Comparison Hungary and Laos

Implementation of a Backpacker Hostel

Juliane Pogoda, Vanessa Rother, Alberto Gonzalo, Diego Perez Valverde

Info sourcesInternet was the best source eg Facebook

and cia.comPeople we know from Hungary Former knowledge about Marketing Personal experience about Hungary

DifficultiesWe could not use books because the

information in books is not up to dateInformation about Laos was out of date as

well on the Internet, no chance to contact people

• Location: landlocked country in Central Europe

• Capital: Budapest• Language: Hungarian• Population: 10.300.000

21% under 14, 60% between 15-59 median age: 38

urban population: 60%• Weather: continental with mediteranean and

atlantic influences

• Political - Government type: Parliamentary Republic - Tax policy: comprehensive tax (personal income tax, corporate tax, value added tax) - Environmental law: protection and economic issues - Crime rate: low

• Economic - Inflation rate: 6,10% (2009) - Infrastructure: extensive road system developed highway and railway network

few inland ports main airport: Budapest

- Growth: member of the EU in 2004consistent economic growth

- Tourism: in 2004, 36.6 million travellers

hunting and fishing National Parks natural hot thermal springs

- GDP/capita: 5700€ - GDP by sector: agriculture (4,32%),

industry (29.23%), services (64%)

• Social - Population growth rate: -0,139 (2008) - Unemployment rate: 7.8% (2008 est.) 7.3% (2007 est.) - Life expectancy: men 66, woman 74 - Birth rate: 9.51 births/1000 - Infant morality: 8.1 deaths per 1000 live births

• Technological - a centre for R&D and high-tech industry - R&D activity: € 800 million in 2007, a 70%

increased compared to 2001 - Internet usage: 34.9% of the population (2007)

• Strengths- well developed european country- good infrastructure- low criminal rate- protection in laws- high tourism rate- highest GDP in services- skilled lobour force

• Weaknesses- unknown language- affected by financial crisis- big differences in summer and winter seasons

• Opportunities- stable/growing tourism- if Backpacker Hotel is successful in Hungary maybe expansion

• Threats- big competition within Europe- prefered countries for example Bulgaria

• poorest and least developped country in South-East Asia• Capital: Vientaine• Neighbouring countries: Vietnam, China, Burma, Thailand, Cambodia• Inhabitants: 6.8 million (2009)

0-14 years 40.8%, 15-64 years 56.1%, 65 years and over 3.1%• Languages: Lao, French + English• Climate: tropical climate, rainy season July - October

• Political: - Government type: Lao People‘s Democratic Republic, Communist state - Criminal rate: low rate of violent crime - Environmental care: biggest problem deforestation > implementation of restrictions + unexploded bombs still remain from Second Indochina War > altered local ecology

• Economic : - GDP: US$ 5.2 billion - per capita: US$ 765 - by sector: Agriculture 39.2%, Industry 34.3%, Services 26.5% - growth rate: 4.5% (2009) - Inflation rate: 4.5% (2007), 8.6% (2008) - VAT: 10%

- Workforce: 3.65 million > Agriculture 76.8%, Industry + Services 21.4% - Currency: Lao Kip, exchange rate: 1 US$ = 8,732.19 Kip - Tourism: > many travel alerts + warnings

> growth in arrivals strong in 2008 - Infrastrucure: big north-south-route along Mekong, connects Laos to Vietnam; road network is growing

• Social: - Life expectancy: m = 58 years, f = 60 years - Birth rate: 33.94 births/1000 population (2009) - Death rate: 10.78 deaths/1000 population (2009) - Infant mortality rate: 77.82 deaths/1000 live births - Literacy: 66.4% - Urbanization: predominantly rural country > approx. 85% of population live in rural areas

• Technological: - Internet usage: 2000 6,000 0.1%

2006 25,000 0.4%2009 100,000 300% change

- Transportation: > road infrastructure underdeveloped

> for tourists no self-drive > no railway > Friendship Bridge (Laos <>

Thailand) > Lao Airlines: domestic flights > boat cruises on Mekong river

• Supply: - Imports: machinery and equipment, fuel, vehicles, consumer goods, food > from: Thailand, China, Vietnam

- Exports: wood products, coffee, electricity, tin, copper, gold, agricultural goods, garmets, timber, furniture > to: Vietnam, Thailand, France, Germany

• Strenghts- developing country has grown much recent.

