Written Business Plan Evaluation
zkyalehm95
travelwish.pdf
TravelWish Travel Consultant
Business Plan Copy Number [1] March 2002
This document contains confidential and proprietary information belonging exclusively to TravelWish.
Jan George Chief Executive Officer
New York City, New York 1-800-TVL-WISH
www.TravelWish.com <[email protected]>
This is a business plan. It does not imply an offering of Securities.
Executive Summary
Company Description TravelWish, a special interest travel consultant company based in New York City, will begin operations in January 2003 as an S Corporation. The firm will provide a wide range of customized tourist services to individuals and small groups in the New York City metropolitan area. Located in an upscale office in Midtown Manhattan, the company will target well-educated, high-income customers with special interests. TravelWish will focus on outgoing travel to Central and Southeastern Europe.
Mission Statement At TravelWish we are committed to providing a unique, safe and enriching travel experience by personally caring for our customers, encouraging the growth and creativity of our employees, and building trustworthy relationships with our business partners. An advocate of sustainable tourism, we respect indigenous laws and traditions, and strive to preserve local resources. Through improving the image of Central and Southeastern Europe, we aim to support the economic development of this region.
Industry Analysis and Trends TravelWish will be part of the outbound sector of the international travel and tourism industry, offering special interest travel services to Central and Southeastern Europe. An intriguing destination, this region is not widely offered on the U.S. market and promises high growth. TravelWish’s main areas of specialization include recent trends in the industry, such as educational, heritage, eco- and health tourism. The company will take advantage of the changing role of travel agents today: from travel clerks, to counselors who provide credible travel information and advice.
Competitive Advantage TravelWish will compete with New York City travel agents/consultants, Internet travel businesses, and national touroperators and wholesalers. Although there is a large number of competitors in the market who can rely on brand recognition, low overhead and economies of scale, TravelWish has some distinct competitive advantages. The owner/manager has extensive hands-on knowledge of the company’s destinations and reliable connections with European suppliers, which will allow the firm to provide accurate, up-to-date information. Due to the recent political changes in the region, travel services to Eastern Europe are not widely available on the U.S. market. U.S. travelers are showing an increasing interest in the area’s rich natural and cultural resources.
Products and Services TravelWish will offer upscale independent and scheduled tours, and additional travel services. Highly customized individual and group independent tours will have no pre-set dates and will be developed upon request. They will be offered directly to customers through personalized consulting sessions, and to U.S. based travel agents upon request. The company will offer a variety of scheduled tours, created around special interest themes, available twice a month during the high travel season. The majority of these tours will be sold through U.S. based travel agents. In addition to these core services, TravelWish will offer airline tickets, insurance, assistance with travel documents, and other supporting services.
Target Market TravelWish’s primary target customers are well-educated, high-income travelers with special interests who live, work and do business in Midtown Manhattan. The firm’s customers are 45-60 years of age, have active lifestyles, and are interested in native peoples and culture, history, heritage, natural sciences and health tourism. These travelers are environmentally conscious, securely employed and hold managerial/professional positions. In addition to independent travelers, TravelWish will target local special interest and professional organizations, and educational institutions.
Marketplace TravelWish’s marketplace is the New York City metropolitan area, the largest metro area in the United States. A city with European roots and a large number of professional, educational and special interest organizations, New York is an excellent match for the concept of TravelWish. Located in Midtown Manhattan, New York’s main business district, TravelWish will be in the heart of its target market and within close reach of its local business partners.
Marketing Message TravelWish aims to be viewed as the New York City expert in special interest travel to Central and Southeastern Europe. Through its name, slogans and exceptional customer service, TravelWish will convey a clear message: “Our travel specialists have the skills and expertise to make your personal travel wishes come true.” The firm will build an image as an advocate of sustainable tourism by working closely with public and private travel industry professionals, special interest organizations and Eastern European governments to support sustainable tourism projects.
Marketing Stra tegy The core of TravelWish’s marketing strategy is affiliation with New York City cultural, educational and special interest organizations. In partnership with such institutions, the company will hold cultural and educational presentations in order to promote its services, as well as develop responsible, well-educated and informed travelers. In addition, TravelWish will reach its target market through promotional tours, public relations, sponsorship of T.V. and radio programs, local magazines and newspapers, brochures and flyers, direct mail, and personal contacts. The firm will advertise through a professional, user friendly website, travel-related directories and trade shows. TravelWish will strongly rely on word of mouth and repeat customers.
Human Resources Management During the first year of operation, TravelWish will consist of the manager/owner and a travel specialist/office assistant. As needed, TravelWish will consult with an accountant, an attorney and an insurance agent. By 2008, TravelWish’s team will consist of a manager, six travel specialists, an office assistant, a marketing director and a technical assistant. The management style and culture will be based on encouragement of growth and creativity, and empowerment.
Operations The main operational processes of TravelWish are consulting customers, contacting suppliers and arranging tourist services. The consulting session, the key to attracting and retaining loyal customers, will provide travelers with personal attention and reliable information. TravelWish will operate in a small but attractive office in Midtown Manhattan – the heart of its target market. A Microsoft Access customer database will serve as a request tracking and marketing tool. In terms of suppliers, TravelWish is committed to affiliating with small, European-based touroperators who have exceptional expertise in their geographic area.
Development, Milestones and Exit Plan In the long term, TravelWish will strive to increase the number of destinations to include all of Europe, increase the variety of services offered but remain small, local and personalized The company will work towards increasing awareness of Eastern European destinations, improving the image of the region, and helping for its economic stabilization. TravelWish will aim to become a leader in the sustainable tourism movement and grow into a resource center for travelers to Europe.
Financials TravelWish will invest in active advertisement and promotion during the first year of operations. Therefore, during 2004 and 2005 sales will increase rapidly and the company will reach its break-even level during the third year ($1,341,825.70 of sales or 583 customers). Average spending per customer is expected to be $2,300. During its first year of profitability, TravelWish will make $3,247 and generate 17.88% return on investment. Overall return on investment is expected to be 8.14%. The company will obtain $180,000 for start-up financing through issuing 36,000 shares of $5 stock in January 2003.
Table of Contents
Page
Company Description 1
Industry Analysis and Trends 4
Competition 11
Products and Services 14
Marketing 16
Human Resources Management 20
Operations 24
Development, Milestones and Exit Plan 28
Financial Assumptions and Use of Funds 29
Appendix 35
• Financial Statements 36
o Income Statement – Year 1 36
o Income Statement – Years 1-3 37
o Cash Flow Statement – Year 1 38
o Cash Flow Statement – Years 1-3 39
o Balance Sheet – Year 0 40
o Balance Sheet – Years 1-3 41
• Organizational Chart 42
• Logo and Advertising Slogans 43
• Map of Europe 44
• Sample Tours 45
Bibliography and Citations 50
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Company Description
TravelWish, a special interest travel consultant company based in New York City, will begin operations in January 2003. The firm will provide a wide range of customized tourist services to individuals and small groups in the New York City metropolitan area. Located in an upscale office in Midtown Manhattan, the company’s primary target market will consist of well-educated, high-income customers with specialized interests. TravelWish will focus on outgoing travel to Central and Southeastern Europe.
Mission Statement
At TravelWish we are committed to providing a unique, safe and enriching travel experience by personally caring for our customers, encouraging the growth and creativity of our employees, and building trustworthy relationships with our business partners.
An advocate of sustainable tourism, we respect indigenous laws and traditions, and strive to preserve local resources. Through improving the image of Central and Southeastern Europe, we aim to support the economic development of this region.
