A Business Plan of Convient Travel.com
1、What kind of business will you operate?
Convient Travel.com is an online travel agency that caters to the needs of people aged 55 and above who are looking for flexibility and personalized travel experiences. this company will provide an online web site in which customers can search and browse. There will also be a chat room that will list the pre-set travel-of-the-week package from it. However, the package will also be adaptable to a customer’s needs, in terms of time, destination and entertainment. Once a
customer logs in with his or her username and password, a customer will be able to chat with others to collect information prior to booking.
But why is the reason to opperate this company Travel.com (“it” or “the
Company”) ? It is based on the belief that, as an increasing number of seniors become users of the Internet, combined with an interest in traveling, they will provide a lucrative market for it. The Company provides the option for flexibility in its tours, allowing the consumer to decide on length of stay, budget, destination and so forth. Apart from the customized tours, tour packages will also be sold. Through its web site, seniors are able to gain insight into tours they might be interested in as well as chat with other similarly oriented people. The comprehensive web site provides links to relevant sites, free e-mail addresses and a sense of community.
2、 Where will you run your business? From home? Will you rent space?
Because it’s target customers are baby boomers and seniors, the office will be located on the place of where most of the successful baby boomers and seniors live. this company decided to lease the space to incur a reasonable rent expense. The place has adequate space for computers, printers and also contains a guest room where customers can share their opinions personally with a travel agent. 3、Will you have any employees except for yourself?
The business will require employees with at least a bachelor’s degree or
equivalent. are well they are well educated people with different backgrounds and experiences.Personnel would also be required to have some experience with the travel and tourist industry, in order to understand what customers might want, and how to satisfy their needs. In addition, this company may need web developers and web designers for maintaining the Internet site. The equipment that will be needed for this business are computers, printers, database servers and application servers, and they will be purchased, in order to avoid overpriced equipment leases.
4、How will you finance the opening of the business?
When the customer has logged on to the Company’s web site (see Exhibit 3),
he/she will be able to browse through the special promotions, as well as have the option to research and create their own tour package. Options include choosing their price, location, special dietary requirements, and locations they would specifically like to visit. Once all these factors are in place, the user will be asked to fill out a form which requires general information. At this time, they are entitled to receive the Company’s newsletter, as well as
promotions-of-the-month. They will also receive their own e-mail account when they have chosen a username and password. The price estimate will be mailed to their account, or a representative will call them (depending on their preferences), at which point they can decide whether or not to accept the tour package.
After accepting the package, this companywill make the necessary arrangements. The firm will use reservation systems for making air and hotel reservations. These companies offer various fares which are regularly updated and published on the computer. Once a selection has been made, a confirmed ticket will be printed out and issued. this companywill pay the reservation agencies weekly for the tickets sold. this company receives a commission from the reservation agency for every ticket booked and paid for. The commission will then be distributed among the sales representatives.
After the tour package is finalized, the customer will be notified by a response of his/her choice. An e-mail message will appear with an itinerary of the trip. If the customer is unfamiliar or uncomfortable with email, a customer service representative will call and explain the travel details. A letter will also be sent confirming their order. Changes can be made to the tour during this period. When the customer is happy with their travel plans, the money will be transferred and the tour will be finalized. At this time, the terms and conditions of each tour will be agreed upon via the web site. The agreement will be legally binding and commit the customer to the price of the trip.
A small welcome packet will be sent to reinforce the customer’s choice of
the Company, and the great value they will be receiving. Emergency contact numbers will be provided for cities visited. customers will have access to any additional assistance needed. They will also be given detailed maps to cities and country destinations booked for travel, recommendations on sites to visit, and transportation options. A small history of the countries will be included, as well as information on local customs and laws. A small foreign language card containing useful phrases will even be provided for customers to carry during this trip.
Feedback will be a very important issue for improving service. For a limited time, customers will have the opportunity to receive a discount on future travel by providing post-trip analysis on the web site using a simple questionnaire. A feedback chat room will allow customers to hear from others during the decision process both on where to go, and where to stay.
