 2007 effort should be put for the attracting of the big and middle size companies from the

region for the organization of the common for all companies at that time of the year celebrations.

The high percentage of foreign guests – 90% requires the availability of currency exchange

service for their easiness. The receptionists can perform that service on the reception desk. Another

additional service that can be of interest for the foreign and leisure tourist is the organization of

daily excursions in the nearby historical and amusement spots. The main destinations are Aladja

Monastery, Pobitite Kamuni, Theme park Fanagoria, Nessebar (The Old Town), Balchik (The

25

Botanical Garden), Dobrich, Cape Kaliakra, the natural reserves- Jailata and Durankulak Lake,

visits in the Aquapolis. Such daily excursions are offered on the territory of the Golden Sands resort

by the company Anons 94 AD. The hotel can make a contract with it and sell its offers to its guests.

They will be requested in advance at the reception desk and some of them will be sold as part of the

packages. Our idea is this additional service to be performed mainly from March till October.

In order to increase the percentage of the Bulgarian leisure and business tourists we propose

a number of packages to be developed, especially designed for the needs of those target groups.

There are several types of offers that we created and believe can catch the attention of the

leisure tourist, because of the preferable price levels and the comfort and location assured by the

hotel. One of them is the special Three days summer package. This package program is suitable for

young families and couples as well as mainly for those from the Varna and the region that need a

quick recreation from their everyday busy life. It includes two all-inclusive days stay and usage of

all the sport and recreational facilities of the hotel and swimming pool in neighbor hotels free of

charge. For the young families with children it can also include one-day visit in the nearby

Aquapolis Park. It will continue from the beginning of May till the end of October.

The other type of summer leisure package that we propose for the vacation of the leisure

tourists is the One-week leisure offer. It includes 6 days all-inclusive stay in the hotel, usage of all

the sport and recreational facilities, as well as one excursion at guest’s choice. In 2005 it will be

sold from the beginning July till the end of September, and in 2006 and 2007 its sales will start

earlier and will be valid for the periods 1st June – 31st September.

We consider as suitable the development of some packages for national holidays such as

The New Year Day, The St. Valentine’s Day and The Woman’s Day for all kinds of guests during

the year. The New Year package includes three overnights Full Board (from 30th December till 2nd

January), and as one gala dinner with special program is predicted. The guests can use all the hotel

facilities free of charge. This package is appropriate for customers from the whole country, while

the packages for the St Valentine’s Day and The Woman’s Day are purposed mainly for the market

in the region of Varna. It includes just one overnight with breakfast and one gala dinner with

entertainment program.

The other target group towards the attraction, of which the establishment should direct its

efforts, is that of the business and corporate clients from the Varna region. Having in mind their

basic needs we created some packages. They will be sold all year round and mainly in the period

October - May. They are suitable for the middle size and big national and international companies,

banks, and different associations, foundations that perform 3-4 day conference meetings. Those can

be seminars, team building meetings, performance appraisal and future marketing policies

26

discussions, companies’ celebrations and events, train the trainers and training courses. We created

business weekend, three- and four-day business packages, as usually that is the duration of the

different conferences. Each of them includes the 2 or 3 overnights in the hotel, 2 coffee pauses per

day and the use of the conference and the recreational facilities and an outside swimming pool. The

aim is to reach as much as possible potential buyers of that product and to assure their visits on a

contractual basis for a period of at least on e year. Of course we project different rates and flexible

offers depending on the different companies’ needs. The hours of the coffee pauses, the menus, the

necessary equipment, the arrangement of the conference rooms, the accommodation

(single/double), and all these additional elements will be negotiated in advance with every single

company.

The same packages will be offered in the next two years as the management can observe

their acceptance among the customers by the Questionnaire that we propose to be distributed on the

reception desk (Appendix 7). In case the guests are not satisfied with some services and require

their change or addition of new the management can react and introduce them.

1.3. Price

The current prices of hotel Slunchogled as we already said generally correspond to those in

the other hotels nearby, although they are a little bit lower, especially for the Bulgarian guests. The

main problem is that the double pricing method still exists in the establishment although it

contradicts to the Bulgarian law system. That is why we recommend the management of the hotel to

introduce new price list and start charging its guests equally for accommodation. Reference to the

new price list that we propose can be seen in Appendix 8. The prices in the new list are with about

25% lower for the foreigners. The new charges will be more attractive for them and since they are

usually middle class price sensitive travelers this can result in more leisure foreign guests for the

establishment. In order to solve the problem that can occur with the Bulgarian visitors, who are not

yet used to the equalized price lists we suggested the development of several packages, designed for

both the business and the leisure tourists, assuring them preferable discounts.

The prices of the additional services and those in the restaurant we consider as appropriate

and do not suggest changing them. Only the use of the hairdryers and the use of the billiards we

think it can be free of charge. The additional cost of € 6 (6 BGN) for Half Board and € 12 (12

BGN) for Full Board we equalized to 10 BGN per meal, using the same price principle as with that

for the accommodation.

When setting the prices of the developed by us packages we used mainly the cost-based

method. We calculated the selling price of each of the components included in the package and

then set different percentage of discounts, depending on the purposed target market and its needs.

27

Then we tested the prices on the market as we took into consideration the potential customer’s

expectations for the value of each package and decided the final sum of each package. Calculation

of all package prices can be seen in Appendix 9

Having in mind that the group of the leisure tourists is the more prices sensitive the

discounts we set for them are higher than the ones for the business customers are. Our main

purpose is to create new competitive price levels of the hotel’s services that do soften the

considerable increased introduced by us for the accommodation and responds to the expectations

of the Bulgarian leisure customer. We suggest discount of 15% for the summer packages.

In calculating the package price for the corporate clients we decided that the prices would

not depend on the season, but on the volume of the contracted business. We considered first the

number of the attendees in each event and suggest a 15% additional discount for every meeting for

more than 25 persons. The frequency with which each company will organize its conferences, the

duration of the contracts and of course the expected price value of each of those potential

corporate clients is also taken in mind and the discount can be negotiated additionally.

The price setting of the gala dinner menus purposed for different celebrations are also on

the basis of the cost-based method and the competition based. We propose a discount of 10% only

for the events for more than 30 people, because anyway the prices in the restaurant are very

competitive.

We do not project any changes in the prices for the following two years and suggest the

management of the hotel to follow the same pricing methods and observe closely both the

competition and the new trends in the customers’ requirements.

1.4. Promotion and advertising

The advertising campaign of Slunchogled hotel needs an improvement in order more

people to be informed about the existence of the establishment and its offers. From July 2005 the

hotel offers new package programs for Bulgarian corporate and leisure guests, so they have to be

presented to the customers through well chosen advertising tools. When picked them up, we took

into consideration the preferences of those target groups and the budget that the hotel can afford,

since it is small and can not spend a lot for promotion. We defined a limit of about 2 to 4% of the

expected revenues each year, which is normal for the industry.

