SalesBook, May2012 - English

SalesBookBrian Meissner, Proprietor

Punta del Diablo, Rocha, Uruguay

[email protected]

USA - (512)758-3968

Uruguay - (09)325-720

This document contains Confidential & Proprietar y Information belonging exclusively to El Diablo Tranquilo.

Table of contentsInvestment Highlights

Historical Overview

Property Highlights

Location

Unique Property in a Unique Destination

Financial Performance & Investment History

Value Enhancement Opportunities

Desciption of Structures

Location Overview

Industry Overview


El Diablo Tranquilo Hostel

El Diablo Tranquilo Playa Suites

Punta del Diablo

Rocha

Uruguay

Region

Industry Overview

Enhancement Opportunity Examples

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El Diablo Tranquilo is a purpose-built boutique hostel with full restaurant facilities located on the beach of Punta del Diablo, Uruguay. After five years as a flagship contributor to the growth of Punta del Diablo, I am pleased to be offering the rare opportunity to enter an emerging market through acquisition of an emblematic establishment in its prime. In the following pages I welcome you to learn more about our strong legacy, current success, and an exciting destination well positioned for continued growth.

When we opened in November of 2007 our challenge was to augment the traditional summer tourism by displaying the magic of this seaside to an entirely new consumer. We launched with a bang – offering a full range of accommodations while operating as a restaurant and concert venue. We helped provide Punta del Diablo the infrastructure and visibility necessary to drive through a transition period and into the established destination it unquestionably is today.

We garnered our small town a place on Lonely Planet’s “Blue List”; an important collection of must see desitions. Meanwhile, we fortified the nascent perception of boutique hostels and graced lists of the world’s best as guidebooks and periodicals picked up on the trend. Both upscale hosteling and Punta del Diablo would be gaining traction for years to come. The sheer number of visitors to Rocha supports this claim. In citing 10 years of incredible growth in tourism, the departmental Tourism Ministry states that 36,000 foreign tourists arrived in 2002, climbing to 52,000 by 2007. In the four years since we opened our doors, that number has nearly quadrupled, to 196,000 in 2011.After our second year we created El Diablo Tranquilo Playa Suites and added lodging in the beachfront building previously containing only the restaurant. Operating together, El Diablo Tranquilo and El Diablo Tranquilo Playa Suites have continued to shape the tourism landscape of Punta del Diablo and meet the needs of travelers from the world over. We have enjoyed a privileged position as our seaside village has become a vacation hotspot. This brings us to today, our trajectory is sound and growth opportunities exist within each property. Though my time at the helm is coming to an end, I believe the legacy of El Diablo Tranquilo is just beginning.

Investment Highlights

Historical Overview

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Each of our buildings enjoy unique locational advantages. Playa Suites sits on Playa Rivero and is accessed by our own boardwalk. This makes us one just a handful of lots that will never have to cross a thoroughfare to reach the ocean. Furthermore, the thousands who use our boardwalk for beach access pass by the deck of the restaurant and directly through our beach barcito. This makes a captive market of the fastest growing and most densely populated sector of town.

El Diablo Tranquilo Hostel is situated on two hectares spanning Avenida Central to 7th Street. This gives us room to grow in a prime district just one block from the beach on a principal entrance into town. This location is the ideal combination of accessibility, transit volume, and natural beauty.

Property Highlights

Location

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Uruguay had almost 3 million tourist arrivals last year – a number equal to over 80% of its population. The next highest ratios in Latin America are Panama at 45% and the Dominican Republic at 44%

Unique Property in a Unique Destination

Bradt Travel states that “For many people, visiting Punta del Diablo is synonymous with staying in this beautifully designed boutique hostel, which has become a destination in itself.” We have played an integral role in establishing our village as an anchor point for travelers in the region, essentially inventing an industry that now accounts for over 4% of bookings within our state and 3.78% of gross tourism receipts.

Owning El Diablo Tranquilo means taking advantage of our status as a “world’s best” boutique hostel, enjoying a prestigious position as one of only two Uruguayan destinations to crack the National Geographic Traveler’s “South American Stay List” (along with the decadent Estancia Vik in Jose Ignacio), and benefitting from buzz that reaches travelers’ ears long before they arrive in Uruguay.

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Tourism arrivals to South America rose by 11% in 2010, with Uruguay posting a 16% gain.

