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MOTEL IN SHANGHAI

The staff at the proposed American-style motel venture in Shanghai will be multi-lingual in both Chinese and English.

Typically, the accommodations industry in the developed countries does no better than track gross domestic product growth (Golden, 1995, pp. 1-2). Since 1981, however, the industry has not performed even this well in developed countries. In 1995, the industry is again confronted by mixed conditions and predictions in both the global and domestic arenas of economic activity. A major assumption of this business proposal, however, is that the economic transition in the PRC and the booming economy of Shanghai will permit the proposed venture to overcome these industry trends. Thus, the entrepreneurial investor organization that will participate in the proposed American-style motel venture in Shanghai assumes operational outcomes superior to industry averages. This assumption includes the development of market share, sales levels, profitability levels, and the levels of return on investment.

The explosive economic growth in Shanghai represents a major opportunity for the entrepreneur investors (Wold, 1994, p. FTS5). A second major assumption underlying this business proposal is that rapid and substantial economic growth will continue in Shanghai. Western style hotel rooms are in short supply in contemporary Shanghai (Jordan, 1993, p. 18). This assumption is based in part on the unstated policy of the PRC to develop Shanghai as a major international trading center that will rival and may even surpass the status attained by Hong Kong. The assumption is the PRC will pursue this goal for Shanghai without respect to the return of Hong Kong to the political control of the PRC in 1997.

Capital Requirements and Projections

Although labor and materials prices in Shanghai are modest by North American standards, approximately US$25 million in capital will be required to fund the construction and launching of the Ameri...

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