Aquarius Group Ltd Aquarius Resorts versus Aurelia

Written Analysis and Communication II: Assignment 3.

Avinash Reddy(1831) Alysha Tharani(6189) Sanyanth Naroth(6696) MB. Nayantara (6208)

Aquarius Private Ltd Kerela, India 17th June, 2009. To: Mr. Rajesh Kumar President Aquarius Private Ltd Subject: A report on the analysis of the project generating maximum revenue. I am submitting herewith the report on analysis of the project generating maximum revenue. The two potential projects, Aurelia and Aquarius resort have been analyzed carefully on the criterion of revenue maximization. Regards, Rajnikanth ABC Consultancy

Executive Summary:
For the long term sustainability of a business, it is vital to meet present as well as future demands of maximum revenue generation. While the Aquarius resort does that for present, Aurelia, the original project satisfies the latter. It also serves better, the purpose of profit maximization and customer satisfaction with reduced risks, eliminated local competition and increased clientele. With this increased revenue, repayment of bank loan is also catalyzed and the name credibility remains intact. The unexplored arenas of marketing and promotion when ventured into will tap in the original target client base simultaneously promoting the local heritage of Srirangapatna in both the states.

Word count: 105

Sr. No.

Content

Page No.

1.

Situation Analysis

2.

Problem Statement

3.

Options

4.

Criteria for Evaluation

5.

Evaluation of Options

6.

Recommendation

7.

Action Plan

8.

Exhibits

Situation analysis:
Funfort amusement theme park, a member of the Aquarius group is less popular than other theme parks in vicinity due to lack of marketing. These parks entailed severe competition. Though in the year 2008, a profit of Rs. 49,98,796 was made, a loss of Rs. 38, 35,596 in 2009 was incurred. In order to minimize further losses, the park was shut down temporarily. A bank loan of 3 crore rupees has to be repaid by 2011. Most customers of the park did not seem to be completely satisfied due to lack of accommodation. The corporate sector clients and major private party groups, also constantly demanded the same for the purpose of periodical recreation. The park has not been marketed severely as yet since there is no accommodation for the customers coming from Bangalore and other far off locations. This ultimately translated into a significant loss of revenue. The vision of the group has been to provide a complete one stop family entertainment spot. The park didnt match up to this vision which ultimately resulted in a substantial loss of revenue and customer base. The risk of life in land rides was comparatively higher than the generated revenue for the same and the costs included in maintenance. Also, the heritage of the park location was not getting significant recognition as desired earlier. Thus, the need to reconsider the original project, Aurelia arose which when compared to the Aquarius resort, catered to long term sustainability of the venture.

Problem statement:
To identify if the Aquarius resort or Aurelia will serve better the purpose of profit maximization and increased customer satisfaction.

Options:
1. Aurelia: An amusement theme park with a five star resort. 2. Aquarius Resort: Only a resort without the theme park.

Criteria for evaluation:

a) Clientele: Catering to the need of old clientele and attracting new customers. b) Revenue generation: Calculation of revenue maximization for each option. c) Risk and maintenance: Crucial to examine the level of risk involved. d) Competition: Severity of local competition faced. e) Marketing: Need for promotion to increase client base.

Evaluation of options:
Aurelia: Clientele: Through feedback, it is found that most of the regular clientele has been requesting for accommodation. Also, several corporate clients were enquiring about the same for large groups. This will satisfy well the demands of the old as well as new clientele. Revenue generation: The revenue generated from Funfort is Rs. 2,25,75,682 in 2009. The expected revenue from the resort is Rs. 2,10,00,000 (refer exhibit B). Thus the total revenue generation is Rs. 4,35,75,682. This is almost double the amount of present revenue generated. Risk and maintenance: The technical maintenance of the park would

decrease as the land rides are eliminated to serve the provision of accommodation. However, the risk involved with the water rides remains constant. The maintenance of the ambience and the scenic beauty will have to be more rigorous as the clientele would increase for both water rides and resort. Competition: Threat of local competition is eliminated as parks in vicinity do not provide accommodation. Aurelia being one of its kinds in the area, catering to fun, food and stay at a go. Marketing: It is important to market in Bangalore and Mysore to increase clientele that would require accommodation facilities. More billboards can be put up in the city and neighboring regions. An official website can be created. Promotion through newspaper and television advertisements along with radio

announcements can help boost sales. More promotional offers can be given to schools and colleges of far off locations.

Aquarius Resorts:

Clientele: Old clientele will be lost as the theme park would be replaced with a resort. However, the demand for accommodation by the corporate sector is constant. This predicted profit generation in comparison with the current profits of the park is higher by 1( refer to exhibit)

Revenue generation: The expected revenue generation from only the resort is Rs. 2,10,00,000 only (refer exhibit B). The revenue presently being generated from the amusement park is lost.

Risk and maintenance: Here, since the land rides are removed, the risk of life and maintenance is eliminated in totality. Maintenance is still constant. Competition: Resorts are located in vicinity, providing good service at reasonable prices. This will stiffen competition. There will be no distinguishing factor between Aquarius resorts and other resorts in the neighborhood.

Marketing:

The resorts in proximity market severely. To survive the

competition marketing and promotion will have to be extensive in order to increase client base. This will increase the expenses without any confirmative increase in generation of revenues.

Recommendation:
Comparatively, Aurelia meets the present as well as the future demands of maximum revenue generation while eliminating local competition. It also significantly catalyzes the repayment of bank loan and investors money while simultaneously maintaining the credibility of the brand. The edge gained over other local parks through provision of accommodation, makes Aurelia one amongst very few to run an amusement theme park inclusive of a resort. The risk of life and maintenance involved in land rides also diminishes with their exclusion from the project. Thus, it is recommended that Aquarius Private Limited, re-execute the original plan of Aurelia.

Action Plan:
Since Mr. Rajesh wants to avoid any other name to be involved in this business, the generation of required finances for resort construction can be through investors temporarily. As soon as the project starts generating revenue, the investors money can be returned. The land rides also must be cleared immediately for construction. To run the water park efficiently, the current entry charge of the park should be brought down to attract more customers. This decision will have an impact on the revenues from the park, but this can be covered up by the revenues from the resort. A well structured marketing plan must be created and executed at an appropriate time. The bank loan should be repaid immediately with the investors capital as the pressure to repay the loan is mounting.

Word Count: 1003

EXHIBIT A
STATEMENT OF NET EARNINGS
Year Revenue Direct income through sales Other income Subtotal Costs and Expenses Purchases Direct Expenses Administrative and Selling expenses Subtotal Net Earnings (Revenue-Cost) Rs. Rs. Rs. Rs. Rs. 3,996,037.00 1,236,835.00 21,178,406.49 2,64,11,278.49 -3,835,596.49 Rs. Rs. Rs. Rs. Rs. 3,874,015.00 920,276.00 22,260,151.74 2,70,54,442.74 4,998,796.82 2009 Rs. Rs. Rs. 22,395,913.00 179,769.00 2,25,75,682.00 Rs. Rs. Rs. 2008 31,792,720.40 260,519.16 3,20,53,239.56

EXHIBIT B
Opportunity lost from IT and corporate sector with absence of accommodation:
Number of calls per month Average no. of people per call* Total number of people per month Average cost of room per person** Revenue per month Revenue for 12 months 7 50 7*50 5000 350*5000 12*1750000 350 Rs.5000 Rs.17,50,000 Rs.2,10,00,000

*average number of people requiring accommodation per call **with reference to tariff rates from nearby 5star resorts