P&L StatementBeds AvailableBeds Ocuppied

Occupancy (%)Average room rateRevpar

4,8233,88580.6

$20.25$16.31

19,3459,14947.3

$21.63$10.23

21,0709,94747.2

$27.46$12.96

29,93012,775

42.7$35.17$15.01

30,01213,251

44.2$34.79$15.36

Year 1/'08 - 3/'08 4/'08 - 3/'09 4/'09 - 3/'10 4/'10 - 3/'11 4/'11 - 3/'12

Revenue$ 78,658Beds

Food & BeverageOther IncomeTotal Operating Revenue

43.0%

$ 97,241 53.2%

$ 7,024 3.8%

$ 182,923 100%

$ 197,922 $ 273,106 $ 449,355 $ 460,94449.7% 61.2% 85,7% 78.0%

$ 184,972 $ 164,700 $ 50,467 $ 112,80146.5% 36.9% 9.6% 19.1%

$ 15,221 $ 8,667 $24,360 $ 17,4143.8% 1.9% 4.6% 2.9%

$ 398,115 $ 446,473 $ 524,182 $ 591,160100% 100% 100% 100%

Revenue$ 14,416Beds

Food & BeverageOther IncomeTotal Operating Expenses

18.3%

$ 85,116 87.5%

$ 4,460 62.5%

$ 103,992 56.9%

$ 35,802 $ 59,401 $ 138.079 $ 126,52418.1% 21.8% 30.7% 27.4%

$ 167,125 $ 153,856 $ 9,450 $ 121,56590.4% 93.4% 18.7% 107.8%

$ 10,678 $ 4,087 $10,150 $ 9,74970.2% 47.2% 41.7% 56.0%

$ 213,605 $ 217,344 $ 157,679 $ 257,83853.7% 48.7% 30.1% 43.6%Cross operating income $ 78,931 43.1% $ 184,510 $ 229,129 $ 366,503 $ 333.32246.3% 51,3% 69.9% 56.4%

Undistributed expense---------Administrative & General

Sales & Marketing

Repairs & Maintenance

Utilities

0.00%

$ 2,250 1.2%

$ 8,000 4.4%

$ 11,603 6.3%

$ 25,000 $ 28,750 $ 34,500 $ 38,4656.3% 6.4% 6.6% 6.5%

$ 3,000 $ 1,800 $ 1,600 $ 2,8970.8% 0.4% 0.3% 0.5%

$ 20,000 $11,000 $16,000 $ 19,6915.0% 2.5% 3.1% 3.3%

$ 23,654 $ 31,400 $ 33,160 $ 46,3635.9% 7.0% 6.3% 7.8%

Total Undistributed Expenses $ 21,853 11.9% $ 71,654 $ 72,950 $ 85,260 $ 107,41618.0% 16.3% 16.3% 18.2%Net operating income $ 57,078 31.2% $ 112,856 $ 156,179 $ 281,243 $ 225,90628.3% 35.0% 53.7% 38.2%

Capital Investments $ 744,000 $ 19,500 $ 256,000 $ 16,000 $ 18,000

“A recap of our yearly financial history”

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The hostelling industry in Rocha has grown to account for almost $5,000,000 in revenue since its inception with us in 2007.

Financial Performance and Investment History

El Diablo Tranquilo was made possible through the investments of 26 individuals who made private loans to a precocious 23 year old totaling almost $750,000. Thanks to the nature of our debt we have been able to maintain a long term view prioritizing market expansion and presence over annual profits while sustaining operating margins between 28-38% annually while in full operation and exceeding 53% during the year in which restaurant operation was leased.

Strides have been made to improve our installations each year, here is an overview of our capital expenditures.

These results speak for themselves and I firmly believe that with accessible expansions to the hostel yearly net operating income can exceed $400,000 even while leasing restaurant operations. I remain at your disposal regarding any more specific financial enquiries.

Year

2008

2009

$3800 Storage facilities at restaurantSecondary waste management tanks at restaurantLaundry installations at hostelEmployee housing unit including bathrooms and kitchenPlaya Suites construction including FF&E installations

2010

2011

Cost

$9500$4200

Capital Improvement

$38,000$218,000$11,000 Completion of Playa Suites

Solar water heating system for Playa SuitesHorse Tour capital provided to Fabian TrinidadAdditions to staff housing

$4600$3400

$19,500

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Foreign tourist visas issues in Uruguay by year from 2007 to present:

2007 : 1.815.2812008 : 1.997.8842009 : 2.098.7802010 : 2.407.6762011: 2.960.15

The El Diablo Tranquilo project is made up of two principal buildings as well as several functional constructions which house staff, provide storage, and in the case of the boardwalk and barcito, provide access and traffic to our locale.