The initial investment of $2,105,185 will be acquired through venture capitalists and bank loans, which will be paid off over 12 years. Given the low capital intensive nature of the business, the Company’s start-up costs and
working capital are less than other e-commerce ventures. The Company is willing to offer a reasonable portion of equity to attract investors.
this companyforecasts its first year sales to be 5% of Travelocity’s revenue
in 2000, with projected increases of 30% per year. The Company budgets 20% of sales for advertising.The Company assumes that most sales will occur in September and December, as seniors are most flexible with their travel plans and the best fares are offered by the airlines during these months. Because December is a high travel period, the Company has increased its anticipated salary and commission expense proportionately. Remaining operating expenses such as office, rent, utilities and insurance are assumed to remain flat throughout the year. Reservation computers and ticket printer expenses are included in office supplies.
PRO FORMA INCOME STATEMENT
Year 1 Year 2 Year 3
Sales 100% $1,765,650 2,295,345 2,983,949
Less: COGS 50% $882,825 1,147,673 1,1491,974.50
Gross Profit 50% $882,825 1,147,673 1,1491,974.50
Selling Expenses 40% $706,260 734,510 771,236
Technology Development 28% $494,382 533,933 555,290
Advertising Expenses 20% $353,130 459,069 596,789
Salaries, Wages 29% $512,039 584,039 680,039
Office Supplies 1% $10,000 13,083 16,415
Rent 1% $16,652 17,651 18,710
Utilities 1% $594 689 776
Insurance 1% $8,828 8,828 8,828
Depreciation .19% $3,300 4,361
Total Operating Expenses 119% $2,105,185 2,356,163 2,653,752
Profit (loss) before taxes -70% ($1,222,360) -1,208,491 -1,161,777.50
Taxes -1% $16,244 21,117 27,452
Net Profit (loss) -70% ($1,238,604) -1,229,608 -1,189,229.50
The initial investment of $2,105,185 will be acquired through venture capitalists and bank loans, which
will be paid off over 12 years. Given the low capital intensive nature of the business, the Company’s start-up costs
and working capital are less than other e-commerce ventures. The Company is willing to offer a reasonable portion
of equity to attract investors.
PRO FORMA INCOME STATEMENT FIRST YEAR BY MONTH ($000s)
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Sales 130 103 133 140 147 159 162 179 137 156 154 166 Less:COGS 35 22 41 61 65 85 102 114 82 92 86 98 Gross Profit 95 81 92 79 82 74 60 65 55 64 68 68
Operating Expenses Selling Expenses 85 60 32 40 60 47 323 40 62 81 82 84 Advertising Expenses 62 19 18 41 43 28 24 23 25 10 29 31 Salaries, wages 40 38 38 38 41 41 41 52 40 53 45 45 Office Supplies 1.6 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 1.4 0.7 0.7 Rent 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.8 1.8 Utilities 0.04 0.04 0.04 0.04 0.04 0.09 0.09 0.04 0.04 0.04 0.04 0.04 Insurance 0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.8 0.8 Taxes 1.2 1.2 1.3 1.3 1.3 1.3 1.4 1.4 1.4 1.4 1.5 1.5 Depreciation 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27
Ttl Operating 204 124 95 124 126 164 118 125 131 149 161 165 Expenses
Profit (Loss) before (109) (43) (3) (45) (44) (90) (58) (60) (76) (85) (93) (97) tax
Taxes 0 0 0 0 0 0 0 0 0 0 0 0 Net Profit(loss) (109) (43) (3) (45) (44) (90) (58) (60) (76) (85) (93) (97)
PRO FORMA CASHFLOW FIRST YEAR BY MONTH ($000s)
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Sales 91 111 124 138 145 155 161 174 150 150 157 162
COGS 28 25 37 57 64 81 99 112 88 90 87 96
Selling 42 73 46 36 50 54 40 37 51 72 82 83
Salaries 40 38 38 38 41 41 41 52 40 53 45 45
Advertising 62 19 18 23 43 41 24 28 25 10 29 31
Office Supplies 0.96 1.1 0.7 0.7 0.7 0.7 0.7 0.7 0.7 1.1 0.9 0.7
Rent 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.8 1.8
Utilities 0.04 0.04 0.04 0.04 0.04 0.04 0.09 0.04 0.04 0.04 0.04 0.04
Insurance 0.48 0.6 0.68 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.8 0.8
Taxes 0.84 1.2 1.3 1.3 1.3 1.3 1.4 1.4 1.4 1.4 1.5 1.5
Ttl 175.6 159 143 158 202 140 208 233 208 229.5 248 259.8
Cash Flow -84.6 -48.2 -19 -20 -57 15 -47 -59.2 -58.1 -79.5 -91.04 -97.8
Beg. Balance 0 -19 -32.3 -10.3 12.8 47.8 16.9 80 140 198.3 277.8 368.9
this companyforecasts its first year sales to be 5% of Travelocity’s revenue in 2000, with projected increases of
30% per year. The Company budgets 20% of sales for advertising, in order to attract travelers and increase market
share. Advertising and technology development expenses will decrease in years #2 and #3, in line with a goal to
become profitable by the end of year #5.