• Weaknesses- little knowledge of foreing languages.- still poor and undeveloped country- bad infrastructure- low GDP per capita- services sector really small- unskilled labour force- many diseases- growing inflation rate (money is insecure)

• Opportunities- developing country- more tourists from Europe in the coming years- infrastructure could develop more

• Threats- unsecure country, political instability- native people don‘t know how to cope with changes- hard to find suppliers

Marketing Plan – Backpacker Hostel Objectives:

- establish Backpacker hostel - location: near the Balaton (Siofok)- perform in 1-September-2010.- business will open in 3-January-2011- stay within the budget- make profit at the end of the first year

- maximum benefit for the company and the customer

Strategy

Segmentation of the market: - Income -> low income- Demographic -> mainly people between 18 and 35 (young travellers)- Geographic -> travellers from all over the world, mainly from Europe

- Physiographic -> people who want to experience new adventures

Positionorientation on the bench markertry to have lower pricescompetitive

Methologydemand analysisanalysis of competitionproduct or service analysisanalysis of suppliers 

Product low cost Hostel (standard and private rooms) 2 privates (1 double bed-2people) and 10 standards

(3 bunk beds-6 people)kitchen (microwave, fridge, toaster, coffee machine,

oven and tables/chairs) laundryliving room (tables, sofas, billiard table and a big

television)showers

garden with tables, benches, barbequecamping facilitiessport facilities nearbycomputer loungetravel guideevents – weekly pub crawls, sport matcheslanguage courses

PlaceSiofok near the Balatonclose to public transport

Price->low price and penetration strategy,

special offersprivate room 40 € per night standard room 15 € per nightbreakfast includedlanguage courses: 45€ (10h)camping: 10€ 

Promotion flyers, posters around the region European journeys magazines loyalty cards internet websites (eg www.backpacker-planet.com

)own webpagemember of backpacker associations (discounts)newsletters

Physical Evidencereception, computers, rooms, whole kitchen facilities,

washing , machines, showers

Processopen the Hostel in at correct moment in timefind the right way of communicationdifferent possibilities of bookingpick up on requestwarm welcome from our friendly staffduring the stay staff are always there to help

different entertainment opportunitiesguest recommendation cardsstaying in contact with newsletters

PeopleStaff: - selection (young, friendly, knowledge about the

country, travel experience) - training people to be our staff

- motivation (incentives) 

Guests: - young and open-minded travellers with an interest in new cultures

Imageour objective is to transmit a quality image with low budget youngmodernclean  

Implementationmarket research (www.cia.gov , www.hungarytourism.hu)evaluate and analyse our informationset up a marketing plan/ financial planpurchase our facilitiesfind the right suppliersstart the promotionopen the business 

  

Control and monitoring stay within budgetmake profit after the first yearnegotiate with suppliers and partnerslearn from mistakes and sort them outget feedback from customers follow trends

  

Financial Plan (inside Hostel)Initial capital..…………………………….1.000000Investment

building……………………...........400.000opening costs……………..........…50.000

2 private rooms (2 people each) 40€ = 80€ 10 standard (6 people each) = 60 people60 people*15€= 900€

900€ (standard) + 80€ (private) = 980€ (maximum amount per day)

  

Profit 

JANUARY...............500 €/DAY....................31 DAYS.....................15.500€  FEBRUARY.............500..............................28...............................14.000€  MARCH.................500...............................31................................17.050€  APRIL....................700............................... 30..............................21.000€  MAY.......................700............................... 31...............................18.600€  JUNE......................700...............................30...............................21.000€  JULY.......................980...............................31................................31.000€ AUGUST................980...............................31................................31.000€ SEPTEMBER..........800..............................30...............................24.000€ OCTOBER.............500...............................31................................18.600€ NOVEMBER...........500..............................30...............................18.000€ DECEMBER............800..............................31................................27.900€   TOTAL.........................................................................................257.650 € 

  

Costs per month  1 manager……………………………2000 €  3 Receptionists........................1000€ each 2 Nightporters..........................1200€ each  2 Cleaners.................................800€ each  TOTAL SALARY COST………………..9.000€

Equipment………………………...full equipment is included Internet………………………………200€ Gas/water/electricity………….600€ Publicity/office material…....1000€  Food for breakfast………………3500€   TOTAL COSTS PER MONTH………….13.300

 

  

 Total revenue JAN................51% occupation….6.785€ output..........15.500 €input..........8.715€ profit FEB................51% occupation….6.785€ output..........15.500 €input..........8.715€ profit MAR..............51% occupation….6.785€ output..........15.500 €input..........8.715€ profit APR….............71% occupation....9.443 output….....…18.600 €input.......…9.157€ profit MAY................71% occupation....9.443 output…....…18.600 €input..........9.157€profit JUN ................71% occupation....9.443 output…....…18.600 €input..........9.157€profit JULY..............100% occupation...13.300output...........31.000 €input…......17.700€profit AUG ..............100% occupation...13.300output...........31.000 €input…......17.700€profit SEPT................81% occupation....10.773€ output.......24.000 €input......…13.227€profit OCT ................51% occupation….6.785€ output..........15.500 €input..........8.715€ profit NOV ................51% occupation….6.785€ output..........15.500 €input..........8.715€ profit DEC ................81% occupation....10.773€ output.......24.000 €input......…13.227€profit

ANNUAL TOTAL.................110.890 OUTPUT...........242.300 INPUT.......131.410 PROFIT

  

ConclusionDecided to go into Hungary market because

of the market situation > SWOT-AnalysisDemand for accommodation like that much

bigger than in LaosLaos is not yet developed enoughGood marketing plan > can become

successful, make profit early > maybe expand after few years

ReferencesAUTOR (DATE), “TITEL”, SEITE, online,

available from: http://www.worldwide-tax.com/hungary/hungary_tax.asp, accessed on DATE