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Description of Structures

Constructed on lots 17 and 18 of ‘block’ 21 (with 11 and 12 unused to the rear) El Diablo Tranquilo Hostel consists of 384m2 of interior construction as well as nearly 150m2 of additional covered and uncovered terraces.

All areas of the 208m2 ground floor emanate from a grand entry hall with vaulted thatch roof with intricate exposed beams, 20 foot floor to ceiling windows, a corner hearth, reception area and decorative murals. The guest wing of this floor contains four shared dormitories and large communal bathrooms. A service wing contains a management suite, additional storage/office space and a second staff bedroom.

Expenditures of foreign tourists in Uruguay from 2007 to present

2007 : 795.222.1062008 : 1.028.687.4972009 : 1.297.444.5072010 : 1.478.245.6422011 : 2.171.949.769

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Climbing the staircase to the second floor reveals a lofted hardwood breakfast and sitting area as well as six additional bedrooms. Five of these are private, two en suite and three containing fireplaces. One communal and one private bathroom can also be found here while two more storage areas complete the 178m2 interior space. An outdoor kitchen and dining terrace situated beneath the slope of the thatch roof provides amazing views and add to the rustic ambiance created by the balance of bold hues and natural materials.

In addition to the main building, this property also houses over 70m2 of all season staff housing, containing four bathrooms and a full kitchen. In addition to the cement construction exist an additional 70m2+ of seasonal accommodations. This allows us to house staff for the hostels as well as the restaurant and bar at full employment through peak season.

Storage space and laundry facilities, with separate drainage, constitute another 20m2 of usable constructed area.

The average stay of a guest at El Diablo Tranquilo is just over five days, and the average age is just over 30 years old.

El Diablo Tranquilo Playa Suites

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The ground floor retains its original dimensions; a central fireplace adorns the 75m2 dining area with sliding glass doors to the front and side, staircase to the back and two slate finished bathrooms. To the rear, a spacious kitchen including a walk in refrigeration unit. Front of house service is provided from behind a bar that passes through sliding doors to facilitate service outside.

El Diablo Tranquilo Bar and Playa Suites can be found on lot 7 of ‘block’ 16, perched upon Playa Rivero. Entrance is provided by the wooden boardwalk of our construction, which technically constitutes our street access as ‘Camino Costanera’ and only our beach bar and surf school lie between us and the waves. The original construction constituted a 149m2 footprint with a 40m2 vaulted dining area and 109m2 of available space on the second floor. The Playa Suites expansion added 100m2 of new lodging leaving a 358m2 glass, brick and concrete construction surrounded by over 240m2 of wooden decks and boardwalk.

A sign of stability in a volatile region, Uruguay is entering its 9th consecutive year of single digit inflation having steadied its economy impressively and leaving strong growth prospects and a safe and respected banking sector after the Argentine crisis of 1999-2002.

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Ascending to the second floor via either the external or internal stairways leads to an ample lobby, two large bathrooms, and three shared dormitories, two of which boast panoramic views of Playa Rivero, the city center and the ‘punta’ of Punta del Diablo.

One more flight up the external staircase brings you to the rooftop terrace featuring a parrilla style BBQ and four pent house suites with independent external access. These rooms feature hand crafted furniture assembled using hardwood salvaged from the regions antiquated cattle fences to frame their breathtaking views. The courtyard also houses a storage area containing waterworks while on the roof sit three solar powered water heaters.

Our beachfront Barcito gives us the predominant commercial fixture on Playa Rivero. Straddling the portion of the boardwalk that gives access to the beach this outpost allows us to interact with each and every beachgoer and extend our brand to a wider audience while providing a unique and ideally located sales point.

A freezer shed behind the restaurant stores our surf gear and four horizontal freezers in a 16m2 shed.

A secondary waste water system has been unused since the construction of Playa Suites but could be incorporated into the general disposal system in the future.

El Diablo Tranquilo’s clientele is truly global, with guests having arrived from 96 countries and no single country accounting for even 15% of our guests.