The Company assumes that most sales will occur in September and December, as seniors are most flexible
with their travel plans and the best fares are offered by the airlines during these months. Because December is a
high travel period, the Company has increased its anticipated salary and commission expense proportionately.
Remaining operating expenses such as office, rent, utilities and insurance are assumed to remain flat throughout the
year. Reservation computers and ticket printer expenses are included in office supplies.
Strengths and Weaknesses
The firm’s offering of both online and “face-to-face” customer service is an important strength, as it enables
the Company to attract more customers, and to increase market share among baby boomers and retirees. it’ 24-hour
service is also important in achieving a competitive advantage. Targeting a specific market is another strength for
the Company, enabling it to offer those services that would attract more baby boomers and retirees. In addition, an
alliance with travel agencies in Europe will be beneficial to its operations. Furthermore, having employees who are knowledgeable about the travel business, as well as information technology, will be advantageous to the Company. Its web site can be easily arranged and improved by the knowledge of IT in accordance with customers’ needs.
Since employees are capable of speaking more than one language, this companymay service foreigners who desire to speak Japanese, Cantonese, Indonesian, and French.
One of the main weaknesses of the Company is its lack of a partnership with an airline. It can only offer the best fares that are published on line. Those published fares might change as the departure time approaches. Therefore, it is likely for the firm to demand immediate payments to customers before the airfare increases. Secondly, since the firm anticipates operating only one retail location initially, customers who prefer “face-to-face”
service might have to visit the office directly. This can be inconvenient for customers who live far away from the Brookline, MA area.
Opportunities and Threats
As the market that this companycompetes in grows significantly, the Company can take advantage of the large market potential. After establishing a customer base, opportunities for further expansion will be considered. Currently, the Company is focusing on the domestic market, having a strategic alliance with other travel agencies around the world. However, with the growth of international markets, especially Europe, this companywill gradually expand into those locations as well. As the Company grows, the need for alliances will diminish. Lastly, this companywill broaden its services to include event packages such as anniversaries, wedding vow renewal opportunities, and birthday packages to meet the demands of the market.
this companyalso faces threats that might hinder the Company’s growth. The travel industry relies heavily on the health of the economy. If the economy is performing poorly, people are less inclined to travel. The travel industry is also susceptible to the political and economic status of other countries. The amount of tourists will significantly decline if a country is undergoing political strife, or has bad relations with the United States.
The growth and profits in the industry makes it lucrative for other players to enter the market. While the Company does target a niche market, competitors might find the same market big enough to enter themselves. However, this companywill have established a significant market share by that time which would create barriers to entry for a new player.
