A Business Plan Draft in Tourism Industry-Biz Req Doc Version

Executive Summary

1.1 Background

The tourism industry is doing great. Domestic travel has been growing at 2 percents since 2015, with 1.4 percent growth in spending (Oregonian/OregonLive, 2015). We can also see the direct spending of $928 billion on travel and tourism in the United State in 2015 and even more in 2016. According to the estimation of occupational employment from bureau of labor statistics, the number of certified tour guides and escorts nationally is 35,100 (Department of Labor, 2014). Compared with the function of a tour guide, people taking this occupation have low basic salary and depend on rebate or kickback to boost their income. This fact might push tour guides to promote low-quality attractions or restaurants to earn rebate for themselves, which apparently hurts tourists’ experience and the reputation of the area.

1.2 Overview

UNItour is a company that develops, markets and operates the UNItour websites, mobile APPs and traveling guide service.

Customers become our free members at first; through APP or websites, members submit the destination or attractions; the company would assign free tour guides from the destination areas to accompany the travelers who are our members with coupons, and the specific service of this UNItour guide remain negotiable between the guide and the members with guidance from UNItour firm; after the trips is done, members rate the trip and the guide.

If the free members want to obtain coupons for more service after they use up the free coupons, they need to be our paying members. According to the positive feedback and qualified rating, we pay UNItour guides. We also encourage members to post their own original traveling experience on our website. Compared with the traditional limited tour guides resource, UNItour would provide service with strong service-quality control based on rating and comments for all members. Another differentiation is that we hire natives and encourage members to be our guides who really understand the attractions of the area which are not even known by the mainstream media in tourism industry.

1.3 Objectives

With our current projections, we estimate the enterprise value between $8 million and $10 million. UNItour will need $700k from Venture Capital, with the future spend on marketing, hiring, purchasing assets and so on. With net income of $1.3 million in the third year and growth plan globally, we have confidence we can payback the investor in roughly 10 years with 8 to 12 times of the investment. See more from the attached term sheet (Exhibit 1).

2. Business Analysis

2.1 Proposed Strategy

We believe the primary customers would be short-term trip travelers domestically: families, individuals or other groups who want to have trips lasting from one day to seven days on weekends, in breaks or on vacations in one area. This segmentation would cover tourists from overseas of course. For instance, the biggest growth in tourism industry has been in visitors from China: a half-million in 2009, to 2.2 million last year, with 4.5 million forecast in 2017 and 7 million in 2020. See detailed marketing strategy, SWOT analysis and market volume in Appendix 1.

2.2 Financial Objective and Investment Appraisal

After year one, the sales income would increase due to larger market in New York, DC, San Francisco and San Diego. We also believe that as a brand new business, UNItour needs a formal income statement which reflects the ROI and financial status more thoroughly than a single project investment appraisal (Appendix 2 for income statement).

As an new start-up, cost efficiency and frugality would be the principles for the beginning stage of our development. At the beginning half year we will use open source applications and platforms, and limited Google Ads to fulfill the technique requirements, and will apply to use Tableau Eduction version in Columbia University. For the future development, we will use AWS as our big data and cloud computing platforms. Basically we can save our hardware maintenance fee and minimize our software and hardware purchase fee. All these technique cost is included in the cash flow statement and income statement above, categorized by Cost of Goods Sold or COGS (in thousands).

Considering the growth of business and according the increasing data mining needs, UNItour will have to use AWS more and more frequently thus resulting significant increase in COGS.

2.3 Conclusion

The tourism industry is a highly competitive and profitable industry, but many tour service providers mainly focus on information providing and ticket services, rather than tourist experience itself. In light of this trending travel behavior, UNItour builds an innovative business model to provide on-demand service to users. UNItour connects willing tourists to registered local tour guides by a user friendly and fast responsive app. The whole process is very simple. A free or paying tourist asks for a local tour guide using UNItour app, and then a guide provides the tourist with a customized in-depth tour. The tourist rates the guide with coupons and the guide collects coupons to get the commission. The main source of revenue for UNItour is the membership fee. UNItour doesn’t need to hire any tour guides, and such a relief can show a higher amount of its earnings as profits. Besides, future growth for UNItour is vast, because its business model is highly applicable in any tourist spots. Within several years, UNItour can cover hundreds of cities in multiple countries with high ROI for investors.

3. Product Scope

3.1 Scope

UNItour’s service would create a community based on shared interests. As an independent contractor, the tour guide needs to know well about the area, the interesting events, history and celebrities for the trip. The most important feature of tour guides from UNItour is the ability to create pleased experience for customers. They need to provide necessary information, help tourists avoid low-quality attractions and even accompany the tourists during the whole trip. To receive payment from UNItour, the tour guide needs to complete a certain number of deals and achieve a required rating score.

UNItour is free for registration and all the free members could use the service freely with one-time and one-person coupon. People can also choose to be UNItour guides directly through guide registration channel. After the free members spend the coupons, they can choose to be paying members for unlimited coupons with subscription fee paid monthly, quarterly or annually. Quarterly and annually members would become premium members with more high-quality customized service.