The emergence of Punta del Diablo as a regional travel hub has been driven by three principal consumer groups with domestic, regional, and extra-regional origins. The town began its ascent within Uruguay with the national tourism ministry’s focus on ‘Uruguay Natural’ and a tourism identity no longer focused exclusively on the contrived glamour of Punta del Este. Soon, Punta del Diablo became a statement against travel based on “being seen in the right places” and in favor of the enjoyment of simplicity. For a town with less than 1,000 permanent residents, it is astonishing to walk the streets of Montevideo and notice the prevalence of bumper stickers, mate gourds, clothing and even graffiti identifying many as devotees of Punta del Diablo’s unique mysticism. Across the Rio de la Plata, a new wave of travelers also sought alternatives to the increasingly crowded and unappealing Argentine beaches. Rocha has been their answer, a bohemian respite that fosters dancing until sunrise yet free from the exclusive prices and stuffy pretention of Punta del Este. The last group consisted of foreign nationals arriving in a region where Uruguay was an afterthought. Rocha was an obvious destination as soon as the whispers reached their ears. Pick up a guide book in any foreign language, and I am confident that Punta del Diablo is highlighted as an authentic destination – the adjective of highest value to the independent traveler – and El Diablo Tranquilo is highlighted as the favored option therein.

These visitors have brought with them two important elements to the real estate market. Regional travel has provided accelerating rental incomes and demand for lodging and services, while those arriving from abroad have given the town exposure and opened the market to a wide new array of potential purchasers. As recently as five years ago, pursuing real estate in Punta del Diablo implied making contact with limited group of large landholders. More than fifty years since the original zoning, the market was still virgin. Five years later, the market is fragmented and prices set by demand from abroad. As a whole, Uruguay has avoided the turmoil affecting global real estate markets and enjoyed impressive and sustainable development. From village to regional levels, reasons abound to be excited about recent growth as well as future prospects.

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Location Overview

Guest arrivals by continent:

Europe – 40%South America – 30.8%North America – 18.7%Australia/Oceania – 8%Africa – 2.3%Asia - 0.2

Celebrated for its roots as a village fishing for shark and salting bacalao, the reality is that tourism has been the backbone of the town for decades. However, its ascendance to the most popular destination within Rocha coincides with the arrival of El Diablo Tranquilo in 2007. Just a few years ago our town was similar in stature to regional destinations like Aguas Dulces, La Coronilla, and Barra de Valizas. This past year, however, Punta del Diablo was home to nearly 40,000 visitors per day, easily the most visited destination in Rocha. Much of the boom has been fueled by the advent of hostelling as an option in the lodging space. In 2007 we christened the first hostel in the department of Rocha dedicated to an international clientele and available all year round. This year there were as many as 30 establishments within our town and over 50 in the department labeling themselves as hostels. If imitation is the sincerest form of flattery, we’re very flattered. This has allowed us to focus on the most profitable segment of the market and Punta del Diablo to secure its position as an anchor destination for international travelers.

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Punta del Diablo

Over the past decade, foreign entrants to Rocha have climbed every year, from 36,000 in 2002 to over 192,000 last year - with an incredible 88% of that increase coming since 2007. The hostelling industry, non-existent prior to our arrival, now constitutes 3.78% of all tourism receipts in Rocha, reported at over $4,920,000 annually (note here the difference implied in the region between reported and actual receipts). It is a blessing to be buttressed by unique destinations like the environmentally protected sanctuary of Cabo Polonio and the national park of Santa Teresa. The most favorable trend, however, has been the continued eastward march of investment dollars and the most avant-garde elements of Punta del Este.

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Rocha

Rocha

Uruguay

About 70% of our guests come from 8 countries:

Argentina – 14.2%USA – 13.6%UK – 10.8 %Uruguay – 9.2%Germany – 6.5%Australia – 6.2%Brazil – 4.6%Canada – 4.6%

Interest in this tiny country has skyrocketed over the last few years thanks to numerous Western publications. Uruguay has come to be seen as a safe haven for investment and retirement dollars as baby boomers age and a speculative buy for those relocating funds from the quagmire of the sovereign debt crisis. The country boasts attractive fundamentals to back its investment grade status.