As the main goal of hotel Slunchogled is to develop the package programs for Bulgarian

corporate guests and leisure tourists, different tools are used for the different target markets. The

most appropriate edition for advertising is “Manager” magazine for business customers. The ads

inside will be published once a month, but only in September and October in 2005 and in 2006 and

2007- in February, March, September and October. It is an expensive tool and that is why we

28

picked up only some of the months during which the hotel hosts mainly business guests and is

focused on that activity. The web side www.kras.net is also a good tool that is purposed for both the

business and the leisure tourists and we recommend the management to keep advertising in it in the

following 2 years. “Happy Weekend” magazine we see also as an appropriate, because it can reach

again the two target markets. The establishment will be advertised differently in the different

seasons once per month, each month till the end of 2007. The media tool that we chose is BG Radio

as we see it as a suitable for the leisure market. The broadcasts in it will be twice a day, three times

per week from July till December 2005 and the whole 2006 and 2007. The hours are between 7-11

and 18-24, since those are the peaks and are suitable for catching the business listeners as well. The

content of the broadcasts will be changed regularly according to the special offers at the time. For

the special New Year packages and The Summer Packages ads will be published from the

beginning of November till 20th of December 2005, and in May and July 2006 and 2007 in the most

popular and with the broadest readers range newspapers “Trud” and “24 Chasa”. Slunchogled hotel

will be included in the web sites www.bulgarianresorts.com and www.tripadvisor.com, which is a

free catalogue with more than 50 000 hotels over the world in order to catch the attention of some

foreign leisure tourists. There will be printed 1000 brochures in 2005 and 2000 in 2006, 2007 years,

which will be distributed as point of sale advertising materials and as part of the offers that will be

sent to the companies. The new advertising campaign for 2005 will start at the beginning of July.

For 2006 we propose the hotel to start advertising in the site www.abv.bg, as it is also one

of the most popular among the Bulgarians. The web site of the hotel should also be well maintained

and frequently updated, giving the opportunity for direct reservation. The advertising campaign in

2007 will be the same as in 2006, if there are not any unpredictable conditions, such as new

competitors’ products or new customers’ requirements.

Total advertising expense can be seen in Appendix 10

1.5. Sales forecasts Appendix 11

2. Human resources

Organizational structure, working time and working schedules - Because the hotel does

not have an organizational chart we propose one that can clearly show to all the employees the

pattern of authority and the communication flow that exist in the establishment. We included in it

also the new positions (from July 2005) that we consider as necessary (Appendix 12). We think that

most of the responsibilities and the duties are well distributed in the hotel and are in conformity

with its size. The new position that we suggest to be introduced is that of the bellboy. Two people

29

will be hired from July 2005 and they will be only on night shifts. Their responsibilities will not be

that of a common bellboy and they will be cross-trained like the others employees, so they will be

also bartenders and a waiters for the room service orders. In that case the receptionist will not have

to leave their desk and there will be a constant presence there. We also suggest a maintenance

person to be hired from the beginning of July. Except for his regular duties, he will be a diver of the

bus and will perform the transfers of the guests. He will be responsible for the delivery of some

additional conference equipment, when necessary, and some other supplies that are not delivered on

the spot. For the sales and distribution of the new business packages will be responsible one of the

owners. He/she will communicate with the companies, present to them the conference opportunities

and carry out the negotiations, helped by the manager of the hotel. The manager will do the sale of

the leisure packages. We project two waiters and two bartenders to be hired during the periods,

when the summer garden is opened. They will be cross-trained by the Chef Cook like the other

employees.

According to us the establishment does not need any more additional personnel and those

employees can carry out all the duties. All the shifts cover the working schedules and are spread

according to the anticipated occupancy. The working hours and payments are in correspondence

with the law requirements (Appendix 13 Shifts).

Recruiting and selection of personnel - We recommend the hotel to recruit and select

young and graduated people who possess some qualification in the field of the hospitality industry

because they are more reliable and adaptive to training. Such young people are more easily

socialized in the hotel’s organization and culture. The hotel can publish job advertisements in the

local media or use its current employee as referrals because good employees tend to refer other

good employees.

Training and performance evaluation - We advise the management of the hotel to

consider training as an important issue in order to facilitate the employees to develop their skills

and abilities to perform their duties in an effective and efficient manner. Training must be done on a

regularly basis not only in the beginning of the job placement. The Chef Cook (the F&B Manager)

should continue to train the kitchen and restaurant personnel. This is appropriate because he has

selected, trained and evaluated the personnel so far since the opening of the hotel. He knows

exactly what and when should be improved in both the employee skillfulness and their service. The

Hotel Manager should also continue to train and evaluate the Receptionists and the Room

attendants, as she has done that so far.

We advise the management of the hotel to consider periodical employee performance

evaluation because this is very important for the employees in order to be appraised and given

30

directions for their further job performance. Such evaluations could be done semi annually and

contain aspects like employee’s competence on the job, attitude toward guests and colleagues,

teamwork, motivation, willingness to perform the job, way of reacting in different situations,

overall appearance, etc. We propose a sample evaluation form which can be seen in Appendix 14.

The people who evaluate the personnel are the ones who conduct the training - the Chef cook and

the Hotel manager.

Job descriptions and specifications - Job descriptions and specifications already exist in

the hotel’s organization and we advise the management of the hotel to regularly update or add

additional information inside them in order to be accurate and precise and facilitate employees to

perform their duties better and to know exactly what is expected from them as well as to know who

their superiors and/or subordinates are. (Appendix 15).

Salaries and payroll expenses, benefits - The salary and payment policy of the hotel is

well set and does not needs general changes. We can just suggest an increase of 5% in the wages of

the employees from the beginning of July 2005, because all of them have already worked there for

more than a year. In order to keep its employees loyal we suggest every year an increase of 5 % to

be introduced for those who work for longer time. (Appendix 16).

The meals the transportation and the uniforms cover the main aspects, concerning the

employees’ benefit issues. We propose the management to offer additionally laundry and dry

cleaning for the employees’ uniforms .The introduction of more extra labor expenses is limited for

the moment by the size and the profit amounts of the hotel as well as by the competitive wages.

Standards of performance - Standards of performance are already constructed and are

available to the personnel. We advise the management of the hotel to periodically review and

update if needed these standards because they are very helpful tool for employees in order to know

what in a job and how exactly it should be done.

Motivation - Employees must be made satisfied and loyal by offering them pleasant and

healthy working environment. We recommend the management of the hotel to consider annual

salary increases and performance appraisals. In this respect there could be and increase in the

salaries of the personnel by 5% from July 2005, by more 5% in 2006 and in 2007. It is also

advisable to socialize the employees make them feel part of the company and to be concerned about

the future of the hotel by expressing their views on the performance of the hotel and what can be

done in order to be improved.

