Foreword This budget draft is result of scratch information from The Blue Waves info report, web sites,

Tourist Board of island Krk and other official and published documents available at this moment. This draft we can read as what could be if. because success in lodging industry is determinated with many details which seems to be irrelevant but all together they have a big influence on final result. Godina 2012 biti e vrlo neizvjesna. Na tritu je prisutan strah od recesije. Financijska kriza u dravama EU turiste ini opreznima i vrlo racionalnima. Year 2012 will be very uncertain. On the west European (traditional) Croatian market is present fear of recession. The financial crisis makes the tourists cautious and very rational.

Travel and tourism offers temporary relief to the Croatian economy The political and economic situation in Croatia in 2011 was very difficult: unemployment reached an all-time high, high public debt, many illiquid companies, people working but not getting paid and corruption scandals involving the countrys highest officials, etc. Strategic plan to develop Croatian tourism The most recent strategic plan to develop tourism in Croatia covered September 2003-2010. In October 2010, the Ministry of Tourism issued a public tender for a new strategic plan to develop Croatian tourism. This was a much anticipated call as the new strategic plan is set to shape Croatias travel and tourism Industry for the next decade. High seasonality puts pressure on the tourism infrastructure One of the biggest problems facing tourism in Croatia is the short tourist season. Despite efforts to diversify, Croatia remains predominantly a sun and beach destination. Hotel accommodation on island Krk is fully booked only 142 days, in autocamp 32 days and finally private apartments 36 days. (Source: Tourist board Primorsko-goranska upanija, 2007) The relatively narrow tourism offer means that the areas of natural beauty are still the main attractions. The dependence on natural beauty and the climate influences are large threat to the travel and tourism industry. A serious ecological disaster or a long period of unusually low temperatures or summer rainy days could have serious consequences on the traveler arrivals and tourism balance. In addition, high seasonality creates an immense strain on the infrastructure, which needs to be developed to support high volumes of visitors for short periods of time but is then underused for the rest of the year. Domestic tourism falls short of expectations During the global economic downturn the national tourism boards of most of the Croatias competitors featured promotional campaigns inviting the domestic populations to holiday at home. This was one way to compensate for the falls in the numbers of foreign visitors. However, the number of domestic trips in Croatia recorded a strong decline in 2010 and in 2011, for a second consecutive year. Instead of substituting more expensive outbound travel with domestic trips, Croatian tourists did exactly the opposite. Accommodation Type in Croatia

The majority of beds in Croatia are in private accommodation, more specifically privately-owned homes. They are scattered around many small places along the countrys long coastline and on islands, making it very difficult to control the travel accommodation offer. Legislation on private accommodation is in place but effective implementation and control are lacking. Year-on-year progress is visible but there is still a long way to go until order can be brought to travel accommodation in Croatia.

According to projections provided by the German market Croatia entered the list of "Top 5 destinations" for German tourists in 2011, while according to a survey carried out by Germany's ADAC auto club, Croatia was at the third place among camping and destinations reachable by car, after Germany and Italy and although it is too early to make serious forecasts for this year, tourism officials expect the present positive trend in Germany to continue. Blue Wave Resort Hotel - BRAND NAME Blue Wave Resort Hotel is a hotel offering premium accommodations for outdoor activities seeking travelers. Our hotel have to provide to traditional guest of island Krk different quality and experience then old surrounding competition, or we have to reach new niche of guestst to avoid old competitors. We will provide international knowledge and local experience. Revenue Model Our revenue model considers three main income producing areas. We will have room revenues, income from F&B and retail spaces and revenues from outdoor and beach rental services. This model allows us to diversify our income sources. Differentiation The hotel is built in an innovative way to satisfy the needs of the active travelers.We have to create a concept that offers a set of services and amenities that meet their needs and has not recognized by micro and macro lokal competition. Competition Blue Wave Resort Hotel should develop a start-up new market segment with no direct competitors in nord Adriatic area or at least on island Krk. PRODUCT DESCRIPTION Blue Wave Resort Hotel is located on island Krk which offer natural, cultural and historical attractions and wide variety of outdoor activities such as sailing, diving, cycling, and walking routes. These activities are near urban or suburban locations where lokal citizens can provide to guests opportunity to fully traditional and original experience the area.