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Uruguay

Uruguay claims the lowest crime and corruption, and highest literacy and life expectancy rates, in all of South America. This means a high standard of living in an affordable environment.

Lack of consumer debt exposure has shielded the domestic economy from the effects of the international credit crunch and kept asset values stable. The dollarization of durable goods prices also provides insulation from regional currency shifts.

The government is stable and takes its role as a buffer between the behemoths of Argentina and Brazil seriously, realizing the benefits of relative stability.

Punta del Este and its surroundings have long been established as a destination of note for a jet-set crowd of regional elite and international celebrities. Not only has this blazed a trail for tourism along the coast, it has also set a benchmark for real estate values. Over $2.25 billion poured into Punta del Este alone in the twelve months trailing April 2011.

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A decade long rise in commodities prices has been an unquestioned boon for this export based agricultural country and infrastructure has benefited substantially.

Tourism expenditures have not only rebounded since the 2001, but arrivals have grown 14% year over year since 2007 and total expenditures have reached nearly three times their pre-crisis levels:

Year Tourism expenditures in Uruguay in Uruguay from 2000-2011. (In thousands of dollars)

1988 202,819891990199119921993

227,9238,2332,5381,3446,8

1994 632,219951996199719981999

610,9716,8826,8761,4704,2

2000 712,820012002200320042005

610,5350,9344,7493,9594,4

2006 597,820072008200920102011

808,91052,41312,11639,0

2,048,75

Source: INE (International Institute of Statics of Uruguay)

Some estimates state an impressive 70% of the populace own their homes outright, a remarkable statistic in class divided Latin America.

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Punta del Diablo has been placed on Lonely Planet’s “Blue List: Best in Travel” as a destination that ought not be missed – here is the list in its entirety:

Apia (Samoa)Bologna (Italy)Cordoba (Argentina)Miami (USA)Matsuyama ( Japan)Chengdu (China)

Fes (Morocco)Mumbai (India)Thessaloniki (Greece)Punta Del Diablo (Uruguay)Damascus (Syria)Vienna (Austria)

Region

Uruguay owes its roots to foreign intervention creating a buffer state between hegemons Argentina and Brazil. Sitting between the two major powers of the continent obviously affects the diminutive nation and the way they play it, that looks to be a good thing.

Argentina appears headed for another crisis. However, with inflation soaring and confidence plummeting, Buenos Aires continues to retain its hold as the pre-eminent destination city in South America.

With international tourism expected to be one of the few industries that thrives through the coming years in Argentina, Uruguay will continue to benefit from its drawing power.

Meanwhile, the Brazilian success story continues and both tourism expenditures and investment from that country continue to climb steadily with investors increasingly looking abroad as domestic real estate markets grow flush.

A growing middle class is more able than ever to travel and with solid fundamentals and a natural resource base second to none, Brazil is just discovering its impact as the region’s most important consumer market.

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Uruguay was the “invited country” a seat of honor and important recognition for such a small country at the 2012 SIMA (International Real Estate Expo) conference in Madrid, Spain. Vice President Danilo Astori headed the delegation there and highlighted the safety and profitability of the nation for investors.

The Olympics may not approach those visitor numbers, it will be every bit as visible and another fantastic opportunity for the region to get in front of the eyes and into the heads of billions of travelers to be.

In preparation, Brazil is awarding private contracts to overhaul its airports, improve overland travel, and make arrival to the country easier in every sense.

The real winner of these games? Uruguay and its new airport and well maintained overland infrastructure. Without any additional investment the country will derive massive benefits from the increases in regional travel over the 2+ years between two of the world’s grandest events.

While these events will provide a jolt for South America in the future, the region has been gaining ground as a tourism destination over the last decade. In fact, the continent as a whole has seen a 40% growth in its relative share of the world travel market over that span, culminating in 23.5 million arrivals in 2010.

A further boon to the entire region in the years to come, Brazil has won the rights to hold both Soccer’s 2014 World Cup and the 2016 Summer Olympics.

The World Cup alone will bring US$70 Billion in impact and 600,000 foreign travelers to Uruguay’s northern neighbor.

Regional Attraction

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I believe that this trend will continue, as much of this growth is due to changes rooted in an evolution in global labor trends over the last 25 years that show no signs of slowing.