3. Operational plan

3.1. Distribution channels

31

3.1.1. Direct distribution channels

The products, offered by the hotel are all directly sold during the whole year on the spot. The

other channel is the web site of the hotel itself, which should be adjusted for direct reservation

possibilities. Another way that we suggest to be used is through the personal selling method. It is

especially advisable for the attraction of corporate clients among the Bulgarian companies. It can

show the personal attitude that the hotel is ready to assure to each of them. We think that the owner

who is regularly in the hotel can deal with this matter, since it will again demonstrate respect and

the person should be very diplomatic and experienced. Our suggestion is the hotel first to choose

about 200 middle size and big companies of all business fields operating in the region of Varna and

to send them either by email or by post the offers for the conference tourism. Then the sales person

should contact those companies by telephone and see if any of them are interested in the offers.

Because usually only 5% of the primary demonstrate interest, the owner can appoint a personal

meeting with them and explain thoroughly the opportunities and the advantages of the

establishment. That is actually the most important step that determines to a great extent the future

contracts. We think that after meeting with the representatives of the 28 banks in Varna, the hotel

Slunchogled can convince at least 3 Banks that it is an appropriate place for conducting their team

building and marketing selling discussion meetings. After the conduction of the first such meeting

the owner then will meet with the bank representatives again and will sign a contract with those

three banks for two years and a half. We see as those potential clients of the hotel Raiffeisen Bank,

SI Bank and Bulbank.The same procedure concerns all the companies in the region and the other 3

companies that we predict as future possible clients are like Automotor Corporation, Promobile Ltd,

Kia Motors Bulgaria Ltd. The hotel can design for them then a special rates and packages for them,

according to their needs and requirements. Sample calendar of the bank and companies events can

be seen in Appendix 17

3.1.2. Indirect distribution channels

The product of Slunchogled hotel could be distributed through two indirect channels. The

first one is by joining the hotel to the international tourist site www.tripadvisor.com, which operates

all over the world and a direct reservation link can be created in it and the other channel is the web

site of the hotel itself, which should be adjusted for direct reservation possibilities.

The other channel of distribution is by tour operator. We advise the hotel to sign a contract

for two years and a half with the well-known tour operator Alma Tour. It will assure the

establishment occupancy of 40 in June and 75% in July and August, by selling the summer

packages to the leisure tourists. The commission will be 10%.

32

3.2. Supplies

There are many suppliers in the Varna region that try to attract more customers by offering

them favorable conditions. So in case a new better offer occurs the hotel can choose easily amongst

them and since the power of the buyers is stronger than the power of the suppliers in this situation.

We recommend them to pick up their future suppliers using the following criteria: product quality,

favorable prices and discounts, packaging, accurate transport delivery and reputation.

Having in mind that the hotel is satisfied with its current suppliers and keeps to a normal

food cost percentage we recommend keeping them.

The current suppliers of the hotel are: Chicko – meat products, Angelica – pastries and

breads, Vodolei and KMB – alcoholic and non-alcoholic beverages, Richi – fruits and vegetables,

Ice Food – poultry products, RVD Ltd – cleaning supplies and detergents. The hotel keeps small

quantities on stock and has the practice to order its food and beverages items on a very regular

basis. The suppliers offer daily services so there is no problem for both parties everyday orders and

deliveries to be made depending on the hotel occupancy. Even in the cases when there is an

emergent order the current suppliers come forward in several hours. The detergents are ecologically

clean. They are ordered in advance and are stocked for several months. The laundry services are

carried out by the outside company Bagra which comes on the spot and transport them.

3.3. Fixed assets 2005

New equipment is going to be bought for the summer garden in order to open in July 2005.

A whole bar construction and bar equipment, a barbecue, wooden chairs, benches and tables will be

bought. The tables and chairs will be placed on the first level of the terrace. The bar and the

equipment on the second level which higher than the first. We also plan 26 hairdryers to be bought

and put into guests’ bathrooms. Appendix 18

(Sources: www.noviz.com, www.intimpex.com, www.areximgarden.com, www.bps.bg)

33

4. Financial plan

Income statement

Year 2005 Year 2006 Year 2007

I. Hotel department

Revenues

Rooms 326 044.10 440 341.00 457 954.70

Additional services revenue 9 781.30 13 210.20 13 738.60

335 825.40 453 551.20 471 693.30

Expenses

Other expenses 16 302.20 22 017.00 22 897.70

Department income 319 523.20 431 534.20 448 795.60

II. F & B Department

Revenues

Food & Beverage revenue 153 151.30 213 936.50 224 633.30

Expenses

Cost of food & beverages 36 756.30 51 344.80 53 912.00

Other expenses Restaurant 4 594.50 6 418.00 6 739.00

Department income 111 800.50 156 173.70 163 982.30

GROSS INCOME 431 323.70 587 707.90 612 777.90

IV. Undistributed expenses

Salaries, wages and payroll taxes 111 580.10 127 654.50 134 037.20

Employee benefits 8 244.00 8 351.70 8 351.70

Employee meals 9 072.00 9 216.00 9 216.00

Utilities 39 118.10 39 900.50 40 698.50

34

Repairs 0 0 4 000

Advertising 12 123.30 20 741.70 20 741.70

Administrative & general 3 500 3 500 3 500

Additional services 2 400 2 400 2 400

Laundry services 4 889.80 6 674.90 6 963.30

Maintenance 2 400 2 400 2 400

Musicians 3 675.60 4 278.70 4 492.70

Tour operator 0 14 365.70 14 365.70

Total undistributed expenses 197 002.90 239 483.70 251166.80

V. Income before fixed charges 234 320.80 348 224.20 361 611.10

Property taxes 2 250 2 250.00 2 250.00

Interest expense 57 024 50 688.00 44 352.00

Depreciation & Amortization 103 552.80 103 552.80 103 552.80

Tourist taxes 10 242.80 14 594.20 15 886.60

TOTAL 61 251.20 177 139.20 195 569.70

VI. Income before taxes

Corporate tax 15 % 9 187.70 26 570.90 29 335.50

NET INCOME 52 063.52 150 568.30 166 234.20

Cash flow

Year 2005 Year 2006 Year 2007

Cash at the beginning 3 000 69 158.90 244 908.90

Inflows:

Room sales 391 252.90 528 409.20 549 545.60

Restaurant sales 183 781.50 256 723.80 269 560.00

Additional services 11 737.60 15 852.24 16 486.30

Total Inflows 589 772.00 870 144.10 1 080 500.80

Outflows:

