A Business Plan Draft in Tourism Industry-Market Volume, Financial Forecasting, Term Sheet and Business Services and Processes Diagram

Marketing Strategy and Market Volume

Easing the way has been China’s recent adoption of a visa valid for 10 years for its citizens, instead of requiring them to reapply for each trip (Oregonian/OregonLive, 2015). In 2014, direct spending on leisure travel by domestic and international travelers totaled $644.9 billion. More than 3 out of 4 domestic trips taken are for leisure purposes (78%) (U.S. TRAVEL ASSOCIATION, 2013).

We know that roughly there are 500 million trips happened with kids in households in 2014 domestically as 35% of totally domestic trips (U.S. TRAVEL ASSOCIATION, 2013). Among those trips, 58% tourists totally depend on channels that UNItour would have impact on to plan their leisure trips, such as social media and websites. We assume that our promotion would cover 10% of the target market. We have articles showing that averagely Google Ads, as well as Video Ads, with non-negative content would create 3-5% conversion rate.

The final market volume (in trips):

(500 million / 0.35) *0.58*0.1*0.04 = 3.3 million trips

which would be 0.231% (3.3/(500 / 0.35) )of totally domestic trips.

As shown in Exhibit 2, the estimated model final revenue based on a 100-member model would be $1910 a year. The average free trial conversion rate is estimated to be 22.5% (Murphy, 2011). We also know that averagely that 123.2 million households in US have 2.61 people per household.

Theoretically we can figure out that per person in US would annually take

(500/0.35)/(123.2*2.61)=4.44 trips.

In this 100-member model, there would be 444 trips happen yearly. The whole market volume based on trips is 3.3 million.

The value created by UNItour model would be

(3.3/444)*1910=$14.19 million.

The theoretically total market value would be $14.19 million annually.

We would launch our official release at the end of 2017 in Williamsburg, VA. Visitor spending capped at $1.08 billion in Great Williamsburg area in 2012 (Voll, 2013). With 2% growth rate annually, in next five years  this number would be $ 1.17+ billion. The total traveling spending nationally was 927.9 billion as shown in Exhibit 3.

We can estimate that there are

(1.17/927.9)*3300 = 4.161 thousand trips

with

(4161/444)*1910 = $17,899

as the revenue generated in this area yearly.

Besides the short-term trips members for domestic trips, we would include long-term trip travelers (traveling fans who want to spend more than one month on the road. 

Promotion

Online : Google Ads; video ads through YouTube, Netflix and HULU; App recommendation; Key Websites Promotion such as Expedia.

Offline:  events promotion; PR promotion through partners like governments; magazines and journals about innovative tourism (since they already reported the famous attractions in the area, whether they are good or not).

Sales

Online promotion and downloading through Google Store an Apple Store to approach the APP; through APP customers could receive coupons with QR code and become free or paying members.

Go to internet for websites and register to be our free members or paying members.

Through webs and Apps customers would become our free members and receive a coupon for a free trial. After the coupon is used, free members would choose to become paying members or cancel the service (we would automatically assume that they would choose to become paying members and that we can start charging for monthly membership fee).

Post Sales

Customer Relationship maintenance; collect feedback and track members’ satisfaction; Control the quality of UINtour guides’ service by setting rating and evaluation system;Encourage members to post their trip experience on UNItour websites; Encourage members to design their own paths and submit to UNItour.

Customer Relationship

We expect to establish a community to connect people who love traveling and making friends with strangers. The community based on similar interests(or preference to certain cities or sceneries) would naturally create topics for members and UNItour guides;

The maintenance of customer relationship would be co-created by both UNItour and members; Interaction with travelers through customer service based on APPs, Social Media and hotline; We encourage all members to rate the service from UNItour guides; We deal with negative experience through customer service online or telephone; We provide personal assistance for premium members for customized tour paths and self-service from websites and smartphone.

SWOT Analysis

Strengths:

  UNItour provides a new solution to improve low-quality or low-efficient traveling experience due to uncontrolled tour guide service or time-consuming information collection process.

  The service we can provide would connect customers with attractions know only by natives instead of by mainstream media.

  The UNItour team is well supported by experienced professionals in this field.

  We already finished our beta version and had it tested in Williamsburg with great feedback from tourists.

Weaknesses:

  Limited resources, including capital, to implement a full-scale version

  UNItour currently lacks brand awareness in a highly competitive tourism industry

Opportunities:

  The tourism industry itself is going great: domestic travel has been growing at 2 percents since last year, with 1.4 percent growth in spending. International travel jumped 3.7 percent, with 6.7 percent growth in spending in 2015 (Oregonian/OregonLive, 2015). We can see the direct spending of $928 billion on travel and tourism in the United State in 2015 and more in 2016.

  Limited tour guide service in the market: according to the estimation of occupational employment from bureau of labor statistics, the number of certified tour guides and escorts nationally is 35,100.

Threats:

  The business model is easy to copy unless we can take enough market share to build barrier, which requires strong promotion and UNItour guides hiring.

Financial Analysis

The three-year financial forecasts (income statement and free cash flow) for UNItour are below. 

Screen Shot 2017-03-17 at 4.26.22 PM.png

With WACC valuation method and the average WACC from Expedia, Ctrip and Allegiant Travel Company, we estimate the enterprise value (assuming capital is readily available to develop our venture) between $8mm and $10mm. We currently project UNItour will need $ 700,000 to release the official service and starts our marketing campaigns at the end of 2017.

Screen Shot 2017-03-17 at 4.26.52 PM.png

Screen Shot 2017-03-17 at 4.26.45 PM.png

Business Services and Processes Diagram

The US tourism market is well-established, benefiting from the country’s broad variety of attractions, ranging from city breaks, to beaches, to adventure holidays. There is a large domestic tourism market which helps to protect the industry from fluctuations in international arrivals.

With enough travelers to the town, we started the company and launched the first marketing campaign and beta test in Williamsburg, VA in Sep of 2017. Our product will be offered in both the Apple App Store and the Google Play Store at first.  As our subscription options, after they use the one coupon as free trial, members may choose to purchase a one year, one quarter or one month subscription. For the customers who choose to pay annually and quarterly, we would also provide customized tour path service.

The subscription fees are the main source of revenue. In the future for growth plan, besides Ads, we would also provide re-direct links to flights or hotels reservation platforms for extra commission based on hits.

We would introduce the whole package of service to market by starting from Williamsburg, VA and this would be stage one lasting for the first year. On stage two starts in the 2nd year, we would include four other famous cities for tourism: San Francisco, San Diego, New York City and Washington DC. In the 3rd year, we will launch stage three and go for five more cities such as Orlando, Charleston, Chicago, Seattle and Honolulu. We would also start overseas business for future growth at that time. Business Service and Process Overview Diagrams is as following.

Screen Shot 2017-03-17 at 4.27.26 PM.png

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