Find more details of scope in Appendix 3.

3.2 Assumptions & Constraints

UNItour uses telephone and SSN to identify paying members.

Anyone can become free members of UNItour with telephone number. Any members can become UNItour guides if they post qualified traveling experiences for at least one trip on social media and receive significant hits. When an UNItour guide completes a limited number of deals and achieve a certain rating score, he or she can also become a premium member with discounted subscription fee.

Anyone can be an UNItour guide, including premium members as well (we will set up another guide registration channel for this group of customers, with some more interesting features and process).  Premium members receive events invitation, trip designing service and unlimited coupons. Sometimes UNItour guide even needs to throw some events according to the requirements of premium members.

4. Requirements

4.1 Business Service requirements

Key Activities would include connection with our key partners (see detail operation diagram in Appendix 4, and related organization chart in Appendix 5):

UNItour guides; hot attractions regulation departments; national Traveling Association; public relationship firms; local governments; commercial partners like flights and car rentals firms.

Key resources:

Boost investment; technology to develop and update the software; traveling data and content collected from UNItour guides, members’ feedback and requirements to support path design for premium members; UNItour guides and regional managers evaluate the designed paths; partnership with commercial firms in the future

Other key activities would include:

UNItour guides employment: maybe from professional tour guides; APP/Software Production; securing endorsement and content from hot attractions regulation departments; marketing and promotion through multiple methods; convince local governments to support this service in multiple methods: UNItour is promoting attractions besides the ones already known by travelers and mainstream media; UNItour guides and experience rating data; our best UNItour guides promotion in local channels in that area; path design for cooperation with partners like flights platform; partnership with commercial firms in the future

4.2 Technical requirements

Key technical applications, systems and place of processing data are as following:

Web Analytics: Google Analytics/Ads.

We will take advantage of Google Ads and Analytics as web traffic analysis platform and major digital marketing tool.

Data Visualization: Tableau.

Data Mining and Machine Learning: 1. R & Python. 2. AWS EMR

Data Architecture: 1. MySQL. 2. AWS EC2

AWS EC2 and EMR’s rate is based on usage rather than subscription, which is reasonable for startup-level business issues.

Data types and sources: text comments and ratings of UNItour guides from members; membership information profiles from members; log files created by members and UNItour guides; traffic information of web and app from visitors; sources and places of processing; attractions information of comments and ratings from members, UNItour guides and external partners; aggregate data packages in multiple types from external data providers at the beginning stage of company development.

UNItour collects data for three areas: customer reviews of trips and/or tour guides, attractions’ information (only information of attractions bundled with UNItour guides), ratings and recommendations of our tour guides.

For comments and rating of trips of our members, we will conduct analysis and aggregation jobs in real-time. For the rest two areas, we will update the analysis results daily. The huge data volume (in TB at the beginning and in PB after AWS stage) and high-frequency analysis requires the application of cloud computing on big-data platforms.

Text mining and recommendation system would be two major analytics issues or high-level functionality for UNItour daily data analysis routines. This routine requires automation on comments and ratings text mining for real-time analysis, and an on-going updating for recommendation system. The user groups of our data and related applications and systems are our data scientists in data sciences team, business analysts in our marketing team and operation team, and leadership in need.

To be specific, necessary technical activities and anticipated usage include:

1. Initial internal database establishment

2. Data mining infrastructure establishment

3. Data mining model and system development

4. Website development

5. Mobile applications development on IOS and Android platforms

6. Test

7. Database transferring after 2017

8. Application of AWS

4.3 Acceptance Criteria

As a brand new project and a start-up, UNItour needs to complete the technical activities within the estimated time period and following appropriate standards:

1. Initial internal database establishment. The major cost of $4,000 in the first year.  Should be accomplished before 05/30/2017. The internal database will support the initial text mining and recommendation system. It will support real time query, join, and other regular database functions and will be averrable for all start up team members.

2. Data mining infrastructure establishment. Data mining infrastructure includes Tableau, R and Python. Should be accomplished before 05/30/2017. The infrastructure will cost minimally, will enable analytics team to develop insights based on database, and will enable data science team to build according models. The infrastructure will be available for the whole firm with authority filter.

3. Data mining model and system development. Models development mainly focuses on text mining model and recommendation model (of guides to members). Should be accomplished before 05/30/2017. Model development will cost minimally, and will support insights development of analytics team. Models are only available for only data science team.

4. Website development. Should be accomplished before 06/30/2017. Website development will cost minimally, will set APIs for database connection, will connect with Google Ads/Analytics, and will be available for marketing team and analytics team.

5. Mobile applications development on IOS and Android platforms. Should be accomplished before 06/30/2017. App development will cost minimally, will set APIs for database connection, will connect with Google Store/Apple Store analytics functions, and will be available for marketing team and analytics team.

6. Test run. Should be accomplished before 08/30/2017. Up-time should be lower than 90% before test and between 95% to 99% after test (percents of time of the system being available to conduct tasks).

7. Database transferring after 2017. Enable larger data analysis and storage. Only available for data science team.

8. Application of AWS after 2017. Conduct EMR and EC2. Only available for data science team.

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