35

Supplies (Hotel) 19 562.40 26 420.40 27 474.20

Supplies (F&B – Restaurant) 44 107.60 61 613.80 64 694.40

Other expenses restaurant 5 513.40 7 701.60 8 086.80

Salaries & Payroll taxes 109 569.90 127 420.50 133 505.30

Employee benefits 9 892.80 10 022.00 10 022.00

Employee meals 9 027.00 9 216.00 9 216.00

Utilities 46 941.70 47 880.60 48 838.20

Maintenance 2 400 2 400 2 400

Advertising 14 548.00 24 890.40 24 890.40

Administrative & general 3 500 3 500 3 500

Fixed assets 13 912.80 0 0

Repairs 0 0 4 000

Additional services 2 400 2 400 2 400

Laundry service 4 889.80 6 674.90 6 963.30

Musicians 3 675.60 4 278.70 4 492.70

Tour operator 0 17 238.90 17 238.90

Property taxes 2 250.00 2 250.00 2 250.00

Tourist taxes 10 242.80 14 594.20 15 886.60

Loan payment 120 384.00 114 048.00 107 712.00

Corporate tax 0 9 187.70 26 570.90

VAT 97 795.30 133 497.50 139 265.30

Total Outflows 520 613.10 625 235.20 659407

Cash at the end of the period 69 158.90 244 908.90 421 093.80

Ratio analysis

2005

Paid occupancy percentage = 44.9 %

36

Profit margin = Net income: Total revenue = 52 063.52: 488 976.7 = 10 %

Operating efficiency = Income before fixed charges: Total revenue =

234 320.8 : 488 976.7 = 48 %

Labor cost % = Total labor cost: Total revenue = 111 580.1 : 488 976.7 = 22.8 %

Food & beverage cost % = Cost of food sold + cost of beverage sold = 36 756.3 = 24 %

Food sales + Beverage sales 153 151.3

2006

Paid occupancy percentage = 66.64 %

Profit margin = 150 568.30: 667 487.7 = 22.5 %

Operating efficiency = 348 224.2 : 667 487.7 = 52.2 %

Labor cost % = 127 654.5 : 667 487.7 = 19.2 %

Food & beverage cost % = 51 344.8 = 24 %

213 936.5

Debt to equity ratio = 0.26 to 1

2007

Paid occupancy percentage = 70.64 %

Profit margin = 166 234.20 : 696 326.6 = 23.8 %

Operating efficiency = 361 611.1 : 696 326.6 = 51.9 %

Labor cost % = 134 037.2 : 696 326.6 = 19.2 %

Food & beverage cost % = 53 912 = 24 %

224 633.3

Debt to equity ratio = 0.18 to 1

X. Evaluation control proposed strategies

37

According to the results of the ratio analysis we reached the conclusion that our strategies

would be successfully implemented for the development of Slunchogled hotel. The percentage of

the profit margin is higher than the average for the industry (2- 10 %), which shows that the hotel

generates very good number of sales and has appropriate control over the expenses. The food &

beverage costs percentage is very good and responded completely to the standards of the hospitality

industry. The labor cost percentage is decreased due to the high occupancy percentage reached and

the reasonable revenues. In order to keep our personnel satisfied we will increase the salaries of the

employees every year which will improve the motivation and the their involvement in the working

process.

After executing our primary goals and analyzing the results of them, we would advise the

hotel to continue to keep to these proposals in the future in order to reach constant positive results

and update them if needed.

38

Appendix 1 Main Economic Indexes

Indexes 2003 2004 Projected

for 2005

-- GDP

GDP, thousands BGN 34 419

244

38 388

116

GDP, real growth in % 4.3 5.6 5.2-5.3

-- Inflation in % 2.3 6.0 3.5 - 5

-- Unemployment rate

Labor Force, thousands 3 283.1 3 322.0

Number of Unemployed, thousands 449.1 399.8

Unemployment Rate- % 13.7 12.1 10.9

Long-term Unemployed-% 65.4 59.3

Unemployed Young People, up to 24years old-

%

28.2 25.8

-- Average Income indexes

Total Income, average per capita, BGN 139.28 153.99

Total Expenditure , average per capita, BGN 145.77 162.39

Gross average monthly wage, BGN 284 301 344

Net average monthly wage, BGN 225.09 238.76 267.92

Appendix 2 Income taxes according to the sum received 2005, 2004 and 2003 years

INCOME per month TAX

Until130BGN Not obliged

2005

From 130BGL -150BGL 10 % of the sum over 130BGL

From 150BGL-250BGL 2 BGL+ 20 % of the sum over 150BGL

From 250BGL -600BGL 22 BGL + 22 % of the sum over 250BGL

Over 600BGL 99 BGL + 24 % of the sum over 600BGL

2004

Until 120BGL Not obliged

From 120BGL -150BGL 12 % of the sum over 120BGL

From 150BGL-250BGL 3.60 BGL+ 22 % of the sum over 150BGL

From 250BGL -600BGL 25.60 BGL + 26 % of the sum over 250BGL

Over 600BGL 116.60 BGL + 29 % of the sum over 600BGL

2003

Until 110BGL Not obliged

From 110BGL -150BGL 15 % of the sum over 110BGL

From150BGL - 250BGL 6BGL + 22 % of the sum over 150BGL

From 250BGL -600BGL 28BGL + 26 % of the sum over 250BGL

Over 600BGL 119BGL + 29% of the sum over 600BGL

39

Appendix 3 Tariffs for Categorization of Tourist Establishments – year 2005

Hospitality Establishment Tariffs

Hotels, Motels and Tourist Villages

Up to 30 rooms 500BGN

From 31 up to 150 rooms 1000BGN

From 151 up to 300 rooms 1870BGN

From 301 up to 500 rooms 2750BGN

Over 500 rooms 5000BGN

Restaurants, Snack bars, Cafés and Bars

Up to 20 seats 110BGN

Up to 50 seats 250BGN

Up to 150 seats 500BGN

Up to 300 seats 940BGN

40

Slunchogled *** Hotel

Presents to Your attention:

Weekend/ 3-day Business Package

and

4-day Business Package

We would like to offer You a quiet and pleasant atmosphere to carry out Your meetings and seminars in a hotel, equipped according to the world standards for conference tourism.

The packages include accommodation-full- board, usage of the conference

halls and the facilities offered by the hotel. The price for a weekend business

package is 134 BGN and for a four-days business package is 201 BGN. Groups

over 25 persons receive a discount of 15% from the total price of the package.

These offers are valid from September till May; the dates are additionally

negotiated according to the requirements of the corporate customers.

If You are interested do not hesitate to contact us:

052/ 385 746- Neli Dimova (Sales & Marketing Manager)

It will be a pleasure for us to work with You!

41

Appendix 6

Sample package offers

Slunchogled *** Hotel would like to invite You to carry

out Your business events in a splendid hotel, situated in the

heart of the Black sea resort - Golden Sands.