Management
The owner and manager, Jan George, has a four-year business degree with concentration in hospitality management. She has extensive training and experience as a tour operator and a travel agent. Born and brought up in Bulgaria, Jan has first-hand knowledge of Central and Southeastern Europe, the main destination of TravelWish. Jan George has organized and directed a number of tours throughout the region and is familiar with all major destinations, as well as with the local customs and traditions. She is fluent in German and Bulgarian, and has strong connections with local suppliers. This expertise will allow TravelWish to provide detailed, accurate and reliable information to its customers.
Products and Services
TravelWish will offer two basic types of tours*: independent and scheduled. The company will focus on highly customized individual/family and small group independent tours. These will also include conventions and educational tours taken by special interest organizations and educational institutions. These trips will have no pre-set dates and will be developed upon request. In the future, the firm will have a sample itinerary for most destinations that will be customized according to the customers’ wishes. TravelWish will offer these tours directly to customers through personalized consulting sessions. Independent tours will be available to U.S. based travel agents upon request.
TravelWish will also offer scheduled tours to a variety of destinations in Central and Southeastern Europe. According to the destination, these tours will be created around special interest themes (detailed in the Products and Services section, page 14) and will be available twice a month during the high travel season. The majority of these tours will be sold through U.S. based travel agents.
* Several sample tours, which can be used both as independent and scheduled, are attached in the Appendix.
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In addition to these core services, TravelWish will offer airline tickets, insurance, assistance with travel documents and other supporting services. After five years, the company plans to introduce add-on products, such as travel accessories, guidebooks and special interest literature, videos featuring current destinations, cellular telephones and international calling cards. Whenever possible, these products will feature the company’s logo and contact information.
Future Goals
In the short term TravelWish plans to:
• Position as a local, personalized travel consultant who ensures high customer satisfaction • Create a strong base of loyal customers • Create an image as a responsible member of the travel industry who respects indigenous people,
laws and traditions, and strives to preserve local resources • Be an advocate of sustainable tourism • Break even at the end of the third year
TravelWish will strive to achieve the following long-term goals:
• Increase the number of destinations to include all of Europe • Increase the variety of services offered • Increase awareness of major destinations and improve the image of Eastern Europe • Increase tourist flow to and help for the economic stabilization of Eastern Europe • Remain small, local and personalized • Make enough profit to provide all employees with excellent compensation
TravelWish will strive to improve the image of and increase tourism traffic towards Eastern Europe in order to help the region develop a stable and prospering economy. The travel industry is a major factor for economic development. Over the last ten years Eastern Europe has undergone rapid changes and suffered from political and economic instability. Tourism has the potential to bring income, provide job opportunities and encourage foreign investment in the area.
Through its business practices the company will show its commitment to sustainable tourism. TravelWish will strive to create a strong image as an advocate of responsible, environmentally safe tourism that respects local culture and traditions. Many travelers and tourism professionals today understand that responsible tourism is the only future of the hospitality industry. Through working with TravelWish, business partners and customers will feel that they are contributing to the preservation of the world’s cultural and natural resources.
Core Competencies, Key Success Factors and Strategies
• Expertise - The owner and manager has extensive, first hand knowledge of TravelWish’s main destinations. All travel specialists will be selected and trained to have an excellent understanding of the destinations they are responsible for. TravelWish will create a loyal customer base by always providing accurate, reliable and up-to-date information.
• Reliable International Partners - A member of the company will personally meet with each local touroperator and supplier to establish a trustworthy relationship. Major accommodation units and other facilities will be carefully inspected before a contract is signed.
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• Personalized Customer Service - TravelWish aims to develop a strong and lasting relationship with its customers. Word of mouth promotion and repeat business are key factors for the company’s success. Travel specialists will gain as much information as possible about every client in order to improve his/her travel experience.
• Strong Communication - Travel consultants will promptly follow up on every request and do their best to fulfill all customer wishes. They will continuously inform clients about the status of their request and work closely with them to create a well-designed, realistic and flexible itinerary. Once they leave the country and throughout their trip, customers will be able to contact a local touroperator or TravelWish if they need any assistance. The firm’s strong relationships with local representatives will allow TravelWish to resolve any problems quickly and effectively.
• Intriguing Destinations - TravelWish will take advantage of the increased interest towards Eastern Europe. Due to the drastic political changes in the region many travelers are curious to see what life was like behind the “Iron Curtain.” The development of the private sector in the post-communist countries has facilitated the improvement of the tourism infrastructure. Many local suppliers and foreign investors have entered the market with low introductory prices.
• Strategic Partnerships – TravelWish will affiliate with New York City educational institutions, professional and special-interest organizations, and European cultural centers to coordinate promotional efforts and reach specific market segments. The company will partner with European- based organizations to host symposia, conferences and conventions in Central and Southeastern Europe for American special-interest groups.
Developments to Date
TravelWish is currently performing extensive research on potential business partners. The company has evaluated and signed contracts with suppliers in the Czech Republic, Bulgaria and Greece. TravelWish is coordinating among its international representatives and laying the groundwork for a low-priced promotional tour in June 2003.
TravelWish has contacted a number of New York City special-interest groups focusing on the natural science, heritage, culture and history. The company is working with The Explorers Club, a society dedicated to the advancement of field research and scientific exploration, to develop a field research study in Southeastern Europe. The firm has invited several clubs and societies to organize a conference in Central or Southeastern Europe in partnership with a similar local group.
The company is building partnerships with Eastern European cultural center in the city of New York. TravelWish is currently working on joint promotions (seminars, lectures, exhibits and performances) with the Polish Institute of Arts and Sciences of America, the Polish Cultural Institute, the Czech Center, the Czech Tourist Authority and the Hungarian National Tourist Office. The firm has contacted New York University regarding joint educational and research programs.
Vision
TravelWish will grow into a resource center for travelers to Europe. The company will continue to provide highly customized vacations and tourist services. In addition, the firm will build a cultural center representing every country in Europe. When profits increase TravelWish will build a library with tourist resources and organize cultural activities (lectures, seminars, exhibitions, festivals and others) promoting diversity. Americans with European background will have the opportunity to remember and share their
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traditions. Those who want to learn about European culture will have the chance to experience it. Then, they will be well prepared to enjoy their trip.
The activities at TravelWish’s European cultural center will promote the company’s destinations and attract customers. They will also create educated and responsible travelers. Furthermore, the firm will improve the image of Southeastern Europe and promote the diversity of cultures and traditions. TravelWish will become a driving force for a better, more responsible tourism.
Legal Form
TravelWish will be an S Corporation. This form of business will protect the owners from the risks of the travel industry by limiting stockholders’ liability to the amount of the shareholders’ investment. Setting up an S Corporation is fairly inexpensive (about $350) and eliminates double taxation. Once a corporation selects S status, it stops paying corporate income taxes and instead passes taxable income or losses on to the stockholders. An S Corporation can select the end of its fiscal year in order to better manage its cash flow. This advantage is particularly important in a seasonal business, such as the travel business. One disadvantage is that an S Corporation cannot have more than 75 stockholders. This should not pose problems for a small business, such as TravelWish.
Industry Analysis and Trends
TravelWish will focus on the special interest niche in the international travel and tourism industry. The business will be part of the outbound sector of the industry offering travel services to Central and Southeastern Europe.