Workers today will hold many more positions during their lifetime than their predecessors. We may work more fervently at each position, but each gap in positions presents an opportunity for an extended vacation and people are taking advantage en mass. Thus, Westerners today take fewer trips than the generation before, but the duration of those trips has increased. This benefits locations that are relatively hard to reach but hold vast opportunities upon arrival, such as South America.

Those at the far end of this spectrum, on trips lasting several months, are the core market for boutique hostels such as ours. Like us, many have been thriving in the region by focusing on social aspects of travel that are integral to travelers long absent from the social spheres of their homes.

Uruguay continues to increase its footprint in the now trillion dollar global tourism industry and has a positive outlook for both foreign and domestic tourism over the next decade. This tiny nation now accounts for 12.5% of the 23.5 million arrivals on the continent and just above 10% of the $20b spent annually by travelers within South America. Uruguay is also leading the impressive growth within the hostel sphere, where Web Reservations International has reported booking increases of 24% and 27% respectively over the last two years for the continent as a whole and 36% and 31% for the country in specific. As previously illustrated, the specific market for El Diablo Tranquilo can be broken down into two segments: summer beachgoers from Uruguay and Argentina and independent travelers from outside of the region.

Taken together, these markets have helped Punta del Diablo increase tourism receipts tenfold in just five years, from an estimated $5,000,000 in 2007 to over $50,000,000 this past year. According to the state tourism ministry, receipts for the Rocha coast over the same time frame have increased from $22,300,000 to $130,380,000 – meaning Punta del Diablo’s share has grown from 22% to 38%. This increase in revenue generated has translated into real estate appreciation within Punta del Diablo, where rental incomes have driven a median price increase of roughly 400%. This influx of capital has laid the groundwork for a region only scratching the surface of its potential.The most noticeable growth continues to be in the prevalence and quality of the rental cabanas that make up the bulk of the accommodation offering. The simplicity, personal use and tendency of domestic travelers to rent in large groups for extended periods make this a very attractive option. Hostels, however, cater to a service oriented market. Providing these services allows us to charge substantially more for our accommodations than the cost of a private household in town. The increase in hostels has been documented above and includes two principal competitors, below we compare prices throughout seasons and reviews recorded on HostelWorld.com, the principal booking engine for our industry.

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Industry Overview

Local tourism provides the backbone of Punta del Diablo’s explosive peak season, filling the beaches and clubs with tens of thousands each day. This spike in demand allows for exceptionally high margins in the accommodation space and the increased popularity of hosteling in the region has come thanks to unprecedented adoption within local markets.

Visitors from outside of the region arrive throughout the year and allow us to remain sustainably profitable all year round. Expenditures by foreigners visiting Rocha have increased over 40% since 2007 to $677 per visit, perfect for our position as an upscale and full service destination with a strong advantage in the international market.

Given the growth prospects for Brazilian arrivals to Uruguay, one can only hope they display the same habits as they do in Argentina, where the tourism reports average expenditures by Brazilian visitors at USD $220 per day, and all other foreign travelers only USD $120 per day.

This information helps defray concerns about the effect of the competition. Our town has the potential to resemble Brazil’s Jericoacoara, a beach paradise with a decidedly international feel and clientele. Punta del Diablo, however, will always retain the benefit of its strong regional tourism that Jericoacoara lacks. A few hotel and posada offerings have also arrived, though not in the numbers that hostels have. The competition in this space would apply mostly to Playa Suites in the event of a conversion into a hotel and incudes La Viuda del Diablo, Posada Nativos, and Posada Rocamar. Again we will apply the comparison in reviews for an extremely rough estimate of market presence and using the industry leader for reviews, TripAdvisor.

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26

Beds

11083

Hostel La Viuda

Summer/WinterMedian Dorm prices

Summer/WinterMedian Private prices

Hostel World Reviews

Casa de las BoyasEl Diablo Tranquilo

All Others 380

$30 - $11$40 - $16$54 - $20$20 - N/A

$80 - $41$120 - $50$150- $60$65 - N/A

2631

15526

With Mercosur polarized over Argentina’s political direction, Uruguay’s president recently met with his Brazilian counterpart laying the groundwork for total economic integration between the two countries. This act further opens the doors to our northern neighbor with 200 million consumers who have increased their visits to El Diablo Tranquilo every year of our existence.