Please, be our guest Mr. / Mrs. ………

In case you want to reserve the hotel for your business

events, please register directly in the hotel or at telephone:

052/ 385 746- Neli Dimova (Sales & Marketing Manager).

RSVP

42

Slunchogled *** Hotel

Presents to Your attention:

1-week Summer Package

and

3-day Summer Package

We offer You a great opportunity to spend a wonderful holiday in Golden Sands - on The Black Sea coast

The packages include accommodation-full- board, usage of all the sport

and recreational facilities of the hotel, as well as swimming pool in neighbor

hotels and excursion*(only for 1-week summer leisure package). The price for

summer 1-week leisure package is 490/460 BGN (depending on the month) and

for summer weekend package is 140 BGN. All tourists receive a discount of 15%

from the package price. These offers are valid from May till October.

If You are interested do not hesitate to contact us: 052/ 385 746- Neli Dimova (Sales & Marketing Manager)

It will be a pleasure for us to make Your holiday unforgettable!

43

Slunchogled *** Hotel

Presents to Your attention:

New Year Package

We would like to offer You a great opportunity to meet the New Year Eve in Golden Sands -

on The Black Sea coast

The package includes accommodation – full board (from 30th December till

2nd January), gala dinner with a special program and use of all the sport and

recreational facilities of the hotel – fitness, sauna, massage, and billiard. The

price of the package is 214 BGN.

*The final date for reservations is 22nd December. * Exemplary types of New Year menus are enclosed.

If You are interested do not hesitate to contact us:

052/ 385 746- Neli Dimova (Sales & Marketing Manager)

It will be a pleasure for us to meet the New Year with You!

44

~ Snow-white’s menu ~ ~ Santa’s menu ~

* Paned cheese with honey & walnuts * Mushroom stuffed with ham & cheese

(Crispy paned white cheese with honey & walnuts) (Sautéed mushrooms filled with mix of chopped ham & cheese)

* Salad Snow-white (250g) * Assorted winter salad (300g)

(Coupled Snejanka salad, yogurt & red peppers) (Ham, yellow cheese, apple, potatoes, mayonnaise)

* Snow-white’s specialty (350g) * Santa’s bag (350g)

(Chicken breasts, sweet corn, cheese, cream, (Pork fillet, bacon, mushrooms, French cheese,

almonds and steamed rice) and mashed butter potatoes)

* Snow-white chocolate mousse * Santa’s fruity cake

(Light white chocolate parfait cream with vanilla topping) (Rich assortment of jellied fruits and vanilla cream)

~ The Dwarf’s menu ~

* Eggs stuffed with mushrooms, cheese

(Boiled eggs filled with chopped mushrooms & cheese over a tomato slice)

* Mixed vegetables salad

(Carrots, cabbage, tomatoes, cucumbers, onion, soy-bean sprouts)

* Winter rice noodles with vegetables

(Rice noodles, Tofu, vegetables, mushroom sauce, peanuts)

* Flourless vanilla cake

(Dietetic flour cake with raisins & hazelnuts)

Drinks:

* White or Red wine 250ml * Rakiya or Vodka 50ml * Champagne 150ml * Cocktail 150ml * Mineral water 50ml * Coca-Cola or Fanta or Sprite 250ml

******************************************************************************************

Slunchogled *** Hotel

NEW YEAR’S CELEBRATION DINNER OFFER

45

Presents to Your attention:

St. Valentine’s Day Package

(14th – 15th February)

We would like to offer You a romantic atmosphere on a splendid place - Golden Sands

to meet the St. Valentine’s Day with Your beloved

The package includes one overnight with gala dinner and special program

in the restaurant of the hotel, breakfast and lunch. The price of the package is 80

BGN and all guests receive a discount of 20 % from this price.

*The final date for reservations is 10th February.

If You are interested do not hesitate to contact us: 052/ 385 746- Neli Dimova (Sales & Marketing Manager)

It will be a pleasure for us to share our love with You!

Slunchogled *** Hotel

46

Presents to Your attention:

December – The Holiday Month

We would like to offer You a splendid restaurant and holiday atmosphere to spend Your corporate events!

Restaurant Slunchogled organizes different types of corporate events for

the end of the year. It offers You 50 seats and delicious meals to celebrate the

coming holidays with Your colleagues. The gala dinner includes four - course

menu and alcoholic and non- alcoholic drinks. The price of the voucher is 21

BGN. Examples menus are enclosed.

If You are interested do not hesitate to contact us: 052/ 385 746- Neli Dimova (Sales & Marketing Manager)

It will be a pleasure for us if You are our guests!

47

Sample menus:

Menu # 1 Menu # 2

~ Paned cheese (100g) ~ Stuffed ham rolls (100g)

(white cheese in a crispy pane) (ham stuffed with Russian salad)

~ “The Angry Boss” Salad (350g) ~ “The Mad Boss” Salad (350g)

(Tomatoes, cucumbers, Russian salad, Snejanka salad, (Tomatoes, cucumbers, cabbage, carrots, red peppers,

ham, yellow cheese, egg, corn, olives) potato salad, cheese, ham, egg, olives)

~ Chicken “Day off” (400g) ~ Pork “Late for work” (350g)

(Barbecue chicken breasts with cream sauce, (Pork fillet with mushroom sauce and

steamed vegetables and rice) roasted potatoes)

~ The chocolate cake of the boss (120g) ~ The fruity dream of the boss (150g)

(Dark chocolate with vanilla filling & grated almond) (Exotic fruits, ladyfingers, cream, raisins, walnuts)

~ Rakiya/ Vodka 50ml ~ Rakiya/ Vodka 50ml

~ White wine ½ bottle ~ Red wine ½ bottle

~ Mineral water 500ml ~ Mineral water 500ml

~ Coca-Cola, Fanta, Sprite 250 ml ~ Coca-Cola, Fanta, Sprite 250ml

PRICE: 21 BGN PRICE: 21 BGN

****************************************************************************************** * For reservations and special requests (i.e. persons on a vegetarian or a vegan diet) contact us in advance.