Opportunities
TravelWish will take advantage of the changing role of travel agents today. The overwhelming amount of information available on the Internet and its growing capabilities increase the need for credible advice. As a travel consultant, TravelWish will provide personalized advice based on expertise, experience and reliable local partners.
Once restricted to western travelers, Eastern Europe today is becoming an increasingly attractive destination. Post-communist governments have invested in developing a modern tourism infrastructure. The changes in the region have attracted media coverage and increased awareness. Many well-educated travelers want to witness the political and economic changes by themselves. Eastern Europe is a destination that hasn’t been strongly affected by mass tourism. Travelers can find unspoiled natural beauty and a rich culture in this region.
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Size and Growth
Travel Worldwide A service industry, international travel and tourism benefits from the fast growth of this economic sector. The travel industry demonstrates an overall trend of continuous growth. Graph 1 below illustrates a steady current and projected increase in international tourist arrivals.
Graph 1
Source: Tourism 2020 Vision: Europe. Volume 4. World Tourism Organization, 2000.
According to the World Tourism Organization, international arrivals worldwide increased from 395 million to 635 million from 1988 to 1998 (a 61% increase) (pg. 50-1). U.S. outbound travel and tourism grew 6.3% percent in 1998. In the last 10 years, U.S. outbound travel has declined only once due to domestic economic problems. International travel and tourism by U.S. residents grew from 41.1 million to 56.3 million trips between 1989 and 1998 (pg. 50-5).1
The World Tourism Organization projects continued growth (about 5% annually) in international arrivals. By 2010, the number of world travelers is expected to double to more than 1 billion. Global revenues from travel and tourism are projected to exceed $1.5 trillion in 2010 (pg. 50-8).1 In support of this growth trend, WEFA (one of the most respected economic information companies in the world) forecasts travel and tourism to grow by 4.1% a year between 2000 and 2005 in terms of total spending as against an annual growth of 3.6% for the world economy. As a result, the industry’s share of world GDP will rise from 10.5% in 1990 to 11.4% by the end of 2005.2
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Travel to Europe As illustrated by Graph 2, the number of U.S. citizens traveling to Europe has been steadily increasing since 1948.
Graph 2
Source: U.S. Department of Commerce, Travel and Tourism Industries
According to the World Tourism Organization, travel to Europe grew by an impressive 6.1% to 403 million arrivals in 2000. This accounts to nearly 25 million more trips in 2000 compared to 1999 (pg. 11).3
Travel to Central and Southeastern Europe The World Tourism Organization’s forecasts indicate that by 2020 Central and Eastern Europe will attract more visitors than Western Europe. Strong growth is also expected for arrivals to the East Mediterranean region. The countries in the Balkans are forecast to receive 79 million international tourist arrivals in the year 2020, thus recording an annual growth rate of 4.6% over the period 1995-2020. The leading Balkan tourist destinations according to World Tourism Organization research are Greece, Turkey, Bulgaria, Romania and Croatia (pgs. 11-12).4
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Graph 3
Source: Tourism Satellite Accounting Research: Central and Eastern Europe. World Travel & Tourism Council, 2001.
As Graph 3 indicates, the total demand for travel and tourism in Central and Eastern Europe is projected to grow steadily, by 3.8% annually, between 2001 and 2011. The industry is expected to generate $212.2 billion of economic activity in 2011, compared to $107.3 billion in 2001. The industry’s contribution to GDP is expected to grow from 2.9% in 2001 to 3.1% in 2011 (pg. 1).5
Travel Agents/Consultants According to the American Society of Travel Agents (ASTA), travel agents still sell 80% of all airline tickets, book 90% of all cruises, and make 25% of all hotel reservations. A 1999 ASTA survey indicates that the travel agent industry is still going strong. “Despite the decline in airline commissions and the rise in on- line booking options, consumers are still turning to travel agents for assistance and expertise. Even though 13% of the agents surveyed acknowledged losing customers to the Internet, nearly half the respondents stated that their client base has grown” (pg. 50-8).1 According to the Tourism Industries department of the International Trade Administration, 54% of U.S. resident travelers visiting overseas destinations in 2000 used a travel agent to book their trip. The highest percentage of outbound travelers (24%) used a travel agent to book their accommodation. 52% used a travel agent as their primary travel information source.6
Maturity and Trends
Travel to Central and Southeastern Europe Since 1989, after the fall of the Iron Curtain, travel interest towards post-communist Europe has been steadily increasing. Well-educated western travelers want to personally experience the dramatic political and economic changes in the region. People from capitalist societies want to explore the cultures of Central and Eastern Europe, a previously restricted travel destination. Curiosity, radical change and wide media coverage have turned travel to post-communist Europe into a rapidly expanding segment of the travel industry.
Travel Agents/Consultants The traditional travel agent segment of the industry is at the stage of decline. The travel consultant sector, however, can be considered a new, emerging industry segment. Travel agents today are changing from clerks who simply book travel to counselors who provide credible travel information and advice. The travel consultant industry will continue to expand because customers will always need personal attention in today’s technology-based environment.
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Special-Interest Travel TravelWish will take advantage of the high growth rate of the special-interest segment of the travel industry – an expanding industry sector. TravelWish’s primary customers, the well-educated, environmentally conscious travelers, are not interested in cheap, mass tourism destinations anymore. It appears that today’s sophisticated travelers want a tailor-made vacation that will enrich their understanding of foreign cultures and offer them unique experiences.
According to the Travel Industry Association of America, one-fifth of U.S. travelers (30.2 million adults) have taken an educational trip in the past three years. 18% of travelers in the past year said that taking such a trip was the main purpose of their travel (pg. 70).7 TravelWish will attract these customers by offering educational tours in the areas of history, culture, archaeology, geography, architecture, ecology and other natural sciences.
The Wall Street Journal reports that more and more Americans today are interested in finding out where they come from. A recent survey by Maritz Marketing Research has found that interest in genealogy has risen 33% since 1995 (pg. 127).7 TravelWish will take advantage of this trend by offering special-interest heritage tours. A large number of Americans living in the New York City Metro area are descendants of European immigrants. TravelWish will offer them the opportunity to trace the footsteps of their ancestors.
Ecotourism is also an emerging trend in the travel industry. According to the Outdoor Recreation Coalition of America, in 2000, 137 million Americans aged 16 or over (64.3%) participated in some form of outdoor recreation. The involvement in outdoor activities has grown by over 4% since 1998 (pg. 52).7 Judy Randall of Randall Travel Marketing (an independent research company) points out that the trend towards nature- based travel has been particularly strong since the events of September 11, 2001. The grandeur of nature has helped many people cope with fear and stress (pg. 154).8 This back-to-nature trend will help TravelWish market its mountain exploration and rare wildlife tours.
Another special-interest trend is mind, body and spirit tourism. Health conscious travelers and those who have a busy, stressful life look for a travel destination where they will be taken care of and will not have to think. There is also an increased interest in the spiritual aspect of healing therapies (pg. 154).9 Central and Southeastern Europe, especially the Czech Republic, Bulgaria and Turkey, offer numerous destinations for health and spiritual tourism. TravelWish will offer visits to spa and wellness resorts in a unique cultural setting. These tours can be combined with monastery visits, nature exploration or other spiritual events.
Vulnerability to Economic Factors
International travel is a leisure activity and is generally vulnerable to a number of economic factors. Unemployment and periods of economic recession often force people to take short- distance, less expensive trips.
