A Night Club at National Harbor: Industry Analysis
Constantine Asangong, Charles R. Winfrey, Rami Bannourah, and Brent Brown
MGMT 600
DeVry University, Keller Graduate School of Management

Industry Analysis
Industry Review
It is always challenging to run a business irrespective of the type of business. The basic purpose for all business investments is to maximize profits by cutting cost and increasing sales. The night club and liquor industry is a very lucrative industry that targets the young and active age group. This industry includes night clubs, lounges, bars &grills. It is also connected to the food and beverage industry since food is also serve in most if not all of the locations.
There are about 45,000 bars and night club establishment national wide with a combine annual revenue of about $20,000 (www.researchandmarkets.com). The cost of running a night club varies from city to city but most of all influence by government regulations. Revenue is raise from entrance fees which can range from $20.00 to $50.00 within the market. However, this provides just a small fraction of the revenue generated. A large proportion comes from the sales of beverages. By some accounts, there can be up to 200% profit margin.
The most successful night clubs are those located within the downtown area of big cities with other night time and life style activities like bars and grill, restaurants, movies theaters, and most of all Casinos. According to the ‘huffington post’, 10 out of the top 13 night clubs in the U.S are located in Las Vegas, NV with annual revenue ranging from $25 million to $70 million. Atlantic city, NJ is number 11 on the list with an annual revenue of between $25 million to $35 million. (www.huffingtonpost.com). A common factor with these locations is the presence of nightlife especially casinos (gambling).
The National Harbor is located at the border line between Maryland and Virginia and only a few minutes away from Washington, DC. This is a very busy area with lots of lounges, restaurants, Hotels, convention center bars and grill. During the last election of November 6, 2012, the residents of Maryland voted to expand the construction of another Casino at the national harbor. As we know in Las Vegas, nights clubs located close to casinos generate more revenue.
Generally, like anywhere were alcohol is serve, the night club industry is highly regulated by local and state government. The owner and/or operator have to have a business license, meet the zoning requirement, liquor license, maintain security, and make sure the property is properly insured. Irrespective of the regulations, the night club industry is still a very profitable industry.
Regulation Review
As mentioned above, all businesses are required to have a valid business license before operating the business in any location. Night clubs regulations are event more strict sense they serve alcoholic beverages at night. Since our night club will be located in Prince George’s (PG) county, MD all activities must follow the requirements and regulations of PG county and the State of MD.
According to Sec. 5-198. of the PG county code the regulate License required; fee; and insurance; (a) It is unlawful for any person to maintain or operate a dance hall without first obtaining a license from the Department of Environmental Resources. It is unlawful to operate a public dance in any place other than a licensed adult dance hall or teen dance hall. (b) The nonrefundable license fee for adult dance halls shall be One Thousand Dollars ($1,000.00) per year. The nonrefundable license fee for teen dance halls shall be One Thousand Dollars ($1,000.00) per year. The County Council finds that the license fee established for adult dance halls and teen dance halls in this ordinance is based on the estimated cost of implementation, administration, and enforcement of the licensing program. The adult dance hall and teen dance hall license shall be applied for annually. (c) The County Police Department shall conduct background investigations of all persons seeking to obtain an initial license or renewal license to maintain or operate an adult dance hall or teen dance hall. An application shall be denied if persons seeking to obtain a license have been convicted of a felony, violating any Federal or State laws relating to offenses involving moral turpitude, or crimes involving financial misrepresentations. (d) No license issued under this Division shall be transferred or assigned to any person other than the person and or establishment to whom it was issued. (e) The Director of the Department of Environmental Resources, before issuing or renewing a license, shall require documentation of bodily injury liability insurance, property damage liability insurance, or the equivalent self-insurance. The applicant shall provide proof of insurance prior to the issuance of a license. Said bodily injury liability insurance, property damage liability insurance, or the equivalent self-insurance, shall be commensurate with the mandatory minimum required by law for the establishment. (f) If, during the period for which a license is issued, there is any change in the factual information furnished by the licensee to the Department of Environmental Resources under Section 5-198 or Section 5-199 of this Division, such change shall be fully, truly, and promptly communicated by the licensee to the Director of Environmental Resources in writing, within 30 calendar days of the change, upon a form provided by the Director of Environmental Resources for that purpose. (www.princegeorgescountymd.gov). Section 5-199 as mentioned regulates license applications, while 5-200 through 5-200.04 oversee license denial, suspension, revocation, violations compliance, enforcement and penalties. It is also a Federal Law to sell or distribute alcoholic beverages and tobacco to anyone under the age of 21. A liquor license is required to sell and distribute alcoholic beverages in the state on MD. Application of this license should be forwarded to the Board of license commissioner for Prince George’s County. Unless under special circumstances, public dance (adult night clubs and teen night clubs) are not allowed to operate or make loud noise between 2:00AM and 11:00 AM. Looking at these regulations and many more, we understand that the night club business is a serious one that requires a lot of responsibilities. Owners and operators of night clubs can face huge fines amounting to thousands of dollars or and even jail time. It can also result to revocation of licenses and the privilege of operating a business in the State. While government regulations may be seen as a threat to the night club business, it should also be seen on the other side as a guidelines for proper business practices that protects the consumer or the public as well as the operator and owner of the night club.