OFFER December 2005 Corporate Events

GALA DINNER

48

Appendix 14 Evaluation form for an employee of hotel Slunchogled

Name of employee:

Position:

Person who evaluates:

Date:

Performance areas

Rating

Excellent Good Average Poor

Responsibility

Competence on the job

Attitude toward guests and colleagues

Teamwork

Motivation and enthusiasm for work

Willingness to help guests and colleagues

Way of reacting in different situations

Quality and consistency of work

Keeping safety & security procedures

Keeping standards of performance

Initiativeness

Personal appearance

49

Appendix 10

Advertising Expenses for 2005

Media Size/Durati

on Frequency Period Price without VAT Total price + VAT

BG Radio 30 seconds 2 times a day/ twice a

week July –December

69 BGN

per day/ 138 BGN

per week

3312 BGN + 662.4 VAT =

3974.40 BGN

“Happy Weekend”

magazine - - January – June 380 BGN

2280 BGN + 456 VAT =

2736 BGN

“Happy Weekend”

magazine 1/4 Page Once a month July – December 380 BGN

2280 BGN + 456 VAT =

2736 BGN

“Manager” magazine 10 cm² Once a month September - October 600 BGN 1 200 BGN + 240 VAT=

1 440 BGN

“24 Chasa” and “Trud”

newspapers 10 cm² Once a week

November-

20th December (6

weeks)

158 BGN 948 BGN+ 189.6 VAT =

1137.6 BGN

www.kras.net - - All year round - 30 BGN + 6 VAT = 36 BGN

Own website update - - Once a year 30 30 BGN + 6 VAT = 36 BGN

www.bulgarianresorts.com Entering into catalog edition for free

Personal selling - - All year round - 1 500 BGN

Printing materials

– Leaflets 1000 brochures will be printed. The price is 560 BGN without VAT

560 BGN + 112 VAT =

672 BGN

Making an advertising audio clip 4 times x 100 BGN = 400 BGN + 20 % = 480 BGN

TOTAL: 14 548 BGN

50

Advertising Expenses for 2006 and 2007

Media Size/Duration Frequency Period Price without

VAT Total price + VAT

BG Radio 30 seconds 2 times a day/

twice a week January- December

69 BGN

per day/138 BGN

per week

6624 BGN + 1324.8

VAT = 7948.8 BGN

“Happy Weekend”

magazine 1 / 4 Page Once a month January- December 380 BGN

4560 BGN + 912 VAT =

5472 BGN

“Manager” magazine 10 cm² Once a month February, March,

September, October 600 BGN

2 400 BGN + 480 VAT =

2 880 BGN

“24 Chasa” and “Trud”

Newspapers 10 cm² Once a week

January,

May-July

(16 weeks total)

158 BGN

2528 BGN + 505.60

VAT = 3033.6 BGN

www.kras.net - - All year round - 30 BGN + 6 VAT = 36

BGN

www.abv.bg 3 000 000

impressions - All year round -

1800 BGN + 360 VAT =

2160 BGN

Own website update - Once a year 30

30 BGN + 6 VAT = 36

BGN

www.bulgarianresorts.com Free subscription

Personal selling - - All year round - 1 500 BGN

Printing materials

– Leaflets 2000 brochures will be printed for 2006. The price is 1120 BGN without VAT.

1120 BGN + 224 VAT =

1344 BGN

Making an advertising audio clip 4 times x 100 BGN = 400 BGN + 20 % = 480 BGN

TOTAL 2006, 2007: 24 890.4 BGN per year

51

Appendix 4 Competitors

Hotel name Hotel Exotica Hotel Rai Park Hotel A la Fiesta

Category/ Stars Three stars Three stars Three stars

Location Chaika, resort Journalist, Varna Chaika, resort Journalist, Varna Chaika, resort Journalist, Varna

Number of guestrooms 17 double, 10 suites

(total capacity 64 beds)

20 double, 7 suites

(total capacity 68 beds)

24 double rooms

(total capacity 48 beds)

F & B facilities

Restaurant 70 seats

Lobby bar, Cocktail bar

Swimming pool bar

Restaurant

Lobby bar

Restaurant

Summer garden with barbecue

Lobby bar, Night club

Conference facilities Conference room 40 seats

No conference room Conference room

Other facilities &

Services offered

Swimming pool

Tennis court, Table tennis

Children playground

Computer room, Billiards

Fitness room, Sauna, Massage

Currency exchange

Souvenir shop

Car parking , Rent-a-car

Laundry & dry cleaning

Room service

Transfer, Excursions

Children swimming pool

Tennis court

Children playground

Currency exchange

Car parking

Rent-a-car

Room service

Transfer

Excursions

Safe deposit boxes

Swimming pool

Children swimming pool

Children playground

Tennis court, Room service

Safe deposit boxes

Currency exchange

Play room, Billiards

Fitness, Sauna, Massage

Car parking, Rent-a-car

Laundry & dry cleaning

Transfer, Excursions

In room facilities

Air-conditioning

Satellite TV

Direct dial phone,

Safe deposit boxes

Minibar, Balconies

Air conditioning

Satellite TV

Direct dial telephone

Minibar, Bathtubs

Air-conditioning

Satellite TV

Direct dial phone,

Minibar

Target market Leisure and

business travelers

Leisure and

business travelers

Leisure and

business travelers

52

Appendix 12 Proposal for organizational structure of hotel Slunchogled

Owners

Hotel/ Marketing/ Accounting Manager 1

Chef Cook/ F&B Manager 1

Cooks 4 Waiters 4 + 2* Bartenders 2* Receptionists 4

Room attendants 3 Bellboys 2 Maintenance 1

* - Seasonal employees

53

Appendix 16 Total Labor Expenses for 2005, 2006 and 2007

Total Labor Expenses for 2005 (January - June)

54

Position

Number

of

employees

Salary in

BGN

Social

Security

30.05 %

Total

per

employee

per

month

Total

for the period

Additional employee expenses

+ Social securities

Hotel Manager 1 1000 300.50 1300.50 6 months x 1300.5 = 7 803.00 0

Chef Cook (F&B

Manager) 1 800 240.40 1040.40 6 months x 1040.4 = 6 242.40 0

Cooks 4 380 114.20 494.20 6 months x (4 x 494.20) =

6x1976.80 = 11 860.80

32h x 1.38 = 44.11 x 6 months

= 264.66

Receptionists 4 315 94.65 409.65 6 months x (4 x 409.65) = 6 x

1638.60 = 9 831.60

360h x 0.13 = 46.82 x 6 months

= 280.91

Room Attendants 3 200 60.1 260.1 6 months x (3 x 260.1) = 6 x

780.30= 4 681.80 0

Waiters 4 280 84.15 364.15 6 months x (4 x 364.15) = 6 x

1456.60 = 8 739.60

32h x 1.014 = 32.45 x 3 months

= 97.35

Total: 49 159.20 BGN

Total Labor Expenses for 2005 (July-December)