In the special-interest segment of the industry, however, the negative effects of economic downturns are temporary. Although the U.S. industry is currently in recession and U.S. travel for 2001 dropped by 3.5% over the figures for the previous year, industry experts foresee an increase during 2002. The special-interest sector rebounded quickly because of the demographics of its travelers: better educated, wealthier, and more widely traveled than the population at large (pg. 132).9
TravelWish wish will cope with the vulnerability of the travel industry by targeting high income, well- educated travelers with stable jobs. These customers’ income and travel plans will not be strongly affected by economic downturns and periods of high unemployment.
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Risk Analysis
The largest risks for the travel industry are posed by safety and security issues. These can be caused by political and economic instability of destinations, insecurity at home or problems in a supplier industry.
TravelWish feels confident in the future stability of Eastern European destinations. 12 years after the fall of the Iron Curtain, post-communist Europe is stabilizing both economically and politically. The company will increase the confidence of its customers by providing them with reliable, up-to-date information. TravelWish will quickly resolve any safety and security problems thanks to its strong relationships with local agents.
Travel is an industry, which relies heavily on supplier loyalty and reliability. The travel consultant is the suppliers’ agent and will be held responsible for most mistakes along the supply chain. Travel agents are often blamed for flight and event cancellations, and even bad weather conditions. To avoid these risks TravelWish will examine every supplier carefully and sign well-designed contracts with every business partner. The company will also have each customer sign a waiver, explicitly stating the company’s responsibilities. Every client will be encouraged to purchase travel and medical insurance. TravelWish will only offer information, which comes from a reliable source.
The terrorist attacks of September 11, 2001 are a clear example of the travel industry’s vulnerability to issues of safety and security. As a result of the assaults many travelers feel insecure to fly or travel long distances. Industry trade associations, however, believe that this is a short-term phenomenon. In particular, according to Specialty Travel Index, adventure and special interest travel have proven resilient in the aftermath of September 11. Many touroperators reported that even though sales dropped immediately after the attacks, figures climbed back to expected levels by November and December. The stability of the special-interest segment is due to the characteristics of its customers. These travelers are well educated and open-minded (pg. 132).9 Robert Swan, general manager of the touroperator company Borton Overseas, points out that, “adventure travelers came back, because they are, in fact, adventurous. Although they are concerned about danger … they’re quick to say, ‘You know what – I am going anyway.’” (pg. 132).8
Despite of the tragic consequences, the events of September 11 brought some opportunities to the travel industry. Risa Weinreb of Specialty Travel Index sums them up well: “After September 11, many Americans are finding that they need travel more than ever – to lose themselves in the beauty of nature; to find themselves by connecting with different people and cultures” (pg. 155).9
Seasonal Factors
Travel and tourism is a highly seasonal industry. The high season for travel is May through September. The special-interest segment of the industry is not as vulnerable to this seasonality because its customers are engaged in less traditional activities. Travelers interested in historic and cultural monuments, for example, may prefer to travel in early spring or late fall to avoid the crowds. Nevertheless, TravelWish’s business will be affected by seasonality due to the preferred time for travel and the climate in Europe.
Due to seasonality most cash flow will occur before and during the active travel season. To avoid cash shortages, TravelWish will require a deposit and advance payment. To operate efficiently, the company will devote the low tourist season to planning and marketing. TravelWish will encourage high volume travel (convention groups and special interest organizations) during early spring and late fall.
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Technological Factors
The rapid development of the Internet is both a threat and an opportunity for the travel industry. The Internet is an endless source of information easily available to most travelers. Tourists are able to research destinations, obtain travel information and make reservations on-line. They can directly communicate with travel suppliers worldwide. Travel agents must be careful not to be left out of the picture. TravelWish will attract customers by providing reliable information in a clear and personalized manner.
TravelWish will take advantage of the Internet for destination and supplier research. The convenience of the web makes business partners worldwide easily accessible. The company will use e-mail as its primary way of communicating with international travel suppliers. E-mail is also an inexpensive way of transmitting itinerary and other information to customers.
Today a Computerized Reservation System is an indivisible part of most travel agents’ offices. TravelWish’s concept, however, is focused on travel consulting, not on making reservations. Therefore, the company will not invest in a Computerized Reservation System that will have to be continuously upgraded. TravelWish will communicate personally with industry suppliers and contract with consolidators for its airline ticket sales.
TravelWish will develop a Microsoft Access customer database. This software will be inexpensive and easy to upgrade since future editions are compatible with previous versions.
Regulatory Issues
The state of New York does not license travel agents or travel agencies, but New York State General Business Law Chapter 20, Article 10-A, Truth in Travel Act regulates them to a degree. According to the Truth in Travel Act, the promotion of travel, either individually or as a group, is now of such volume that it is in the public interest to subject it to the supervision of the appropriate political subdivisions of the state for the purpose of safeguarding the public against fraud, false advertising, misrepresentation and similar abuses. It is illegal for any travel consultant to misrepresent the quality and kind of service, fares and charges and special priorities for reservation. There are a number of other regulations that protect the rights of travelers.10
The Truth in Travel Act will directly affect TravelWish’s business. Since one of the company’s main services is information, travel specialists must be very careful not to misrepresent tourist services. Travel consultants will only rely on recent personal experience, reliable local agents and credible sources of information. TravelWish will not advise its customers if it is not 100% confident in the source of the information it is providing.
Supply and Distribution
TravelWish will sell directly to its customers – individual tourists and special interest groups – as well as to U.S. based travel agents. There is a variety of travel supplier categories available in the international travel industry. TravelWish is committed to affiliating with small, European-based touroperators who have exceptional expertise in their geographic area. Management is currently seeking trustworthy, knowledgeable partners in Central and Southeastern Europe who have personal connections with local suppliers. During several trips to Europe the owner plans to personally meet and evaluate business partners. The company will not work with large wholesalers in order to ensure superior quality.
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If a reliable touroperator is not available, TravelWish will work directly with suppliers. The owner has strong connections in Eastern Europe and she is familiar with the local accommodation, transportation and event management industries.
TravelWish will not sell airline tickets through a Computerized Reservation System. If a customer wishes to purchase air transportation, TravelWish will obtain a ticket through a consolidator.
Financial Considerations
Most travel agencies work on commission. The standard commission on a travel package is 10%. If the package is obtained at a net price from the supplier, most co mpanies add a 10% markup. Airfare is usually commissionable at a maximum of 10%. The maximum commission on international airline tickets today is $100. Commissions offered by consolidators (which will be used by TravelWish) vary greatly. The average range is between 8% and 12%.
Some travel companies charge a standard service fee for reservations and itinerary development. These also vary across the industry. Most agents charge about $15-$25 for an airline ticket and $20-$50 for an itinerary. More complex itineraries and group travel require larger service fees. In percentage terms fees range between 1% and 3%. Travel agencies are charged 3% by banks for the use of credit cards.
Competition
Major Competitors
TravelWish’s major competitors are local special interest travel agencies and consultant firms offering outbound travel services to Central and Southeastern Europe directly to individual and group travelers. There is a large number of agencies in the New York City metro area but most of them do not specialize in a specific destination or kind of service. They compete on strategic location and personalized service. Some of them are already well established in the market. Two of the largest travel companies, Carlson Wagonlit and American Express Travel, have a number of representatives in New York City. In addition to location, these businesses can rely on brand recognition.
Many small agencies sell travel services through the Internet – Ayelet Tours, Eastern Europe Travel Services and Adventures Abroad offer customized and packaged tours, and market to the entire United States. A number of on-line companies specialize in popular destinations throughout Central and Southeastern Europe. Such businesses compete on low-prices and accessibility.
