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15 per cent. Promotional costs could be modified by the introduction of a sophisticated
direct mail operation, which would replace the existing emphasis on media methods. The
costs of building this database were estimated to be around $50,000 with an annual
maintenance charge of $20,000. Introducing this system would reduce the promotional
expenditure by around 30 per cent.
Food. The board had considered the introduction of new restaurant complexes into the
hotels. These would have a central seating area with a number of food supply points such
as pasta, Chinese, Indian, American and so on. The costs of creating this would be around
$300,000 for each hotel. This would improve revenues by around 15 per cent, though the
cost implication would be similar to existing Australasian hotel groups.
Tourism development in Australia. The company had been invited to take part in a number
of the new resort complexes that were proposed in various parts of the coast. Three
options existed.
Surfers. There was an opportunity to build a hotel in the new Surfers complex, close to
Surfers Paradise, an existing resort south of Brisbane. This hotel would cost $3 million and
have 700 rooms, and restaurant facilities. Room rates would be around $50 a night, and
the developers promised an 85 per cent occupancy level throughout the year.
Paradise Bay. A complex to the west of Darwin, for which a 300 room hotel was
envisaged, with occupancy levels of 75 per cent and a room rate of $55. The cost of this
development was likely to be $1.5 million.
Azure Waters. This complex was to be built near to Melbourne. The hotel with 500 rooms
would have a projected occupancy of 60 per cent, and a room rate of $85 with a
construction cost of $3 million. Freemantle estimated that they could apply their normal
construction techniques to these hotels.
Overseas expansion. As the group had built in all the major population centres in Australia,
the company was considering options in overseas markets. In order to compare the
opportunities, the strategic planners had provided a grid, Table 12H, which considered the
alternative options in the various countries, broken down by construction cost in $ million
(or acquisition cost where construction was not feasible), availability of town centre/ and
or tourist hotel sites, speed of opening of the hotel after refurbishment or outfitting has
been completed in years, and percentage local shareholding where necessary, and the
expected room rate in $, and current percentage occupancy rates.
Table 12H .Freemantle investment opportunities in world markets, with cost of investment
in $ million, availability of sites, time in years, percentage local investment requirement,
average room price, and percentage occupancy
Cost
Town/Tourist
Time
local
$
%
Bangladesh
10
Yes/Yes
3
60
60
50
China
7
Yes/Yes
3
51
120
90
Hong Kong
18
Yes/No
1
nil
130
85
India
5
Yes/Yes
4
25
60
55
Indonesia
3
Yes/Yes
3
35
55
50
Japan
27
Yes/No
3
nil
80
70
Malaysia
4
Yes/Yes
2
nil
80
80
Macau
3
Yes/Yes
3
nil
80
70
Nepal
4
No/Yes
4
50
130
65
N. Zealand
2
Yes/Yes
2
nil
65
65
Philippines
3
Yes/Yes
3
40
55
55
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