Competitive Analysis
All businesses face competition either directly or indirectly. Irrespective of the type of competition, if not recognize and analyze properly, they will pose as a threat to the business. On the other hand if analyze on time and effectively, a good management team can turn a threat into an opportunity. This is no different to the night club that our team is planning to open at the National Harbor in MD.
Our indirect competition will come from the already existing businesses in the location which catered to those who socialize at night while drinking in public places. The businesses in this location which may affect our night club in one way or the other are as follows;
The ‘Cadillac Ranch (all American Bar and Grill)’, ‘WXYZ Lounge’, Public House’, ‘Harrington’s pub’, ‘Ketchup bar and Grill’. These don’t have the license as night clubs but they do does open late at night with the potential of taking a portion of the market share. Since they are existing businesses, we assume they already have their market share. Though they might seems initially as threat to our night club, for the most part we consider them as opportunity since their presence will only bring more clients in the area. Generally speaking, it is normal for some people to start their night at a bar and grill people finishing at a night club. For the most part we can all benefit from each other.
The most serious threat to our night club is the presence of ‘Pose’ which is a night club on the 18th floor of Gaylord hotel and conventional center. Unlike our night club that will be open to the general public, the ‘Pose’ at the Gaylord Hotel is restricted to the hotel guest only. Secondly their days and hours of operation may vary depending on events and activities at the hotel. This will minimize their impact on us if not give us an added advantage.
The strength of POSE is that they are an upscale hotel with a well establish reputation and brand. It is an Ultra-lounge and nightclub with a very nice terrace view since it is located on the 18th floor. Our nightclub will be known for the highly skill and renowned DJs. We will involve stars from the RedSkin football club, the Washington Nationals Baseball. The Washington Wizard basketball and also the Washington Capitals hockey club. Every night will carry a special event and a special guest making it a place to be.
The actual data of the market share is not known at this time but we are working on it. Whatever the market share is, we know it will increase especially after the residents of Maryland voted to expand a life casino to be built at the national Harbor. The casino, hotels, bars and grill may try to compete with us but our unique setting, great services, renowned DJs, safety and security will attract most guests who will like to spend some happy time at night at the national harbor.
More competition may come from the numerous nightclubs in downtown Washington DC some of which are very popular like the K street lounge. However, lack of safety and security, a friendly atmosphere, and other violations is making it difficult for most people to visit night clubs in Washington DC. Some night clubs like ‘H20’ and ‘Zanzibar’ are no longer in business due to code violations.
Consumer Analysis
The Washington DC metropolitan area is made up of a very diverse demography mostly of working age. Washington DC is the headquarters of the Federal Government so it tends to attract more businesses hence more people of the active age. Our nightclub will target the age group of 25 – 40 years old. However you must be 21 years old and older to enter.
We made several visits at the national harbor especially at night and we notice that the guests who visit the national harbor area are within our age bracket.
Market Segmentation
National Harbor is located across the river from Alexandria, Virginia and is seven miles from downtown Washington, District of Columbia. Within fifteen miles of National Harbor there are more than 100,000 students from ten universities. National Harbor hosts over 14,000 young adults from 20-34 years old (United States Census Bureau, 2011). There are 188,855 young adults living within the District of Columbia (USA.com, 2012). Additionally, there are 48,800 young adults that live in Arlington, Virginia (Viringia Department of Planning, Housing, and Development, 2009). Alexandria is host to 51,000 residents from the age of 20-34, which combined is 288,655 young professionals.
Growth Potential
Annually, National Harbor attracts more than eight million visitors and offers 500,000 square feet of commercial space when it will be fully developed (National Harbor, 2012). The growth potential within National Harbor is going to be competitive, because there are five late night bars and lounges, with one other nightclub located in the Gaylord Hotel. The Gaylord Hotel’s Pose Ultra Lounge is two stories that overlooks the Potomic River and downtown Alexandria, Virginia and views that look into Washington, D.C.

References
National Harbor. (2012). National Harbor. Retrieved from Experience National Harbor: http://nationalharbor.com/office-retail-leasing
United States Census Bureau. (2011). 2010 Population finder. Retrieved from United States Census Bureau: http://www.census.gov/popfinder/
USA.com. (2012). Population and race. Retrieved from USA.com: http://www.usa.com/washington-dc-population-and-races.htm
Viringia Department of Planning, Housing, and Development. (2009). Arlington, Virginia. Retrieved from Planning research, analysis and graphics: http://www.arlingtonva.us/departments/CPHD/planning/data_maps/profile/file69129.pdf