In addition to travelers and organizations, TravelWish will offer its scheduled and independent tours to travel agents. By doing so, the firm will compete with national touroperators and wholesalers. The market leaders are Trafalgar, Collette Vacations, Tauck World Discovery, Globus & Cosmos, General Tours, Sunny Land Tours and American Travel Abroad. These companies package low cost tours and distribute them through local representatives. They can take advantage of economies of scale. Such businesses rely on brand recognition, financial stability and strong connections with international suppliers. They offer a large variety of destinations, including Central and Southeastern Europe.
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Competitive Advantages and Strategic Opportunities
• Expertise and Specialization – Travel companies that offer a wide variety of destinations and services cannot compete with TravelWish on expertise. TravelWish’s owner and manager has extensive, first hand knowledge of Central and Southeastern Europe. All travel specialists will be selected and trained to have an excellent understanding of the destinations they are responsible for. TravelWish will gain market share by always providing accurate, reliable and up-to-date information.
• Unique and Intriguing Destinations – Eastern Europe is still struggling with the image of a politically and economically unstable destination. Many western enterprises are cautious to do business in the region. Therefore, few of TravelWish’s competitors sell tours to Bulgaria, Romania, former Yugoslavia, Albania and Macedonia. Vacations to Slovenia and the former Soviet Republics are also not widely offered. Twelve years after the Cold War, these countries have achieved a lot in decreasing crime rates and political instability. Eastern European countries have a developed tourism infrastructure since travel among these destinations was in important industry during communism. New investments after 1989 have additionally improved accommodation, transportation and telecommunications. The area is rich with unspoiled natural resources and cultural heritage sites. An increasing number of local touroperators are offering services to Western European travel businesses. TravelWish will take advantage of the increased interest towards Eastern Europe and the unavailability of these destinations on the U.S. market. The company will actively work towards the improvement of Eastern Europe’s image.
• Reliable International Partners – Large national companies are not able to “handpick” their business partners. TravelWish will personally meet with each local touroperator and supplier to establish a trustworthy relationship. Major accommodation units and other facilities will be carefully inspected before a contract is signed.
• Personalized Customer Service and Strong Communic ation – On-line and large businesses cannot provide personal attention to every customer. TravelWish aims to develop a strong and lasting relationship with its clients. Once they leave the country and throughout their trip, travelers will be able to contact a local touroperator or TravelWish if they need any assistance.
• Commitment to Responsible Tourism – Environmentally conscious, well-educated travelers will prefer TravelWish over mass tourism oriented businesses.
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Market Share
Europe, TravelWish’s destination, has consistently been a leader among tourist-receiving regions. As Graph 4 illustrates, Europe is a preferred destination for 58% of international world travelers.
Graph 4: Tourism Market Trends: World Overview & Tourism Topics. World Tourism Organization, 2001 (pg. 12).
As illustrated by Graphs 5, 6 and 7, travel agents/consultants have the largest market share among reservation and information sources. In 2000, 54% of U.S. resident international travelers booked their trip through a trav el agent, 24% used the same source to book lodging and 52% turned to a travel agent for tourist information. TravelWish will help maintain this market share by providing accurate information and convenient, personalized services.
Graph 5: Means of Booking Trip Graph 6: Sources of Booking Lodging
Tour operator
4%
Travel Agent 54%
Airline Directory
19%
Personal Computer
7%
Company Travel Dept. 11%
Other 5% Travel
Agent 24%
Other 40%
Business Associate
6%
Company Travel Dept. 9%
Hotel/ Motel 10%
Tour operator
6%
Friend/ Relative
5%
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Graph 7: Travel Information Sources (Multiple Responses)
52%
23% 22%
15%
10%
6%
6%
3%
2%
2% Travel Agency
Airline
Personal Computer
Friend/Relative
Company Travel Dept.
Travel Guides/Timetables
Touroperator
Newspapers/Magazines
National Gov't Tourist Office
State/City Travel Office
Graphs 5,6 and 7 source: 2000 Profile of U.S. Resident Travelers Visiting Overseas Destinations, Reported from: Survey of International Air Travelers. U.S. Department of Commerce, International Trade Administration, Tourism Industries, July 2001, http://tinet.ita.doc.gov/view/f-2000-101- 001/index.html?ti_cart_cookie=20020209.195848.21479, accessed on February 9, 2002.
Barriers to Entry and Future Competition
The main barrier to entry into the special interest travel industry is expertise. A travel consultant must be knowledgeable and experienced in order to offer a well-defined geographic area such as Central and Southeastern Europe. Nevertheless, new competitors are constantly entering the market. Although the number of traditional travel agents is declining, on-line travel agents and consultants will be TravelWish’s future competitors. Suppliers are also starting to offer services directly to customers. Touroperators, hotels, resorts and airlines are able to reach travelers directly through the Internet. Having realized the increasing interest towards Eastern Europe, travel companies are staring to enter the market.
Products and Services
TravelWish will enter the market by offering tours to Bulgaria, Romania, Greece, Turkey, the Czech Republic, Slovakia, Slovenia, Hungary, Austria and Poland. As the conditions in former Yugoslavia and Macedonia improve, the firm will start promoting these destinations. The next area of expansion will be the former Soviet Union. In five years TravelWish will offer travel services to any destination in Europe.†
TravelWish’s independent and scheduled tour packages will include the core services listed below. All tours will be designed with the upscale traveler in mind. Independent tours will be extremely flexible, which will allow travelers to purchase any combination of these services.
† A map of TravelWish’s destinations is attached in the Appendix.
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• Initial consultation and destination information • Planning and developing an itinerary (independent tours only) • Transportation (local – within the destination country/region) • Accommodation • Meals • Local guides and interpreters • Special events • Local festivals/performances • Entrance fees/tickets • Consultation regarding international laws and regulations, visa requirements • Information regarding a destination’s attractions and customs
According to the demand, TravelWish will begin offering the following supporting products and services to both independent and scheduled travelers:
• Airline tickets (sold through a consolidator, not through a Computerized Reservation System) • Insurance • Obtaining a visa and other trav el documents
After five years, the company will begin introducing the following add-on products. To increase sales and generate promotion, these products will feature the company’s logo and contact information.
• Travel accessories • Guide books and other special interest literature • Videos featuring current destinations • Cellular telephones and international calling cards
Tour Themes‡
TravelWish will focus on special interest tourism. Some tour themes, which will be used both as sample tours for independent travelers and scheduled trips, include:
• A Journey Through History • Monuments of World Cultural and Natural Heritage • Bulgaria – Turkey: A Crossroad of European Traditions and the Fashion of the Orient • Ancient Ports of the Black Sea • Forgotten Cities – An Exploration of Ancient Settlements • Educational tours for professors and students in the areas of Archeology, History, Geography,
Architecture, Ecology and other Natural Sciences. • Special interest tours focused on:
o Monasteries, churches and other religious monuments o Traditional festivals o Rare vegetation and animals o Mountains o Wine – “The Culture of Wine – from Dionysus until Today” o Art o Health and therapy o Any particular region, country or city
‡ Several sample tours, which can be used both as independent and scheduled, are attached in the Appendix.