Outdoor Features if possible Rental equipment (bikes, kayaks, etc. depending on location) Gear Storage for large Items (Kayaks, Bikes, Surfboards) and maintenance room Local trails maps available Local Partnerships (for guides, tours, beginners lessons, etc) Bring and take library Rooms modern and spacious General Services Complimentary use of computers in the common areas and Wifi Internet Full Board restaurant Rewards program, VIP Client Club Website application that enables the guest to book trips and receive update information about the hotel Airport pickups Pet-friendly hotel Sustainable features Water and waste management Eco-friendly/Sustainable Practices (Recycle, Re-Use and Reduce) lighting and energy efficient bulbs Local Community efforts Local art shown throughout the hotel Local/community outreach Partnerships with local organizations Bringing jobs to the local area Global Trends: Eco and Sustainable Travel Where are we?

Blue Wave Resort neighborhood

Last year (2011) whole hotel accommodation on island Krk had 6.683 beds and 1.249 additional beds. 48.9% beds of overall capacity on Krk are private apartments or rooms. (2007) 3 star and 4 star hotels on Krk are situated as follows: No of hotels City 3 4 Omialj 1 Njivice 3 Malinska 4 3 Krk 4 1 Punat 2 1 Baka 4 3 TOTAL 18 8 Source: Tourist board of island Krk, 2012

Price in 4 and 3 hotels in Malinska

BB/Room superior 1/2 BB/ Room BB/Room MORE 1/2 Standard 1/2 4 Blue Wave I 30/03-27/04 29/09-30/10 28/04-18/05 29/05-15/06 08/09-28/09 16/06-06/07 25/08-07/09 07/07-24-08 50,00 4 PINIA 106,00 BB/Room 1/2 3 Villa Rova 80,00 BB/Room 1/2 3 Adria

4 Malin 78,00

II III IV V VI

55,00 62,00 74,00 85,00 100,00

78,00 86,00 97,00 127,00 163,00

134,00 134,00 152,00 168,00 186,00

80,00 88,00 127,00 163,00 163,00

62,00 69,00 77,00 94,00 105,00

Source: Tourist board of island Krk, 2012

Competitive LandsCape Competitive Analysis: Our competitive analysis is broken down into two basic groups: Primary and Secondary. The primary group consists of other lodging properties that will capture a share of our target consumer, whereas the secondary group is less competitive but still a viable outlet to ou r concept. Primary competitors consist of: 1.Hotels 4 and 3 2.Apart hotels 3.Privat Villas accomodation 4.High-end Hotels Our secondary competitive market consists of: 1.Condos, Private rooms Accommodations, and Vacation Homes 2. Camping Grounds Competition Blue Wave Resort Hotel has no direct competitors in the CLUB or AI travel segment.

Blue Waves SWOT analysis

Strengths New resort (curiosity) 4 rooms Position Parking lot /garage Beach

Weaknesses - 5 buildings (employee-housekeeping) Cost? - Open stairways /connection between buildings (rain/bad weather??) - Restaurant (120 seats-2 levels), service time? Cost? - Safety issue / control - Seasonal employee (service quality) - Staff accommodation- Cost?? - Domestic labor supply - Quality of labor supply (especially middle menagement level) - Unions? Reasonable? - Prejudices of local community (foreign landlord??) - Industrial investments in surrounding (LNG, JANAF) pollution? - Recession in EU (Italy-August??, Germany-Austria-Jun, July, September) how long Threats

- Choosing or creating market niche (club, AI, children) - Avoiding neighborhood competition - Price adjustment and flexibility - Non-standard BB,HB service - Self-made holidays (choiceupgrade package) - Long-term partner on new market (pre and post summer season) Opportunities