Position

Number

of

employees

Salary in

BGN

Social

Security

30.05 %

Total

per

employee

per

month

Total

for the period

Additional employee expenses

+ Social securities

55

Hotel Manager 1 1050 315.50 1365.50 6 months x 1365.5 = 8 193.00 0

Chef Cook (F&B

Manager) 1 840 252.40 1092.40 6 months x 1092.4 = 6 554.40 0

Cooks 4 399 119.80 518.80 6 months x (4 x 518.8) =

6x2075.6 = 12 453.60

32h x 1.38 = 44.11 x 6 months =

264.66

Receptionists 4 330.75 99.40 430.15 6 months x (4 x 430.15) =

6 x 1720.60 = 10 323.60

360h x 0.13 = 46.82 x 6 months

= 280.91

Room Attendants 3 210 63.1 273.1 6 months x (3 x 273.1) =

6 x 819.3 = 4 915.8 0

Waiters 4 294 88.35 382.35 6 months x (4 x 382.35) = 6 x

529.4 = 9 176.40

32h x 1.014 = 32.45 x 3 months

= 97.35

Waiters *(Seasonal) 2 280 84.15 364.15

3* months x (2 x 364.15) =

3 x 728.30 =

2 184.90

0

Bartenders

*(Seasonal) 2 280 84.15 364.15

3* months x (2 x 364.15) =

3 x 728.30 = 2 184.90

16h x 1.014 = 16.23 x 3 months

= 48.69

Bell Boys 2 250 75.1 325.1 6 months x (2 x 325.1) =

6 x 650.2 = 3 901.20

360h x 0.13 = 46.82 x 6 months

= 280.91

Driver 1 200 60.1 260.1 6 months x 260.1 = 1 560.60 0

Total: 61 448.4 + 972.52 additional yearly expenses = 62 420.92 BGN

Total Labor Expenses for 2006

Position

Number

of

employees

Salary in

BGN

Social

Security

30.05%

Total

per

employee

per month

Total per Year

Additional employee

expenses + Social

securities

Hotel Manager 1 1102.5 331.3 1433.8 12 months x 1433.8 = 17 205.6 0

56

Employees’ benefits

Year 2005

• Employees’ meals = 20 employees x 24 working days x 1.50 BGN = 720 BGN per month (1 meal = 1.50BGN)

12 month x 720 BGN = 8 640 BGN

24 days x 4 seasonal workers x 1.50 BGN = 144 BGN per month x 3 months = 432 BGN

Total employees’ meals expenses = 432 + 8 640 = 9 072 BGN

• Uniforms = 24 employees x 2uniforms x 36 BGN = 1 728 BGN per year

Chef Cook (F&B

Manager) 1 882 265 1147 12 months x 1147 = 13 764

0

Cooks 4 418.95 125.90 544.85 12 months x (4 x 544.85) = 12

x2179.4 = 26 152.8

32h x 1.38 = 44.11 x

12months = 529.32

Receptionists 4 347.3 104.35 451.65 12 months x (4 x 451.65) = 12 x

1806.6 = 21 679.2

360h x 0.13 = 46.82 x

2months = 561.84

Room Attendants 3 220.5 66.25 286.75 12 months x (3 x 286.75) = 12 x

860.25 = 10 323 0

Waiters 4 308.7 92.75 401.15 12 months x (4 x 401.15) = 12 x

1604.6 = 19 255.2

32h x 1.014 = 32.45 x 8

months = 259.60

Waiters *(Seasonal) 2 280 84.15 364.15 4* months x (2 x 364.15) = 4 x

728.3 = 2 913.2 0

Bartenders

*(Seasonal) 2 280 84.15 364.15

4* months x (2 x 364.15) = 4 x

728.3 =2 913.2

16h x 1.014 = 16.23 x 4

months = 64.92

Bell Boys 2 262.5 78.9 341.4 12 months x (2 x 341.4) = 12 x

82.8 = 8 193.6

360h x 0.13 = 46.82 x

2months = 561.84

Driver 1 210 63.10 273.1 12 months x 273.1 = 3 277.2 0

Total 2006: 125 677 +1 977.52 additional yearly expenses = 127 654.52 BGN

Total 2007: 127 654.52 BGN + 5 % = 134 037.20 BGN

57

• Transportation = 20employees x 27 BGN per month = 540 x 20 % VAT = 648 BGN per month

12 months x 648 = 7 776 BGN

3 months x 4 employees x 27 BGN = 324 BGN x 20 % VAT = 388.80 BGN

Total transportation expense for the year = 8 164.80 BGN

Year 2006 and 2007

• Employees’ meals = 20 persons x2 4 working days x 1.50 BGN = 720 BGN per month (1 meal = 1.50 BGN)

12 month x 720 BGN = 8 640 BGN

24 days x 4 seasonal workers x 1.50 BGN = 144 BGN per month x 4 months = 576 BGN

Total employees’ meals expenses = 576 + 8 640 = 9 216 BGN

• Uniforms = 24 employees x 2 uniforms x 36 BGN = 1 728 BGN per year

• Transportation = 20 employees x 27 BGN per month = 540 x 20 % VAT = 648 BGN per month

12 months x 648 = 7 776 BGN

4 months x 4 employees x 27 BGN = 432 BGN x 20 % VAT = 518.40 BGN

Total transportation expense for the year = 8 294.40 BGN

58

Appendix 8 New price list of the hotel

1 May - 30 June / 1 September - 30 September

Number

of rooms

Price

per night

Double room

for single

Occupancy

Single room 1 70 BGN -

Double room 21 90 BGN 70 BGN

Suites

- two beds

- three beds

2

1

100

BGN

120

BGN

-

-

1 July – 31 August

Number

of rooms

Price

per night

Double

room

for single

Occupancy

Single room 1 80 BGN -

Double

room 21

100 BGN 80 BGN

Suites

- two beds

- three beds

2

1

120 BGN

140 BGN

-

-

1 January - 30 April/ 1 October - 31 December

Number

of rooms

Price

per night

Double room

for single

Occupancy

Single room 1 50 BGN -

Double

room 21

70 BGN 50 BGN

Suites

- two beds

- three beds

2

1

90 BGN

110

BGN

-

-

Additional payment for Half-board 10 BGN

Additional payment for Full-board 20 BGN

Day stay 25 BGN

Prices include breakfast, insurance and tourist tax.

Discounts for children:

- Up to 12 years old – 50 %

- Up to 2 years old – free-of-charge

Additional services

Fitness

Free

Iron & ironing

board Free

VCR &

video

cassette

movies

Free

Laundry

BGN 3

4-hour

Internet

access card

BGN 10

Hairdryer BGN 2

Sauna BGN 10

per hour

Safe

deposit box

BGN 5

per day

Billiards

Free

Transportation

to and using of

a nearby

swimming pool

Free

Conference rooms

Room # 1

(capacity 30 seats)

100 BGN per day

Room # 2

(capacity 15 seats)