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Marketing
Marketplace
TravelWish’s marketplace is the New York City metropolitan area. The company offers special interest tours to Central and Southeastern Europe. Because this is a narrowly defined geographic area, TravelWish needs to be located in a densely populated region. New York is the largest metropolitan area in the United States (population 21,199,865).11 It is also ranked second by population growth.12 According to a Survey of International Air Travelers, the highest percentage of U.S. resident international travelers reside in New York City. New York City was the port-of-entry for 20% of all U.S. resident travelers visiting overseas destinations in 2000. 13 The city has two large international airports that offer the lowest cost airfares to Europe. This will maximize convenience and help TravelWish keep prices down.
Midtown is Manhattan’s main business district. Most cultural centers, such as the Polish Institute of Arts and Sciences of America, the Polish Cultural Institute, the Czech Center, the Czech Tourist Authority and the Hungarian National Tourist Office are located in this neighborhood. The Explorers Club, a special interest organization, also has an office in the area. Manhattan is rich with ethnic restaurants and educational institutions. The core of TravelWish’s promotional campaign is networking with local organizations. Therefore, the company needs to be located within walking distance of their offices. The area demographics, as described below, match the firm’s target market.
Target Market
According to Balkan Holidays 14 (the largest and best established touroperator in Bulgaria), the main characteristics of American travelers who visit Central and Southeastern Europe are:
• 45-60 years old • Middle class and above (income over $35,000) • Well educated (at least some college education) • Already visited popular destinations in Europe (Western Europe and Western
Mediterranean) • Adventure travelers with active lifestyles • Interested in native peoples and culture • Interested in health/mind, body and spirit tourism • Interested in small-scale tourism (small groups and families)
The Travel Industry Association of America (pg. 92)15 and a personal interview16 with a travel agency owner characterize special interest travelers to Europe as securely employed, many in managerial positions. In addition to these, TravelWish will target customers that are interested in history, heritage and natural sciences, environmentally conscious, and respectful of native cultures and resources.
The demographic characteristics of the population of New York City closely match the target market described above. Out of 8,008,278, 17.2% (1,381,490 residents) are between the ages of 45 and 60.17
2,051,931 people have at least some college education. 617,619 have Central and Southeastern European ancestry. In addition, 298,936 New York City residents have Russian ancestry (Russia is one of TravelWish’s future destinations).18 TravelWish will target residents with Eastern European background as both employees and participants in heritage tourism. 1,209,483 of the city’s households have an income above $35,000. 19
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TravelWish’s specific target market, Manhattan, also closely matches the characteristics of travelers to Central and Southeastern Europe. Manhattan’s population in 2000 was 1,537,195. 18.5% of residents fall in the 45-60 age group.20 429,045 households in Manhattan have an income over $35,000 and 757,855 people are employed. 421,254 are employed in management and professional positions.21 Manhattan’s population is well educated (723,198 people have at least some college education). 107,872 people have Central and Southeastern European ancestry. In addition, 91,419 have Russian ancestry. 95,155 Manhattan residents speak an Indo-European language at home.22 TravelWish will seek employees with a European background who are fluent in a European language. Travelers with European ancestry will be attracted by the company’s heritage tours.
Midtown is Manhattan’s main business district. The area is the site of many world famous upscale businesses. There is a high concentration of cultural centers, museums and special interest organization in the neighborhood. These businesses and institutions attract high-income, well-educated people with special interests. In addition to those who live in Manhattan, TravelWish will target people who work, shop and do business in the area.
In addition to independent travelers, TravelWish will target local special interest and professional organizations. New York City, and specifically Midtown Manhattan, is a headquarter location for many such associations. These include clubs and societies focusing on natural sciences, heritage, culture, architecture and history. The company will also approach tourism related trade associations interested in international symposia and conferences. The variety of religions and religious monuments in Central and Southeastern Europe will help TravelWish attract religious organizations as well. The company will approach these groups to explore Europe and/or organize conventions abroad. TravelWish will partner with related organizations in Central and Southeastern Europe to reduce costs and provide a better experience.
The home of several world famous universities, New York City is an excellent market for educational tours. TravelWish will offer tours to professors, students, and department/student organizations.
The company will offer its tour packages to U.S. based travel agents. Travel Wish will make its packages available to both national and New York City agencies. The business will be most successful in selling its unique Eastern European destinations, which are not widely available in the U.S. market. TravelWish will reach travel agents through directory listings, trade shows, brochures, the company website and personal contacts.
Message
TravelWish will send a strong message through its business practices and promotional activities. The firm aims to be viewed as the New York City expert in special interest travel to Central and Southeastern Europe. Knowledgeable and experienced, the company provides accurate, reliable and up-to-date travel information. Through purchasing TravelWish’s services, travelers will discover unique destinations, enrich themselves and contribute to the development of Eastern Europe.
The firm will build an image as an advocate of sustainable tourism. Sustainable tourism, as defined by the Organization of Eastern Caribbean States (OECS), is “the optimal use of natural and cultural resources for national development on an equitable and self sustaining basis to provide a unique visitor experience and an improved quality of life through partnership among government, the private sector and communities.”23
TravelWish will work closely with public and private travel industry professionals, special interest organizations and Eastern European governments to support sustainable tourism projects. Through its educational presentations and travel consulting sessions, the company will teach travelers to respect local culture, traditions and resources. Environmentally conscious travelers who respect native cultures and resources will prefer TravelWish’s services. By purchasing a tour from the company, these customers will feel like they are giving something back to the international community.
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Through its educational activities, TravelWish will reinforce the message that tours are designed with the objective of a safe and attractive destination. The company will provide current information to communicate to its customers that the political situation and the infrastructure in Central and Southeastern Europe are continuously improving. The company will actively promote the “hidden treasures” (cultural and natural resources) of these destinations.
Through its name, slogans* and exceptional customer service, TravelWish will convey a clear message: “Our travel specialists have the skills and expertise to make your personal travel wishes come true.”
Promotional Activities
Promotional Tours TravelWish will attract its first customers with a low cost promotional tour in April 2003. The firm will partner with international suppliers to highly discount prices because such a promotion will be beneficial to all business partners. Later on TravelWish will limit promotional tours (“fam trips”) to travel agents and event planners. The company is planning on one, 15 passenger, 15-day promotional tour per year at $1,000 per passenger. The cost to TravelWish will be 90%. The company will not charge service fees to these travelers as an incentive.
Educational Presentations In partnership with educational and special interest organizations TravelWish will hold pre- and post-travel educational sessions. These will include video series, destination presentations and special interest lecture series. Travelers will be able to prepare for their trips as well as share their travel experiences. Through these sessions the company will have the opportunity to educate tourists and contribute to responsible tourism. TravelWish has allocated $300 per month for refreshments, guest lecturers and miscellaneous charges during presentations for the first year. Until the company leases additional office space, these events will be done at educational and special interest organizations’ facilities for no charge.
Cultural Presentations In affiliation with local cultural centers and ethnic restaurants TravelWish will hold dance, music and art shows as well as international cuisine fairs. The firm will invite international students and community members to share their background with potential customers. These activities will help TravelWish build strong ties with the community as well as promote its destinations to special interest travelers. Many of these events will be scheduled at lunchtime to accommodate the working population. TravelWish has allocated $250 per month for refreshments and miscellaneous charges during presentations for the first year. Until the company leases additional office space, these events will be done at business/community partners’ facilities for no charge.
Marketing Vehicles
Public Relations TravelWish will promote its destinations and support responsible tourism by publishing news articles in the local media. The firm will write destination specific as well as educational articles to reach the highly educated travelers. The owner will participate in forums on the topic of sustainable tourism. In addition to providing publicity, this vehicle will help TravelWish improve the image of Central and Southeastern Europe.
