M E R E S U U S P A & H O T E L

FRANCHISE ACQUISITION PROPOSAL

August 2009

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Table of Contents

1. Background of Meresuu Spa & Hotel 3

2. Meresuu Spa & Hotel services 5 Hotel Wellness center Spa center Other services

3. Franchise acquisition proposal 10

4. Investment rationale 12 Effective concept Prospects for investor

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Background of Meresuu SPA & Hotel

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Background of Meresuu Spa & Hotel

Meresuu Spa & Hotel is a 11-storey quality 4-star wellness spa hotel Located amidst beautiful scenery of Northern Estonia in

Narva-Jõesuu Meresuu Spa & Hotel’s gross floor are is 13574 m2

Facilities were opened in June 2008 Meresuu Spa & Hotel territory includes

Land plots in use totaling is 17000 m2

Meresuu is owned by Egeria Kinnisvara OÜ Egeria Kinnisvara OÜ is controlled by OÜ Commodore

(25%) and Magdaleena Kinnisvara OÜ (75%) Construction costs in the range of USD 18-20m

For similar development according to current price levels During its short history, Meresuu has already

received several awards Winner of Presidential Award “Beautiful Estonian home

2009” competition; Best Tourism Establishment in Ida-Virumaa

“ Best Tourism Establishment in Estonia” award International “Green Key” certificate

Webpage: www.meresuu.ee

Meresuu Spa & Hotel

Meresuu Spa & Hotel

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Meresuu Spa & Hotel services

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Meresuu Spa & Hotel services (I) : Hotel

Meresuu Spa & Hotel is a 4-star level hotel State of the art technical equipment has been used in

the construction of the complex Hotel includes 110 high quality environmentally

friendly guestrooms 82 Standard Rooms 14 Family Rooms 5 Double De Luxe Rooms 5 Junior Suits 3-4 Suits

All hotel rooms are equipped with TVs, phones, climate control systems, mini-bars, safe-

deposit boxes, espresso coffee machines (in suites) Internet connections and bathrobes

Several guestrooms have been designed to suit the requirements of guests with special needs

Majority of the guestrooms of Meresuu Spa & Hotel have a view of the sea The rooms are situated on the floors 4 to 11

Standard Double Room

Junior Suit

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Meresuu Spa & Hotel services (II) : Wellness center

Wellness center includes 36 treatment rooms for beauty and health services Facials Body treatment capsules Full body care treatments Hands and feet Massage Hydrotherapy

Treatments and rituals for women, men and children

Brands used during treatments include SwissLine, Fleur’s, Phytomer, Talika, OPI, E-Shave

Additional services Sandy sunroom Infra-red sauna Cryosauna Salt chamber Hairdresser services

Wellness center

Wellness center – one of the treatment rooms

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Meresuu Spa & Hotel services (III) : Spa center

Spa center includes seven different pools Swimming pool – large pool with hydro-massage

waterfall Children’s pool Massage pools - shallow pool with air massage system,

large hydro massage tub and contrast bath hydrotherapy tubs for feet

Open-air terrace Jacuzzi Five different saunas

Aroma Steam Finnish Salt Turkish

Open air terrace with bar Additional services include

Aqua aerobics Group exercises and trainings Gym

Spa center – swimming pools

Spa center – sauna area

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Meresuu Spa & Hotel services (IV) : Other services

Restaurant Capacity for 200 people Serves extensive buffet selection for breakfast, lunch or

dinner A ´la carte room for 24 people Private room for lunch and dinner for 10 people Open-air terrace

Lobby bar Serves light snacks and refreshing juices and cocktails

Piano bar Capacity for 100 people Live music in the weekends Cigar room, pool table

Conference facilities 4 conference rooms with all the necessary equipment The largest conference room is for 130 participants Seminar and meeting rooms are for 42, 24 and 24

participants respectively Other services

Playroom with nanny for children Sports equipment rental Interactive activities for groups

A ´la carte

Restaurant area

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Franchise Acquisition Proposal

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Franchise Acquisition Proposal

Meresuu Spa & Hotel’s project and know-how offered to potential investor, including Full architectural project documentation Full interior design concept Necessary changes in the original project documentation in order to achieve even more efficient operations Changes in the project’s documentations regarding ground works and foundations (according to geological studies in

prospective location conducted by investor) Detailed calculations of project’s costs based on the best offers from sub-contractors and suppliers Project manager for day-to-day management of the whole project till the opening (construction period is approximately 12

months) Construction supervision Training of key managers of the future management team in Meresuu Spa & Hotel Know-how regarding IT systems, logistical solutions and other vital operational know-how

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Investment rationale

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Investment Rationale (I) : Effective Concept

Meresuu Spa & Hotel concept 4-star level wellness spa hotel Optimal size with 110 high quality guestrooms Private and exclusive complex Wide range of wellness services Conference center for business activities

During its short history Meresuu Spa & Hotel has received significant recognition Presidential award “Beautiful Estonian home 2009”; Best Tourism Establishment in Ida-Virumaa “ Best Tourism Establishment in Estonia” “ Green Key” certificate assuring that Meresuu is ecologically responsible hotel operation

Meresuu Spa & Hotel is highly valued among state level Foreign ambassadors, government politicians and Estonian President were accommodated in Meresuu During Estonian

independence 90th anniversary celebrations Meresuu Spa & Hotel has received guests from more than 40 countries

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Investment Rationale (II) : Prospects for investor

Meresuu Spa & Hotel concept includes conference center Potential to accommodate corporate customers and foreign guests Possible to organize conferences, corporate parties, and diplomatic receptions

Further possibilities to develop the current concept Option to add medical center with professional medical care and doctors Possibility to build additional larger suites to top floors of the hotel

Trend of Spa hotels’ occupancy Occupancy of Spa hotels is on average 30% higher than of normal hotels in the region

Acquiring the project gives potential investor head start for expansion Efficient and fast start-up period Options for quick expansion in the region using the same concept