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Hostel La Viuda

SummerMedian prices

WinterMedian prices

TripAdvisor Reviews

Casa de las BoyasEl Diablo Tranquilo

All Others 4

$230$170$140$190

$170$80$40$65

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1556 (146 with EDT)

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I fully anticipate the next owner of El Diablo Tranquilo to increase its profitability through both operational and physical changes. Many modifications will arise simply by shifting towards profit seeking from the current experience driven approach. A few of these changes are more easily quantifiable; among them several physical improvements as well as the functional decision whether or not to use the restaurant exclusively for guests. I have assembled projections for some expansion possibilities based on our operating history and current assumptions.


This past summer the Rocha coast became the first area to launch iPlaya, distributing over 20,000 digital multimedia cards sharing information via QR codes compatible with most smartphones. High-tech, high-touch efforts like this are what set Uruguay on pace for 3 million visitors and a continuing case study for tourism growth.

El Diablo Tranquilo Bar & Restaurant

Operational Changes

Focus more diligently on sponsor relations.

Harness the beach bound traffic for additional sales food and beverage sales. Further capitalize on the sales point with offerings of surf school, sand boarding, umbrella rental – even clothing and gear sales.

Integrate more fully with existing “discotecas” and serve as a better vendor of and bridge to their products.

To open to the public, or not to open to the public

By focusing on our guests at the expense of 40,000 others in town we clearly sacrifice significant revenue. However, we gain three principal advantages.

Competitive advantage for the hostel.

The ability to include all restaurant purchases as bundled ‘pension’ services allows us to reap important IVA exoneration benefits extended to accommodation providers.

It should be noted that these savings can be achieved while open to the public as long as pension sales are documented through the hostel billing procedure.

Efficiencies in staffing and provisioning for both front and back of house needs.

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For the second consecutive year, Uruguay was the #1 Latin American country in International Living’s Quality of Living Index. Highest marks were received in: Risk & Security – 100, Freedom – 100, Climate – 93, and Health – 74.

RevenueRoomsFood & Beverage

$507,039$135,361$29,476

$671,876

75.5%20.1%4.4%

100.0%Other IncomeTotal Operating Revenue

4/'12 - 3/'13 As Is Restaurant Open to Public Restaurant Leased

$494,363$270,818$30,434

$795,614

62.1%34.0%3.8%

100.0%

$481,687$82,560$29,476

$593,723

81.1%13.9%5.0%

100.0%

Departmental ExpenseRoomsFood & Beverage

$127,500$115,057$15,840

$258,397

25.1%85.0%53.7%38.5%

Other IncomeTotal Operating Expenses

$203,104$16,376

$346,980

75.0%53.8%43.6%

$139,380----------

($139,380)

28.9%0.0%0.0%

23.5%Gross operating income $413,479 61.5% $448,634 56.4% $454,343 76.5%

Undistributed ExpenseAdministrative & GeneralSales & Marketing

$42,312$3,187

$21,660

$118,158

6.3%0.5%3.2%

17.6%


Total Undistributed Expenses

$8,187$22,415

$128,774

1.0%2.8%

16.2%

$42,312$3,187

$14,440,07

$93,938

7.1%0.5%2.4%

15.8%Net operating income $295,321 44.0% $319,860 40.2% $360,405 60.7%

$50,999 7.6%Utilities $53,650 6.7% $34,000 5.7%

$44,523 5.6%

Physical Changes

Improve accessibility and parking capacity at by completing the extension of our boardwalk connecting 3rd and 5th streets, an improvement that will also ease the delivery of supplies to our locale.

$127,500 25.8%

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Operational Changes

Minimize staff and open up existing employee facilities for high season rental.

Physical Changes

Convert Playa Suites into an independent 10 bed boutique hotel, free of hostel association with hostel. The existing structure remains perfectly adaptable and for those hoping to enter the emerging market of up-scale travel to Punta del Diablo, the location and precedent provide unmatched potential.

El Diablo Tranqulo Hostel is constructed on only two of four contiguous lots purchased at the time of our founding. Additional accommodations can be geared towards new market segments or tailor made for the busiest parts of the year when extra space is most readily sold.

Most accessible is the conversion of our permanent staff quarters to income generating accommodations. With relatively minor finishing expenses these rooms are attractive rentals and staff can be relocated to rental properties for a fraction of the income generated.

