Digital Solution for the Hospitality Industry Needs Equity Investment

Aim is to develop a digital system that will benefit the hospitality providers and end-users, and span geographically across the entire Balkan region and beyond.

The scope of the herein proposed business involves creating a system that will benefit both the hospitality market and its end-users, and span geographically across the entire Balkan region. The money will be used to set up three offices in three different cities, to purchase inventory, equipment, insurance, assets, and perform big marketing campaigns to make huge impact in the market. Return of investment in 3 years.

The idea is to provide the hospitality businesses, mainly luxury hotels and big-revenue-generating restaurants, with an innovative and attractive solution (D-Menu) that will enable the guests to experience the venues as never seen before. It also provides a platform for the business owners to more accurately keep track of their financials, better optimize the workforce, see what items bring more response, and a few more ways to generate additional income. The solution is a combination of hardware and software.

As this is going to be an export-oriented business, it is fair to consider geographically larger market. According to the National Bureaus of Statistics, our potential market estimates are as follows: around 15% within the luxury hotels segment, and around 10% for the big-revenue-generating restaurants segment. Given the previous market growth trends, again according to the same sources, I can estimate with confidence that, in the next few years, the potential hotels segment will increase in size by 10 percent, whereas the restaurants segment shall expand by 12 to 13 percent.

Our revenue model will be comprised of many options: one-time purchase, leasing, network infrastructure design, digitizing the menu, and some more.

Our competition is comprised of three groups: software manufacturers and sellers, hardware retailers, and companies that sell ad space and provide marketing services. From what I have observed during the last few years, the software producing companies target mainly the broader market, and do not specialize particularly on the hospitality market. Maybe that is a reason why these hospitality businesses have not been offered so far a solution to upgrade their point-of-sale systems, and they operate on old platforms. The other reason may be that some of these software companies have turned their business operations to foreign clients. The hardware retailers mainly sell laptops and notebooks, a technology that has been present for more than a decade. They also sell general-purpose tablets, and not those for digital signage.

Our company will differentiate from the competition in the following ways:
Firstly, we intend to specialize in producing IT solutions for the hospitality and related servicing businesses.
Secondly, we are going to sell hardware aimed specifically at digital signage.
Thirdly, our potential market is craving for a different and innovative approach to their customers and guests.
Fourthly, we intend to form partnerships with some of these marketing companies and offer them the new hardware platforms as another means to provide their services to the clients.
And, fifthly, we intend to employ a top-ranked staff in regards to their line of profession.

The money will be used to set up three offices in three different cities: Skopje, Ohrid, and Gevgelija. It will be also used to purchase inventory, equipment, insurance, assets, and perform big marketing campaigns to make a huge impact in the hospitality and software sectors, and alike. I envisage enough rounds of financing until my company reaches maturity.

The company is seeking seed investment to put this business model into action. For that purpose, we will accept either equity or a loan. The investor can be either a silent or a hands-on partner.
To investors interested in equity participation, the company will offer a stock of 15% equity shares (including additional stock options pool for future hires), or 20% shares if there is more than one investor (again, including additional stock options pool).
The ROI will be fully paid out after two and a half up to three years.

It the investment is provided as a loan, we ask for a grace period of one year to eighteen months to establish the business, after which period the repayments will be available either in equal monthly annuities or annually at the end of each fiscal year. If the investor agrees on annual repayments, they would be paid out incrementally as 20%, 40%, and 40%.

Image source: Flickr CC, Author: Rodd Lucier