International Travel Agency Business Plan
Adventure Travel International (ATI) will start operations this year, providing adventure and sport/travel packages to people in the Pacific Northwest, specifically the greater Woodville area. The national tourism and travel industry is growing at 4%, and adventure travel at 10% annually, creating an opportunity for ATI’s success. The Woodville adventure travel market is growing at least 12% annually, and there are no providers who specialize solely in adventure travel in the greater Woodville area. With our experienced staff, excellent location, and effective management and marketing, ATI is well positioned to take advantage of this growth and lack of competition.
ATI’s goals over the next three years are to achieve sales of $650,000, maintain 10% margins on all airline travel, achieve 15% of sales from the Internet, and develop strategic alliances with service providers nationally, internationally, and in the Woodville area.
To achieve these goals, ATI needs to focus on three key areas:
1. Effective segmentation and targeting of adventure travelers within the larger travel market.
2. Positioning ourselves as adventure travel specialists.
3. Communicating the differentiation and quality of our offering through personal interaction, media, and regional marketing in order to develop a repeat-business base of loyal customers.
ATI will be a sole proprietorship owned and operated by Shea Delaney in Atkins Grove, California. The founder and employees of ATI are experienced travel industry professionals who are passionate about the activities ATI will promote and offer.
ATI’s total start-up capital requirement is approximately $102,500, financed through the owner’s personal investment and a $85,000 long-term note from Woodville First National Bank.
The travel agency market is competitive, and technology, such as the Internet and Computerized Reservation Systems (CRS), has changed the way travel agencies operate. The Internet allows agencies and individuals to perform travel-related research, while discount airfare brokers offer tickets online at discounted rates. Computerized Reservation Systems have increased the speed and efficiency of the agency-to-customer transaction, but have also increased start-up costs for travel agencies. Deregulation has increased the need for differentiation and lowered airfare prices. Other trends in the travel industry include caps on agency commissions, increases in adventure travel, and reduction of profit margins.
The travel industry is highly fragmented with large national chains, small home-based businesses, and consolidators on the Internet. ATI has approximately 30 immediate competitors in the greater Woodville area, including branches of national travel agency chains.
ATI is researching the market to identify potential opportunities for future sales. ATI’s long-term goal is to establish itself as an internationally recognized provider of top-of-the-line adventure travel. ATI’s target customers are health-conscious couples and individuals with median household incomes of approximately $50,000, particularly married couples, ages 25-35, with children and household incomes over $50,000.
The Woodville area has a large concentration of outdoor recreation enthusiasts who are ATI’s primary customers. ATI has established relationships with providers of travel-related products and services, including two major airlines as primary ticket providers.
ATI has a number of major competitors, including Rollins & Hayes, Sundance Travel, and Global Adventure Travel. However, none of these competitors have the combination of price, scope, or local focus that ATI will offer.
ATI’s pricing strategy will aim to maintain margins of 10% on all airline travel and average 20% margins on all other products and services.
The company will pursue an aggressive marketing campaign, including a grand opening, sponsorship of athletic events, promotions through strategic alliances with local health clubs, and advertising in specialty and local media. ATI also plans to station sales personnel in locations around Woodville.
ATI will be a small organization, and its employees will share management duties and decision making. Prerequisites for all ATI employees include at least five years travel industry experience, knowledge and ability in the types of activities ATI will promote, and Certified Travel Counselor (CTC) certification for applicable positions.
Prices will be competitive with the market, and estimated sales for the first year of operations are approximately $534,000, increasing 10% annually for the next two years.
ATI will start operations with four full-time positions: general manager and president, marketing and advertising director, accountant, and one travel agent.
The company expects no problems with expenses or cash flow within the next three years, with annual cash flow becoming positive in the second quarter of operation.
1.1 Objectives:
– Achieve $650,000 in sales by year three.
– Maintain a 10% margin on all airline travel.
– Attain 15% of sales from the Internet.
– Establish strategic alliances with service providers nationally, internationally, and in the Woodville area.