* A logo and advertising slogans are attached in the Appendix.
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Television and Radio Due to the high costs, TravelWish will not directly advertise on television and radio. The company will co- sponsor T.V. documentary films featuring different destinations. According to Travel Industry Association of America research TravelWish will reach a large portion of its target market through television. Travelers who choose a destination as the result of seeing a movie have a higher household income ($81,000 mean average annual), are college educated (39%) and work in a professional or managerial occupation (pg. 84).15
TravelWish will also support radio programs on the topic of sustainable tourism. During the first year, TravelWish will allocate $2,000 for such sponsorship.
Specialty Magazines and Newspapers TravelWish will advertise in local special interest and travel magazines. These include natural science, cultural, health and environmental magazines. TravelWish will also appear in the Travel Agency Directory, published in the Travel Section of The New York Times, for 4 consecutive Sundays during the first year (February through May). This yearly investment of $1,128 will effectively reach a large portion of the company’s target market. The Travel Agency Directory has 3.7 million readers with a median household income of $85,357.24 The typical reader of The New York Times is almost three times as likely as the average U.S. adult to have a college or post-graduate degree, more than twice as likely to hold a professional/managerial position and almost three times as likely to have a household income exceeding $100,000. With a circulation of 1.7 million on Sundays, The New York Times has the highest circulation of any seven-day newspaper in America.25 TravelWish will increase the use of The New York Times for advertisement in the future. During 2003, TravelWish will spend an additional $2,000 for advertising in other magazines and newspapers.
Ivy League University Publications Manhattan is known to be the workplace of a high percentage of Ivy League University graduates. To reach its well-educated target market, TravelWish will advertise in the alumni magazines of universities, such as Brown, Columbia, Cornell, Dartmouth, Harvard, Pennsylvania, Princeton, and Yale. The firm will run one display ad (with logo) in three magazines during fall/winter 2002 at the cost of $2,010. During the first year of operations the firm will run 20-word ads, twice a year in three magazines at the cost of $570 per year.26
Brochures and Flyers TravelWish will publish colorful brochures and pamphlets featuring upcoming tours, sample itineraries and promotional events. These will be distributed at promotional events, and will be available at European cultural centers and special interest organization offices. Brochures will also be supplied to travel agents. Promotional flyers will be posted on bulletin boards in cultural centers and other strategic partners’ offices. To ensure 250 customers during the first year, TravelWish will distribute 5,000 brochures at a cost of $1,400 for the first year27. Flyers will be designed by the owner with Microsoft Publisher at no additional cost (except the cost of office supplies). In December 2003, TravelWish will prepay $2,000 for brochures needed in 2004. TravelWish will relay some of the costs of printing additional brochures to U.S. Travel Agents who sell the company’s scheduled tours.
Direct Mail and Personal Contacts TravelWish will strive to provide highly personalized services. Direct mail advertising will reflect this commitment. In addition to personal promotion letters/e-mails to potential customers (individuals and organizations listed in TravelWish’s customer database), the company will send a monthly electronic newsletter featuring upcoming activities. Newsletters and most direct mail will be distributed through e- mail. To reach special interest and educational organizations, the owner will personally meet with their representatives at least twice a year (two months before and during the high travel season). For the year 2003, TravelWish has budgeted $250 for occasional postal mailings.
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Internet TravelWish will have a professional, user friendly website. The site will allow customers to request travel information and price quotes through an on-line form, which will be integrated with TravelWish’s customer database. Sample itineraries, scheduled tours and destination information will be available on the site. The site will include a regularly updated calendar of cultural and other special interest events in Central and Southeastern Europe. The website will be listed under all major search engines as well as linked to a large number of travel-related sites. These will include U.S. based European centers, special interest organizations, travel supplies stores, online travel magazines and others. This is an inexpensive way of making the site accessible to both travelers and travel agents. TravelWish’s well-educated customers will be effectively reached through the Internet.
Directories and Trade Shows It seems that most customers turn to the Yellow Pages first. TravelWish will be listed under travel and culture-related Yellow Pages categories. In addition, TravelWish will be listed in a number of travel company and trade association directories. This will allow the company to reach travel agents in addition to direct consumers. To reach travel agents the company will also take part in trade shows. For the year 2003, TravelWish has budgeted $750 for 1 trade show/travel conference28 and $100 per month for 3 directory listings.29 In December 2003, the company will prepay directory listings for year 2004.
Word of Mouth and Repeat Customers TravelWish aims to develop a strong and lasting relationship with its customers. Exceptional, personalized service and a quality travel experience will ensure a large base of loyal customers. TravelWish is confident that its customers will be satisfied and will inform others of their exceptional travel experience.
Human Resources Management
Key Employees
During the first year of operation, TravelWish will consist of the manager/owner and a travel specialist/office assistant. There will be some overlapping of duties. The manager will also be a travel specialist/consultant and a marketing director. Jan will develop and maintain the company’s website and the customer database. As needed, TravelWish will consult with consultants/specialists: an accountant, an attorney and an insurance agent. The company will seek specialists with knowledge and experience of travel industry risks, laws and regulations.
The company will continuously offer internships to international students at the local universities. These will be unpaid but students will receive college credit, training and experience. International students will aid in the travel planning process by bringing in first-hand knowledge of travel destinations. They will help out with promotional events. Marketing and website/database maintenance internships will also be available. The advantages of working with dedicated students with European background outweigh the necessary training costs. TravelWish will avoid visa/work permit problems by offering college credit practica to its interns.
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As the company grows, TravelWish’s team will consist of:
• Manager – To oversee the operations of the company, balance the workload between employees, plan and develop future projects; The manager will explore new destinations and establish contacts with partners/suppliers. He/she must have outstanding personal communication skills and be a motivating leader; must encourage creativity and delegate authority; should speak at least one foreign European language (in addition to English) and have contacts in the community and overseas. The manager must have a minimum of two years of management experience.
• Travel Specialists/Consultants – Responsible for advising customers, developing itineraries, contacting international partners and arranging all tourist services; Must have excellent interpersonal communication skills (both oral and written), know at least one European language, have computer skills and be well organized. Travel consultants must have extensive travel experience in the company’s destinations and have expertise in at least one geographic area. Specialists must be able to respond and make good decisions fast; need superior customer service skills and must be excellent listeners. They must be eager and able to learn fast. TravelWish plans to employ six travel specialists by year 2008 – one for each of the 5 geographic regions in Europe, and one supervisor.
• Office Assistant – Responsible for obtaining customer information and directing clients to the appropriate travel specialist; will follow up on requests, contact clients and suppliers, and confirm travel arrangements; needs excellent customer service and communication, computer and organization skills;
• Marketing Director – Responsible for all marketing, promotion and advertising; will coordinate promotional activities (presentations and cultural seminars, performances, etc.); will use the customer database to create marketing reports, conduct research and project sales; The marketing director will also be involved in new product development. He/she must have two years of marketing experience, excellent communication and organization skills and extensive knowledge of the target market (the New York City Metropolitan area). He/she must understand and be responsive to customer needs.
• Technical assistant – Initially the owner, this team member will develop and maintain the company’s website and customer database, and assist with the maintenance of the other technical equipment in the office. He/she must have one year of web design experience and excellent knowledge of Microsoft Access. Should have excellent Internet marketing skills and coordinate well with the marketing director. The assistant must be responsive to other employees’ technical needs, and open to input and suggestions. Should be eager to research and develop, and keep up with new technologies.