Blue Waves draft for development Number of key unit and beds by tipe:
Accomodati No of unit / on type keys Apartment Type A Apartment Type B Apartment Type C Superior double bed Standar double bed TOTALE No of Bedroom /unit 12 6 33 36 10 97 2 2 1 1 1 No of Living Room/unit 1 1 1 0 0 Living Bedroom Rooms s Total Total 24 12 33 36 10 115 12 6 33 0 0 51 No beds TOTAL 48 24 66 72 20 230

Available key units by operating days

Months
March No operating days Accomodati No of unit / on type keys Apartment Type A 12 Apartment Type B 6 Apartment Type C 33 Superior double bed 36 Standard double bed 10 TOTALE 97 April May Jun July August September October

15

30

31

30

31

31

30

31

Available capacity keys 180 90 495 540 150 1.455 360 180 990 1.080 300 2.910 372 186 1.023 1.116 310 3.007 360 180 990 1.080 300 2.910 372 186 1.023 1.116 310 3.007 372 186 1.023 1.116 310 3.007 360 180 990 1.080 300 2.910 372 186 1.023 1.116 310 3.007

Available beds by operating days

Months
March No operating days Accomodati No beds TOTAL on type /day Apartment Type A 48 Apartment Type B 24 Apartment Type C 66 Superior double bed 72 Standar double bed 20 TOTALE 230 15 April 30 May 31 Jun 30 July 31 August 31 September October 30 21

TOTAL by Type

Available capacity beds 720 360 990 1.080 300 3.450 35% 1.208
34

1.440 720 1.980 2.160 600 6.900 48% 3.312

40

1.488 744 2.046 2.232 620 7.130 60% 4.278

44

1.440 720 1.980 2.160 600 6.900 73% 5.037

50

1.488 744 2.046 2.232 620 7.130 90% 6.417

54

1.488 744 2.046 2.232 620 7.130 95% 6.774

61

1.440 720 1.980 2.160 600 6.900 65% 4.485

48

1.008 504 1.386 1.512 420 4.830 40% 1.932

35

10.512 5.256 14.454 15.768 4.380

50.370 33.442
66%

% occupancy No Overnights
nettoADR BB in

Revenue

41.055
March

132.480 188.232
April May

251.850
Jun

346.518 413.184 215.280 67.620 1.656.219

July 83.950 August September October TOTAL 100%

Overnights by Months
operating days INDEX 100 104 102 103

15 1.208 1.256 1.281 1.319

30 3.312 3.444 3.513 3.619

31 4.278 4.449 4.538 4.674

30 5.037 5.238 5.343 5.504

31 6.417 6.674 6.807 7.011

31 6.774 7.044 7.185 7.401

30 4.485 4.664 4.758 4.900

31 1.932 2.009 2.049 2.111

229 % occupancy 33.442 34.780 35.475 36.540

Season(Year) 66%(39,8%) 69%(41,4%) 70%(42,3%) 73%(43,5%)

Year 2012 2013 2014 2015

Revenue by Months in
Year 2012 2013 2014 2015 INDEX 100 103 103 103 March April May Jun July August September October

41.055 42.287 43.555 44.862

132.480 136.454 140.548 144.764

188.232 193.879 199.695 205.686

251.850 259.406 267.188 275.203

346.518 356.914 367.621 378.650

413.184 425.579 438.346 451.497

215.280 221.738 228.391 235.242

67.620 69.649 71.738 73.890

TOTAL Year 1.656.219 1.705.905 1.757.082 1.809.795

Revenue ProjeCtion and Derivation of Revenue

Revenue will be generated through hotel operations, leasing of F&B and retail sp ace,snacks/vending operations, concierge and equipment rentals. Within seven year s we willexpand our Base Camp Hotel to five additional locations with natural an d adventurousattractions. Our Boulder, CO hotel will have a projected ADR of $110. We expect an average of$2.7 million in room revenues on a stabilized year. Leasing from o ur F&B retail space willgenerate $80,000 per year. Revenues from our concierge and re ntal services are projected tobe 1.5% of total room revenues. Given our expected ADR and occupancy growth we anticipate $3 million in annual revenue by year 10. Revenue Model Our revenue model considers three main income producing areas. We will have room revenues, income from leasing F&B and retail spaces and finally revenues from concierge and rental services. This model allows us to diversify our income sources.