1.2 Mission:
Adventure Travel International (ATI) is a specialized travel agency focusing on adventure tourism. ATI offers consulting and customized travel arrangements and packages. Our mission is to become the primary provider of adventure travel in the Pacific Northwest. ATI’s employees and owner are experienced professionals who are both outdoor adventure enthusiasts and travel industry experts. Our goal is to connect adventure travel beginners and experienced individuals with suitable service providers, adventure activities, and accommodations that align with their desires, budget, and skill level.
1.3 Keys to Success:
– Segment and target adventure travelers effectively within the larger travel market.
– Establish ourselves as experts in adventure travel.
– Communicate the uniqueness and quality of our offerings through personal interaction and media.
– Develop a loyal customer base for repeat business.
ATI is a full-service travel agency specializing in adventure travel. We cater to both recreational and business travelers, providing them with professional service and consultation. Our primary focus and revenue stream come from the field of adventure travel.
2.1 Start-up Summary:
ATI’s total start-up capital requirement is around $103,000. The owner’s personal investment and a long-term note from Woodville First National Bank will finance the start-up. Please refer to Table 1 for further details.
– EXPENSES: These include rent, office supplies, consultant fees, insurance, utilities, etc. The largest start-up expense will be for computers.
– ASSETS: Mainly cash and computers.
– INVESTMENT: The majority of the investment is secured through a loan from Shea Delaney’s personal savings.
– LOANS: A loan of $85,000 has been secured from Woodville First National Bank.
ATI is a sole proprietorship owned and operated by Shea Delaney in Atkins Grove, California. ATI is considering becoming a Limited Liability Company (LLC) or Partnership (LLP) within 18 months.
ATI has identified three potential office locations in Atkins Grove, California, ranging from 800 to 1000 sq. ft. ATI will be one of approximately 30 travel agencies in the greater Woodville area, population 325,000, and the only adventure travel specialist in the immediate area.
ATI offers individual and group travel services to leisure and corporate clients, including travel consultation, pre-arranged tours, custom packages, and reservations for lodging, rental cars, and rail passage. ATI aims to position itself as the premier adventure travel agency in the greater Woodville area.
ATI sells standard travel agency goods and services, including airfare and travel packages. Additional services include assistance with passports, access to top-of-the-line equipment and supplies, and a superior offering of terrain, activities, accommodations, and entertainment. ATI’s knowledge, expertise, competitive rates, and specialty focus on adventure travel enhance customer satisfaction.
Adventure travel is divided into hard and soft adventure categories. Both involve active and athletic activities, with hard adventure activities involving more risk and athletic competence. ATI can capture the increasing demand for adventure travel by positioning itself as a niche service provider and offering high-quality travel packages for various sporting trips. All suppliers utilized by ATI are top-notch professionals.
The travel agency market is competitive, with the Internet and Computerized Reservation Systems (CRS) changing the industry. The Internet allows for travel-related research and increased price competition. CRS has improved efficiency but raised start-up costs. Smaller agencies must specialize, and ATI has positioned itself as an adventure travel specialist. While there are no direct competitors in Woodville, ATI competes with other travel agencies that offer alternatives to adventure travel and have established client relationships.
ATI obtains brochures from wholesale houses and service providers. Brochures for ATI are handled by a local graphic arts company and mailed to potential customers upon request. Direct mail, print ads, and sales promotion materials will be used as needed. ATI will maintain a customer/contact database.
ATI has established relationships with travel-related product and service providers, including two major airlines. These relationships allow ATI to capture a 10% margin on ticket sales and margins of up to 25% from certain parties. The company continuously evaluates sourcing and monitors its offering’s quality.
ATI relies on a Computerized Reservation System (CRS) for client reservations, which enables quick access to customer information and communication with suppliers. The CRS simplifies customer data storage and retrieval. Market research and the Internet are used for market research and communication.
ATI may open agencies in additional locations and explore other segments of the travel market as the adventure travel market matures. The long-term goal is to establish ATI as an internationally recognized adventure travel provider.