Service Development Strategy
The service that this companyprovides is highly customized. The customer has the flexibility to tailor his/her
travel arrangements through a convenient web site. Because the service targets seniors and baby boomers, the firm will try to meet all of their specific needs, such as providing a 24-hour customer service support as well as a package containing emergency contacts and guidebooks. An emergency sheet that can fold into a wallet or purse will provide contact numbers for everything from the loss of a passport to a dispute with a hotel. The distribution of guidebooks will help the consumer get the most out of their vacation. The goal of this companyis to provide value-added services, which cater to a specific target market with a definite set of needs. The Company’s web site will provide the chance to customize the traveler’s vacation and allow as much flexibility as the customer desires.
Description of Business:
This Company will cater to the need of people age 55 and over who want the flexibility in traveling by groups or individually. Services will include a web site where customers can create their own customized vacation package or choose from the pre-set travel packages of the week and chat with people who are also interested in traveling with them. Customers will also be able to locate travel buddies if they have an idea of a destination, but do not have a large enough group for traveling.
this companyTravel.com (“it” or “the Company”) is a niche online operator specializing in customized and
package tours for the age group of 55 and over (referred to as seniors). It is based on the belief that, as an increasing number of seniors become users of the Internet, combined with an interest in traveling, they will provide a lucrative market for it. The Company provides the option for flexibility in its tours, allowing the consumer to decide on length of stay, budget, destination and so forth. Apart from the customized tours, tour packages will also be sold. Through its web site, seniors are able to gain insight into tours they might be interested in as well as chat with other similarly oriented people. The comprehensive web site provides links to relevant sites, free e-mail addresses and a sense of community. this companywill align itself with a well-known travel agency, Carlson Wagonlit Travel. Its reputable name will give it’ customers assurance and trust. The Company can also take advantage of Carlson’s
expertise and operations in many parts of the world.
this companytargets the senior population (55 years old and over). The Company believes that this is an important segment, as seniors tend to have more money and time, and travel more for leisure purposes. Furthermore, the number of seniors using the Internet is expected to increase substantially in the near future. According to a report from eMarketer, 27% of seniors are expected to be on the Internet by 2004. The actual number of seniors however will be exploding, as the baby boomers move into this range (US Census bureau reports that the over 55 population will increase by 6 million by 2006).
Forrester reports that the UK seniors (one of the first international markets the Company will target) will number in the range of 3.2 million. According to Media Metrix, older users are the fastest growing demographic group in the US Internet market. Other reports indicate seniors spend 8.3 hours per week online, even more than the
average college student. The combination of the explosive dollar amount spent on online travel, the number of seniors expected to take to the Net, and the fact (from Media Metrix) that older Internet users have and use the most credit cards, presents this companywith major opportunities for growth and high returns.
Online Travel Agencies
Online Travel is a rapidly growing segment of the travel and leisure industry. These agencies provide travel planning on the Internet, enabling the consumer to compare costs and services at an easier, quicker pace. Furthermore, most people use the Internet as the essential tool for acquiring travel information. Lastly, online agencies offer the consumer the convenience of 24-hour access and flexibility. They provide fast, interactive, and global services. Online travel can be broken down further into three categories: full-service, name-your-price, and umbrella agents. Full service agents provide the service of a traditional travel agent on the Internet. Name-your-price agents allow customers to quote a price they are willing to pay, and will try to locate a seller who matches that price. Lastly, umbrella agents play the part of the middleman, allowing a user to customize his/her preferences, and then matching those preferences to a suitable travel agent. Analysts predict that online travel services will grow from $6 billion in revenue to $29 billion by 2004 and $63 billion by 2007. Some factors that contribute to the significant rise in the online travel industry include: the growing number of people buying online, the rise in individual spending on the Internet, and the growing number of American travelers (as a result of the strong US economy).
Initial financing required is $2,105,185, and will be received from venture capitalists and bank loans that will be paid off over 12 years. The invested money from venture capitalists and bank loans will allow this companyTravel, Inc. (“it”) to cover office space, office equipment and supplies, advertising, technology
development, salaries and wages and utilities.
This report is confidential and is the property of the co-owners listed above. It is intended only for use by the person to whom it is transmitted and any reproduction or divulgence of any of its contents without the prior written consent of the Company is prohibited.