Tedt Lake Lodge O9[1][1]

Investment opportunity in Sri Lanka: 42 room Eco-resort

• Lake Lodge (Pvt) Ltd– Sri Lankan company set up in 2004

• The Vision– Huge potential for tourism growth in Sri Lanka given political stability– The resort will be built on 3 acres of prime lakeside land (30-year

renewable lease) – In an area of outstanding natural beauty with abundant wildlife

Lake Lodge will be the premier boutique Eco-resort in Sri Lanka

Why Sri Lanka?

• The fabled Island of Serendib has stunning beaches, an ancient Buddhist civilization, scenic hill country and friendly people

• In 2007, Thailand welcomed 15m tourists while only 200,000 visited Sri Lanka

• Following cessation of hostilities in the north and a suitable political settlement there is likely to be a huge upsurge in economic and tourist activity

• Due to the low level of economic activity, Sri Lanka has one of the most pristine environments in South Asia

The resort is being built in Kandyan style

On a stunning lakeside site

Near the famous Rock Fortress of Sigirya

Construction has already started

The resort is situated on Kandalama Lake, Dambulla, which is in the very centre of the island

• 5 UNESCO World Heritage sites within a 50 km radius – Dambulla Buddhist Caves– Sigirya– Kandy; and – The ancient cities of Pollunaruwa and Anuradhapura

• Abundant wild life including– 200 species of bird (26 endemic) and 9 different kingfishers– Elephant– Wild boar– Spotted and barking deer– Monitor lizard– Mongoose– Monkey

The area is known as the “Cultural Triangle”

Location

Security Situation

• Dambulla is 120km northeast of Colombo and 50 km north of Kandy, in the heart of the ‘cultural triangle’

• Nearby Sigirya Rock is one of the most visited sites on the island

• This area was never in the conflict zone which was in the north and northeast of the island

• The Dambulla area is peaceful and famous for its Buddhism and agriculture

Construction of the resort is underway

• Two 3-storied wings with 42 large rooms and balconies, wooden floors and

graceful tiled roofs

• Two lobbies, one for check-in and one for bar/coffee shop

• Outdoor restaurant and Ayurvedic Spa

• Swimming pool

• Drivers’ and staff quarters

• Landscaped gardens and bird hides

• Foundations and some ground-floor work completed; electricity and water

connected

• Buildings have been designed with energy efficiency in mind (solar power for

water heating and use of fans/ventilation to minimize air conditioning)

• The resort could be upgraded to 42 rooms

Ayurvedic Spa

• The resort will have an Ayurvedic Spa where treatments are based on the centuries-old Indian science that seeks to create an optimal balance for mind and body

• Massage with warm herbal oil enhances immunity, increases circulation and creates deep relaxation in body and mind

• Ayurvedic treatment can cure illness as well as providing a unique experience of physical, mental and spiritual harmony

Resort management

• Many hotels and resorts in Sri Lanka fail to provide top-class management and service

• Lake Lodge will have a expatriate General Manager familiar with world-class start-ups who will ensure first-class service and attention to detail and be responsible for the training of local staff

• He will receive an appropriate package of remuneration• There will also be a Chinese/Thai chef

Projected total cost to completion and opening is US$2,000,000

• Construction and fitting out: $1,500,000

• Project management: $200,000– Land lease– Fees (architect, legal and accounting)– Government approvals

• Working Capital: $300,000

• Payback of investment is expected 4 years from opening with subsequent return on investment of 15%

Projected 5 Year Cash Flow

Revenue Year 1 Year 2 Year 3 Year 4 Year 5

28 rooms 408,800 613,200 858,480 1,144,640 1,471,680

Rest/spa 61,320 91,980 128,772 171,696 220,752

Total 470,120 705,180 987,282 1,316,336 1,692,432

Costs

Lease 1,000 1,000 1,000 1,000 1,000

Salaries 190,000 209,000 229,900 252,800 278,000

Maintenance 6,000 6,600 7,260 7,986 8,784

Utilities 5,000 5,500 6,050 6,655 7,320

Marketing 15,000 10,000 10,000 10,000 10,000

W/O PM 20,000 20,000 20,000 20,000 20,000

Total 237,000 252,100 273,310 298,441 325,104

Gross profit 233,120 453,080 713,972 1,017,895 1,367,328

Tax 34,968 67,962 107,095 152,684 205,099

After tax profit 198,152 385,118 606,877 865,211 1,162,229

• Occupancy ratios Y1 40% rising to Y5 80%• Room Rates Y1 $100 rising to Y5 $180

• Restaurant and Spa revenue @ 15% of room revenue• Income tax is 15%, VAT is 15% (added to bills)

Marketing

• Lake Lodge will be marketed in Europe, Hong Kong, Singapore, Bangkok, India, China and Sri Lanka itself (traditionally visitors have come from UK, Germany, France, Holland and recently India)

• The resort will be advertised through specialist bird watching networks in Europe and the US

• It will be recommended as a centre for Buddhist tours due to its proximity to the rock caves, ancient cities, Temple of the Tooth and Matale, where the first Buddhist sutras were written in Pali

• Dedicated island tours will be offered together with hotels in the hill country and southern beaches