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Statement of Increment ProjectionsRooms availableRooms occupied

30,01213,251

44.2$34,79

Occupancy (%)Average roomateRevpar $15,36

1,4621,24385.0%$49,08$41,72

Year OpportunityBase: ´11- ´12 Utilization of Staff Housing

RevenueRoomsFood &Beverage

78.0%19.1%2.9%

100.0%Other Income

Total Operating Revenue

$460,944$112,801$17,414$34,79

97.4%

2.6%100.0%

$60,987

$1,633$62,620

Include? x

Departmental ExpenseRoomsFood &Beverage

27.4%107.8%56.0%43.6%


$126,524$121,565

$9,749$257,838

97.4%

2.6%100.0%

$10,717

$914$11,631

Gross operating income 56,4%$333,322 81.4%$50,990


$38,465$2,897

$19,691

$107,416

6.5%0.5%3.3%

18.2%



Net operating income $225,906 38.2%

$46,363 7.8%Utilities

$315,786-----

$1,847

$22,415

25.2%0.0%2.9%

35.8%$28,574 45.6%

$4,783 7.6%

Capital Investments ----- $12,000

Whether in addition to or in parallel with conversion of staff quarters, seasonal ‘over-flow’ accommodations can be cheaply constructed upon the back lots. These would provide a revenue stream very likely to reconstitute full investment costs in the first year of operations.

Spain, Argentina, and the United States lead a Direct Foreign Investment surge in Uruguay that has increased from $397million in 2004, to over $2.2billion by 2008.

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30,01213,251

44.2$34,79


1,9781,68185.0%$43,90$37,32

Year OpportunityBase: ´11- ´12 Addition of Basic Accommodations:


78.0%19.1%2.9%

100.0%Other Income


$460,944$112,801$17,414

$591,160

97.1%

2.9%100.0%

$73,816

$2,210$76,026

Include?


27.4%107.8%56.0%43.6%


$126,524$121,565

$9,749$257,838

19,6%

56.0%20.7%

$14,499

$1,237$15,736



$38,465$2,897

$19,691

$107,416

6.5%0.5%3.3%

18.2%





$4,582-----

$2,498

$13,551

6.0%0.0%3.3%

17.8%$46,739 61.5%

$6,471 8.5%


The most capital intensive option is to create additional year round lodging on the back lots. The size of the land is adequate for up to six cabanas or a mixed use facility. The benefit of a complete staff, established brand and combined social and common areas implies that the full El Diablo Tranquilo project could house over 160 guests without eliminating the restaurant or acquiring additional real estate.

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30,01213,251

44.2$34,79


3,3582,23366.5%$48,56$32,30

Year OpportunityBase: ´11- ´12 Addition of Quality Accommodations:


78.0%19.1%2.9%

100.0%Other Income


$460,944$112,801$17,414

$591,160

97.4%

2.6%100.0%

$108,454

$2,935$76,026

Include?


27.4%107.8%56.0%43.6%


$126,524$121,565

$9,749$257,838

17.8%

56.0%18.8%

$19,259

$1,643$20,902



$38,465$2,897

$19,691

$107,416

6.5%0.5%3.3%

18.2%





$6,732-----

$3,319

$18,646

6.0%0.0%3.0%

16.7%$71,840 64.5%

$8,595 7.7%


x

An indirect approach not requiring further construction would leverage our reputation as the leaders in international perception of Punta del Diablo as well as the seasonal displacement of the bus terminal (until a permanent solution brings the terminal to us) to create and staff a tourism information desk. Combining our brand advantage with assistance in English and Spanish would level the playing field with those competitors who focus exclusively on competition within the pueblo.

Over 90% of all real estate transactions in Uruguay are cash transactions, eliminating fears of a credit bubble driving recent price increases.

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Closing

El Diablo Tranquilo has given me all that I could have hoped for; I have been able to live a dream, expand horizons, and enjoy the stability to invest in a new project. More than that, however, this project has been an amazing platform for sharing opportunities, touching lives, and creating memories. If these walls could talk they would tell stories of the engagements and marriages of employees who met here, the countless guests who came for a weekend and stayed for a season, the growth of a city, the lives changed. I hope that the information within this book has been of interest and that the thought of owning El Diablo Tranquilo fills you with the excitement and eagerness it has always brought me. Saying goodbye is bittersweet, but here’s to the next great thing life brings – and here’s to this being yours.

SalesBook, May2012 - English

Documents

Transcript of SalesBook, May2012 - English