BasiC MarketinG Plan Elements Aforas Marketing plan is divided into three phases. The first phase considers the preconstruction stage, the second phase includes construction and the third phase includ es preopening of the hotel and opening of the hotel as well as the marketing that focuses aft er the hotel has opened. We will call this final stage from the third phase: sustaining stag e of marketing. Phase I This phase considers preconstruction stage; marketing efforts will be focused on designing the Afora brand image including the website and logo. Phase II This phase will focus on Public Relation (PR) activities that generate awarenes s by presenting our hotels concept, architecture and innovative design. Dwell Magazine as well as other well known design magazines will be used for marketing efforts. Throughout this phase Afora will begin grassroots activities by participating in outdoor events such as: Columbia Muddy Buddy - An event hosted by Columbia sportswear where participants engage in a recreational obstacle course race. Teva Mountain Games An event held in Aspen CO, that features Olympic style competitions for outdoor sports (mountain biking, hiking, rock climbing ) Winter X-Games Hosted by ESPN, a celebration of winter extreme sports (snowboarding, ice-climbing)

Banff Mountain Film Festival A touring film event that showcases the best adventure films and documentaries. In these events Afora will present its concept and services to the outdoor communit y. The website would be launched two and a half months prior to opening to beg in communicating our services and initiate booking reservation Marketing via Internet would also begin at the closing stages of the second phase and would continue throughout; we will make adjustments to the budget depending on the audiences response to these actions. Social media such as Twitter, Fac ebook, and YouTube are inexpensive tools to further establish brand awareness throughout the world. Anot her outlet that we will be using Google Pay Per Click (PPC), which will be used to direct potential customers to our own website. A mobile application for Apple iPhone and Go ogle Android phones would be created to allow people to learn about the hotel and book ou r services through their phone. Advertising with online magazines such as Outside Magazine Online would also take p lace during this phase. Outside Magazine Online is very popular among adventure traveler s, it has an average of 2 million page views per month, 59% of its viewers have an annual household income of $75,000 plus and 67% of the viewers are in the ages of 2549 making this magazine perfect to reach our ideal consumer. Due to our limited marketing budget,we would begin to advertise through this website and eventually through both the as and the magazine to better reach an even wider ra nge of our potential consumer.

Phase III All internet and grassroots activities would continue, providing opportunities to reach potential guests through different means of advertising. Once the hotel opens we will host various events to better develop the brands image. Through our initial contact with travel publications such as Fodors, Lonely Plan et, Frommers, we expect to have reviews written about the hotel in this third phase. During the sustaining stage the budget for marketing will be adjusted according to the revenue obtained in the first year. To reach our target market efficiently, advertising wouldbegin in Outside Magazine and other magazines such as National Geographic T ravel, Travel and Leisure and national newspapers.

See Appendix A for more information. Website: www.aforahotel.Com The websites will play a critical role in our marketing and communication efforts. As previously mention out target customers are very internet savvy and feel comfortable using this option for planning and booking their trips. Therefore we have designed our website to serve as an information center about the hotel,its surroundings, local events and services. Packages will also be advertised an d made available to our guests. Our website would be advertised through the previously mentioned media. Our partners could advertise in this website and have a direct link to their website and vice-versa. See Appendix H for more information.

into the following categories:

1. Food 2. Beverages 3. Cleaning supplies 4. Paper supplies 5. Guest supplies 6. Stationery 7. Engineering supplies

Inventories can be broken down

Excessive inventories can tie up capital and create additional interest costs. 6,000 per room of for operating inventories should be considered satisfactory.