ATI’s initial efforts will focus on the adventure travel market in the greater Woodville area. The leisure travel market exceeds $50 billion annually in the U.S., and adventure travel is a sub-category that represents approximately $40-50 million for soft adventure and $12-15 million for hard adventure travelers.
ATI’s target customers are health-conscious couples and individuals with median household incomes around $50,000. They are interested in popular adventure activities and are primarily located in urban areas in California, Florida, New York, Texas, Illinois, Nevada, Hawaii, New Jersey, Pennsylvania, and Georgia. Men and married couples with children and household incomes over $50,000 are ATI’s primary customers.
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Potential Customers Growth
National 10% 9,000,000 9,900,000 10,890,000 11,979,000 13,176,900 10.00%
Woodville 15% 100,000 115,000 132,250 152,088 174,901 15.00%
Internet 20% 3,000,000 3,600,000 4,320,000 5,184,000 6,220,800 20.00%
Total 12.78% 12,100,000 13,615,000 15,342,250 17,315,088 19,572,601 12.78%
4.2 Target Market Segment Strategy
ATI is located in the heart of the Pacific Northwest. The area attracts fitness-oriented individuals who enjoy outdoor activities such as skiing, climbing, kayaking, whitewater rafting, and mountain biking. These individuals are ATI’s target market. ATI will focus on selling adventure travel to individuals and corporate clients in the Woodville area.
4.2.1 Market Trends
Increased deregulation in the travel industry has resulted in lower prices for airfare and other travel services. Other trends include caps on agency commissions by airlines, an increase in adventure travel, and reduced profit margins. More than 50% of the US adult traveling population, or 147 million people, have taken an adventure trip in their lifetime, with 98 million doing so in the past five years. Approximately 31 million adults have engaged in hard adventure activities like whitewater rafting, scuba diving, and mountain biking. An additional 25 million have participated in both hard and soft adventure activities. Activities commonly participated in during adventure vacations include camping, hiking, skiing, snorkeling or scuba diving, sailing, kayaking or whitewater rafting, and biking trips. Customers are typically young, affluent individuals aged 18-34, with one-fourth having annual incomes of $75,000 or more.
4.2.2 Market Growth
The travel industry is growing, driven by a healthy domestic economy and the devaluation of currency in other regions. Leisure travel increased by 3.2% in 1997 and is predicted to grow by 2.0% in 1998. Business travel increased by 4.8% in 1997 and is estimated to increase by 3.6% in 1998. Adventure travel is one of the fastest-growing segments of the travel industry, with a growth rate of 10% annually. In 1997, 8,000 US companies offered adventure packages, generating $7 billion in revenue. Additionally, executive participation in adventure travel increased by 66% between 1992 and 1996.
4.2.3 Market Needs
Many potential customers are unsure of the destination they wish to reach and rely on travel agencies for advice. Customers value travel agencies for their knowledge and the ability to provide sound advice at a competitive price. ATI is confident in its ability to meet these needs and save customers time and money while ensuring their satisfaction with their vacation.
4.3 Service Business Analysis
The US travel and tourism industry is the nation’s third-largest retail industry and is projected to become the largest by the year 2000. Revenues from travel have increased by approximately 100% in the last decade. US travel agencies generate over $100 billion in revenues each year. The market is divided into business and leisure travel, with each contributing about 45% to total revenues. Domestic travel accounts for approximately 70% of industry revenues. Business travelers can be categorized as medium to large corporate accounts or small independent businessmen. Leisure travelers can be classified based on the types of trips they take, income, or age. The four primary leisure travel groups are adventure, special-interest, R&R, honeymoons, and sightseeing trips; high-income travelers; budget-conscious travelers; and families, students, and seniors.
4.3.1 Competition and Buying Patterns
Adventure travel faces competition from substitute products and services such as theme parks, motorhome trips, and cruises. Other substitutes include self-planned or traditional vacations. Additionally, potential customers may choose not to vacation and spend their money elsewhere or invest it. Direct competition can come from any agency specializing in adventure travel in the US. Travel and purchase decisions are influenced by lifestyle, age, and disposable income. The average adventure traveler engages in one adventure travel vacation every 12-18 months.