60 BGN per day

Conference room equipment

Multimedia 80 BGN per day

Flipchart 20 BGN per day

Overhead projector 20 BGN per day

59

Appendix 13 Shifts

Waiters

Dates/

Shifts*

1st 2nd 3rd 4th 5th

6th 7th

8th 9th 10th 11th 12th 13th 14th 15th

I Shift A E C B F D A E C B F D A E C

Mid

Shift

B F D A E C B F D A E C B F D

II Shift C

D

A

B

E F C

D

A

B

E

F

C

D

A

B

E

F

C

D

A

B

E

F

C

D

A

B

E F

Day

off

E

F

C

D

A

B

E

F

C

D

A

B

E

F

C

D

A

B

E

F

C

D

A

B

E

F

C

D

A

B

• A, B, C, D, E, F are the 6 waiters during the summer period

• I Shift 7:30 – 15:30; Mid Shift – 11:30 – 19:30; II Shift 15:30 – 23: 30

20 days x 8h = 160 working hours per month

Cooks, waiters from October till June

Dates/

Shifts*

1st 2nd 3rd 4th 5th 6th 7th

8th 9th 10th 11th 12th 13th 14th 15th

I Shift A D C B A D C B A D C B A D C

Mid

Shift

B A D C B A D C B A D C B A D

II Shift C B A D C B A D C B A D C B A

Day

off

D C B A D C B A D C B A D C B

• I Shift 7:30 – 15:30; Mid Shift – 11:30 – 19:30; II Shift 15:30 – 23: 30

23 days x 8h = 184h

Bartenders

Dates/

1st 2nd 3rd 4th

5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th

Day

shift

A A B B A A B B A A B B A A B

Day

off

B B A A B B A A B B A A B B A

Day shift – 11:30 – 23:30

15 days x 12h = 180h

60

Receptionists

Dates/

1st 2nd

3rd 4th

5th 6th

7th

8th 9th 10th 11th 12th 13th 14th

15th

Day

shift

A A B B A A B B A A B B A A B

Day

off

B B A A B B A A B B A A B B A

Dates/

1st 2nd

3rd 4th 5th 6th 7th 8th

9th 10th 11th 12th 13th 14th

15th

Night

Shift

CE DF CE DF CE DF CE DF CE DF CE DF CE DF CE

Day

off

DF CE DF CE DF CE DF CE DF CE DF CE DF CE DF

Day shift 8:00 – 20:00 A and B female receptionist only on day shifts

Night shift 20:00 – 8:00 C and D male receptionists only on night shifts

E and F bellboys’ shifts

15 days x 12h = 180h

Room attendants

Dates/

Shifts*

1st 2nd

3rd 4th

5th 6th

7th 8th

9th 10th 11th 12th 13th 14th 15th

Day

Shift

A

B

A

B

C

B

C

A

B

C

A

C

A

B

C

A

B

A

B

C

B

C

A

B

C

A

C

A

B

C

A

B

A

B

C

B

C

Day

off*

C A B C A B C A

Day shift – 8:00 – 15:00

That is a principal schedule of housekeepers’ days off, but they depend on the hotel’s

occupancy and are not fixed

25 days x 7h = 175h

61

Appendix 18 Fixed assets

Item Quantity Price per item

without VAT

Total price

with VAT

Depreciation

per year in BGN

Building 1 500 000 1 500 000: 15 years =

100 000

Hairdryers 27 64 2 073.60 2 073.60: 4 = 518.40

Bar & Bar

equipment

1

3 500

4 200.00

4 200: 5 years = 840

Barbecue 1 2 200 2 640.00 2 640: 5 = 528

Wooden chairs 10 59 849.60 849.60: 3 years = 283.20

Wooden benches 12 196 2 822.40 2 822.40: 3 years = 40.80

Wooden tables

90/90/75

2 85 204.00 204: 3 years = 68

Wooden tables

90/120/75

6 156 1 123.20 1 123.2: 3 years = 374.43

Total fixed assets

13 912.80 BGN

Total depreciation

103 552.80 BGN

(Sources: www.noviz.com, www.intimpex.com, www.areximgarden.com, www.bps.bg)

62

Appendix 5 SWOT analysis

Hotel Slunchogled

STRENGTHS

WEAKNESSES

• Strategic location

• Operating all-year-round

• New and modern equipped property

Rooms for non smokers

• Balconies with a sea view in every

room

• Noise isolation in the rooms

• Conference and business facilities

• Availability of Internet access

• Availability of hydrophore system

• 24-hour room service

• A contracted constant flow of guests

• Own web site on the Internet

• Opportunities for payments with credit

card system

• Well set human resource policy

• Favorable suppliers policies

• Restaurant corresponding to the

capacity of the hotel

• Cooperation with professional outside

companies (maintenance, grassing,

laundry)

• Not well known on the market

• Not enough parking space

• 2 different price lists for Bulgarians

and foreigners

• Poor advertising & promotion

• Low hotel & restaurant occupancy

• Missing organizational structure

• Not well developed channels of

distribution

• Lack of constant presence on the

Reception desk during the night shifts

• High labor cost percentage

• Lack of rooms for disabled people

• Low % of Bulgarian leisure and

business guests

63

OPPORTUNITIES

THREATS

Macroenvironment

• Stable economic condition and policies

• Relatively high economic growth that

creates more favorable environment

for the businesses

• Increase of the foreign investments

• Becoming easy to obtain a credit

• Stable policy towards decrease in the

taxation system

• New technology developments &

innovations are entering in the

country more intensively

• The low level of payments causes

dynamic emigration of young people

• Increase in the taxes for licenses and

categorization in the hospitality

industry

• Aging and constant decrease in the

number of the population

• Difficulties in maintaining and

supporting technologies, as well as

high prices for supporting services

• Expected high inflation in 2007

without the same increase in the

payments

• Small % of middle class and upper

middle class people

Industry

• The most dynamically developing

industry in the country

• More foreign tourists

• The introduction of some international

standardization systems (HACCP,

smokers /non-smokers separation)

will lead to increase in the common

quality standards

• Tendency increase in the overall quality

in the establishments

• Increase in the popularization of the

country, which opens new potential

markets for it

• Lack of cooperative action of the

private and governmental institutions

• The apprehends of the entrepreneurs

that the new requirement for

separating smokers from nonsmokers

will reduce the number of customers

• The new standardization systems are

related with great expenses for the

entrepreneurs

• Insufficient qualified personnel

Microenvironment – Varna region

• Already well known and popular

destination on the international market

• Well developed tourist superstructure

• Municipality programs for sustain

development of tourism in Varna

region in the future

• Tendencies for improving and

developing the infrastructure

(improve the airfields and new

terminal in the Varna Airport)

• Higher than the average income of the

population

• All major national & international

companies have their offices there

• Shrinkage of the anyway short season

due to the chaotic building processes

• Extremely high level of competition

and saturation of the market

• Difficult for the small properties to

establish a brand name

• Problems with the landslides in the

region

• The greatest part of the foreign visitors

are mass tourists and are very price

sensitive

• The main flow of tourist is assured by

big international tour operators, who

prefer to accommodate them in own

or big properties

• Not enough capacity of the water

purifying and the electricity systems

in the resorts

64