4.3.2 Main Competitors
Rollins & Hayes, based on the east coast, is a well-known and respected adventure travel agency. They have been offering adventure travel packages for over twenty years and have integrated travel agency services with adventure travel activities. Rollins & Hayes have an established reputation, high-quality trips, economies of scale, and strategic alliances. However, their packages are expensive and primarily appeal to high-income clientele.
4.3.3 Business Participants
The travel industry includes large national chains, small home-based businesses, and consolidators on the Internet. There are approximately 25,000 members of the American Society of Travel Agents (ASTA) and 3,000 members of the Association of Retail Travel Agencies (ARTA). ATI has approximately 30 immediate competitors in the greater Woodville area, including branches of national travel agency chains.
4.3.4 Distributing a Service
In the travel industry, distribution occurs from supplier to agent to consumer. The distribution between suppliers and agencies is regulated by the Airline Reporting Corporation (ARC) and the International Airlines Travel Agents Network (IATAN). Agencies have access to suppliers through Computerized Reservation Systems (CRS). Wholesale houses now also sell airline tickets online at reduced prices.
Strategy and Implementation Summary
To become the Pacific Northwest’s premier adventure travel agency, ATI will:
1. Establish ATI’s reputation as a differentiated, specialty provider of adventure travel through a diverse marketing communications program targeting ATI’s market.
2. Provide unparalleled service to gain repeat business and build trust among Woodville residents.
3. Promote adventure sports as healthy and exciting activities for Pacific Northwesterners.
ATI’s services offer value through ATI’s experience with and love of adventure sports. ATI’s employees share the customers’ enthusiasm and confidence, building long-term relationships based on trust.
5.2 Competitive Edge
ATI’s competitive edge lies in its focus, passion, and experience in promoting and providing access to adventure sports and travel. ATI has the management experience, capital, and commitment needed to excel in this industry.
5.3 Marketing Strategy
ATI’s marketing strategy focuses on creating and retaining customers. ATI offers more than just travel; it provides adventure and freedom. The benefits of adventure travel, including better health, excitement, personal growth, and fun, will be promoted to attract customers. ATI will use trade or special interest magazines, mailing lists, direct mail, local radio stations, and personal selling to reach customers.
5.3.1 Promotion Strategy
ATI will hold a grand opening, sponsor athletic events, provide literature about trips and activities, and form strategic alliances with area health clubs. Specialty and local publications will serve as media vehicles for advertising. Personal selling will occur through limited phone solicitation and stationed sales personnel in Woodville.
5.3.2 Distribution Strategy
ATI will sell directly to the target market in Woodville and establish distribution capability on the World Wide Web to enhance its national reputation.
5.3.3 Marketing Programs
ATI will utilize traditional marketing communication methods and target the primary customer group. The Internet will serve as an effective medium, and additional methods will depend on marketing research results. Frequent customer contact and a possible monthly newsletter will help promote out-of-season services.
5.3.4 Positioning Statement
ATI is the premier adventure travel agency in the Pacific Northwest for individuals and corporate clients seeking adventure travel. ATI’s experience, exceptional service, value, and advice set it apart.
5.3.5 Pricing Strategy
ATI’s pricing is determined by market standards, with margins of 10% on airline travel and averages of 20% on other products and services. ATI aims to maintain competitive pricing while establishing itself as the premier provider of adventure travel.
5.4 Sales Strategy
ATI sells the benefits of its services and promotes the freedom of a healthy lifestyle. By satisfying customer desires and maintaining relationships, ATI aims to reduce costs, increase profits, and become the go-to adventure travel agency for seasoned travelers and newcomers alike.
Detailed projections can be found in the Total Sales by Month table in the appendix. ATI anticipates slow sales in the first quarter of operation. Sales growth is estimated at 20% annually until year three.
Woodville National Internet Corporate Total Sales
Year 1 $427,685 $42,768 $10,693 $53,058 $534,204
Year 2 $382,245 $70,568 $47,046 $88,210 $588,069
Year 3 $258,751 $97,032 $97,032 $194,063 $646,878
Direct Cost of Sales
Woodville National Internet Corporate Subtotal Direct Cost of Sales
Year 1 $333,595 $33,900 $8,417 $42,081 $417,993
Year 2 $294,329 $54,337 $36,225 $67,922 $452,813
Year 3 $196,651 $73,744 $73,744 $147,488 $491,627
Strategic Alliances
Strategic alliances for promotion have been developed with Body Works Health Club, Woodville Whitewater, The Great Wall climbing gym, and several area retailers. Alliances with adventure trip providers in several U.S. states and foreign countries have also been established.
Milestones
Milestone Start Date End Date Budget Manager Department
Grand Opening & Giveaway 9/1/1999 11/1/1999 $1,500 Jordan Barnes Marketing
Breakeven 1/2/2000 1/2/2001 $0 Paul Mclean Accounting
World Wide Web sales capability 9/15/1999 1/1/2000 $5,000 Steve Fergusee Sales
Strategic Alliance Development program 9/1/1999 12/1/1999 $1,500 Shea Delaney Managers
Totals $8,000
Management Summary
Shea Delaney will act as the General Manager. However, ATI is a small organization and its employees will share in management duties and decision making. It will be important for each member of the team to be capable in all aspects of the business. Prerequisites for all ATI employees include at least five years travel industry experience, knowledge and ability in the types of activities ATI will promote, and Certified Travel Counselor (CTC) certification for applicable positions. The CTC designation can be obtained through the Institute of Certified Travel Agents (ICTA).
Organizational Structure
ATI will begin operations with 4 full-time positions. The positions are as follows.
General Manager and President: Shea Delaney, age 37, B.A. Marketing Management, University of California Santa Cruz. Shea has 12 years experience in the travel industry, including five years experience as manager of the Transworld travel agency, Southern California branch. As manager at Transworld, Shea increased revenues by $1.5 million and established the adventure travel division which, in its first 18 months, generated an additional $400,00 in revenues. His background in adventure sports includes four years on the U.S. pro kayaking tour, two years as a sponsored cross-country mountain bike racer, 25 years surfing, including three years as an amateur competitor, and participation in many other adventure and organized sports such as snowboarding, beach volleyball, and track and field.
Marketing and Advertising Director: Jordan Barnes, age 31, B.S. Communications, Brigham Young University. Jordan spent five years as an adventure travel and freelance writer and has been a marketing consultant specializing in adventure sports for the past three years. Jordan has an extensive mountaineering background and has summitted three 8,000 meter peaks, including Everest. In addition to mountaineering, Jordan is an avid climber and has skied since the age of five.
Accountant: Paul Mclellan, age 45, B.S. Accounting, University of Alaska, Anchorage. Paul is an accountant and an Alaskan. His ability with numbers has helped keep his mind occupied during competition in the Iditarod, marathons, and mountaineering expeditions. Paul worked as an auditor for the State of Alaska for four years after college and then as an accounting department manager for a non-profit organization for another four years. Before going back to school and earning his degree, Paul was a commercial sport fisherman out of Homer, Alaska. During that time he established connections with many service providers in the state of Alaska. ATI will capitalize on these connections as Alaska is a popular destination amongst adventure travelers.
Travel Agent #1: Sue Taylor, Certified Travel Counselor. Sue has eight years experience as a travel counselor. She is an avid cyclist, runner, and kayaker. In addition, Sue has traveled extensively and has first-hand knowledge of many of the destinations our clients wish to reach. Her trips include a year-long trek in South America, four months in Nepal, and a four-month stint as a ski instructor in Wanaka, New Zealand.
Personnel Plan
Manager/President Year 1 Year 2 Year 3
$6,000 $6,240 $6,490
Accountant Year 1 Year 2 Year 3
$13,200 $13,728 $14,277
Travel Agent Year 1 Year 2 Year 3
$12,000 $12,480 $12,979
Marketing & Advertising Dir. Year 1 Year 2 Year 3
$13,800 $13,800 $13,800
Total People
4 4 4
Total Payroll Year 1 Year 2 Year 3
$45,000 $46,248 $47,546
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