Management and Organization
Background, Skills and Qualifications TravelWish will be managed by the owner, Jan George. With a bachelor’s degree in business administration with concentration in hospitality management and extensive first-hand travel experience, Jan has an excellent understanding of the travel industry. She has five years of experience working in a variety of positions in the tourism industry. Jan is a motivating leader and encourages growth and creativity. She has strong personal communication and organization skills, and speaks several foreign languages. She is a good, open-minded listener and understands people well.
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One of Jan’s weaknesses is her inability to make fast decisions and to handle ambiguity. She examines every option very carefully and needs a lot of time and resources to make decisions. She needs clear direction and a lot of information. As she gains experience, she will overcome these weaknesses.
Management Style/Culture TravelWish will attract employees by its strong and dynamic organizational culture. The growth and creativity of every staff member will be continuously encouraged. Employees will have numerous opportunities to learn and express themselves. Since they will be interacting with customers, their input and suggestions will be invaluable. TravelWish will be managed through empowerment. Employees will have the skills, knowledge and authority to make independent decisions.
Quality Quality and customer satisfaction are the core of TravelWish’s concept. The firm’s strong organizational culture will ensure quality. TravelWish will be committed to Total Quality Management and will continuously analyze its operational processes. Weekly meetings will be conducted to discuss employee suggestions and concerns. Employees will be encouraged and motivated to analyze their work processes and suggest more efficient and effective ways of performing them. The organization will be flexible, adaptive and open to change.
Organizational Structure and Chart During the first years of operation, TravelWish will have an informal organization. The owner will oversee the operations, conduct marketing and be a travel specialist. Another travel consultant will assist her with arranging travel services and office work. All employees will report to the owner.
By year 2008, TravelWish will have a more structured organization (an Organizational Chart for year 2008 is attached in the Appendix). Travel specialists for the five geographic areas in Europe will be supervised by a general travel specialist. He/she will coordinate their efforts and develop itineraries involving several destinations. Every staff member will be assigned responsibilities but the organizational structure will be flexible. There will be overlapping of duties if any staff member needs assistance. Travel consultants will be in direct communication with the support staff to ensure coordination between product development and marketing, accounting and technology procedures. Teams composed of travel specialists and support staff (focused around a project or a geographic area) will meet regularly to enhance horizontal communication and/or develop joint itineraries. The support staff will report directly to the owner/manager who will oversee the overall organization.
Hours of Operation TravelWish will be generally open from 10:00 am to 6:00 pm. Lunch hours and late afternoons will be the busiest times for meetings with the working clientele. Travel specialists will make appointments after hours and on weekends to meet the needs of those who work. Promotional events will be scheduled during lunch hours and in the evenings.
Turnover and Seasonality TravelWish will retain its employees by providing them with the opportunity to grow, learn and travel. Staff members must be well trained and knowledgeable. They should develop strong relationships with customers, the community and business partners. Therefore, TravelWish will strive to minimize turnover. The company will not use seasonal labor.
The special interest segment of the travel industry is not as vulnerable to seasonal factors as the industry in general. Nevertheless, spring and summer will be TravelWish’s busiest times. The company will address the problem of seasonality by attracting interns from local universities.
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Recruitment, Selection and Training
TravelWish will recruit its employees through local newspaper ads, employment department listings and the Internet. The company’s website will have a current posting of job openings. TravelWish’s employees must have computer skills so they can be reached by computer job search engines.
Promotional events at ethnic cultural centers will give TravelWish the opportunity to meet with a number of people with European background and travel experience. Travel specialists will be recruited at these events as well. Flyers with job openings will be posted at European cultural centers and organizations. Interns who show eager interest in learning and potential will be promoted from within. The manager and travel consultants’ supervisor will also be promoted from within . The office assistant will have the opportunity to train as a travel specialist. TravelWish will also consider recruiting travel specialists presently working for European suppliers. The advantages of hands-on experience and European background will overweight the costs associated with obtaining work visas for these non-U.S. citizens.
The key selection technique for travel specialists will be a personal interview. TravelWish’s concept is build around personalized customer service and strong communication. Interviews will be conducted in a relaxed, informal atmosphere. The candidate’s listening and interaction skills will be major decision factors. After the interview the candidate will be asked to develop a sample travel itinerary on the basis of a travel request. The candidate’s creativity, organization, efficiency, knowledge of geography and current travel conditions, and responsiveness to customer wishes will be analyzed through this “test”.
Every employee will go through a three-month trial period. He/she will be evaluated on the basis of personal observation and customer comments. The length of training periods will vary according to the skills and knowledge of the employee. Training will be mostly hands-on. Travel specialists will be compensated for and encouraged to do additional destination research. They will immediately have access to the Internet in order to gain the most current information. Trainees will be required to attend TravelWish’s promotional educational seminars. In addition to assisting with the events, trainees will gain knowledge of destinations and special interest topics. In addition to the owner, travel specialists will also be involved in the training of new employees. This will ensure that new staff members are trained by someone who has hands on experience with the work assignments.
Compensation
Travel specialists are the key to making TravelWish successful. In order to attract knowledgeable employees with exceptional customer service skills, the company will pay 10% above the average travel coordinator wage. Employees will receive a monthly salary. TravelWish will not aim to attract money- driven employees so it will not pay on commission basis. Staff member will be motivated by the work atmosphere, the company’s culture and the opportunity to learn and be creative.
TravelWish will provide only required benefits to its employees. To compensate, the company will offer a number of learning and travel opportunities. There will be limited compensation for attending travel-related classes and special interest seminars. Travel consultants will be rewarded with low-cost/free trips to Europe. During travel they will be required to perform some destination/supplier research and analysis, and meet with international business partners.
A typical Travel Coordinator (with qualifications and responsibilities similar to those required by TravelWish) working in New York City earns a median base salary of $42,765. Median benefits and social security taxes are $17,363. 30 Employment taxes are about 5.25% of base salary plus $2.43 per month for worker’s compensation insurance.31 Based on these assumptions, TravelWish will pay a travel specialist/consultant a gross salary of $47,041.50. Total compensation (including taxes and 25% less than median benefits) will amount to $62,568 per year for one travel specialist.
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Operations
Facilities
Location TravelWish will lease a ground floor, 250 square foot office in Midtown Manhattan for about $2,000 a month.32 Manhattan’s main business district, Midtown is the site of many upscale businesses and professional offices. As described in the Target Market section (pg. 16), the population that lives, works, shops and does business in the area closely matches TravelWish’s target market. Located in the heart of its marketplace, TravelWish will reach a large number of walk-in customers and maximize convenience for its working clientele.
This centralized location will enable TravelWish to network with local cultural centers and special interest organizations. The site of a number of museums and cultural events, Midtown attracts a well-educated population with special interests. By doing business in Midtown Manhattan, TravelWish will be within reach of its New York City business partners – travel agents and airline consolidators. This location will enable the owner to personally meet with special interest organizations, cultural centers, educational institutions and other strategic partners.
Design TravelWish will begin operations in a small but attractive office. The facilities will be efficiently designed and will have an Eastern European atmosphere. Tastefully arranged artifacts and pictures will present a sample of TravelWish’s destinations. A large map of Europe will be strategically located to facilitate travel planning. Brochures, guidebooks and special interest literature will be available to customers in the waiting area. These resources will also be accessible to the travel consultants for destination research and reference.
During the first year the company will need two travel consultant desks, a small waiting area and a storage room. The waiting area will be designed to be flexible and allow for limited-size meetings. TravelWish is planning on leasing adjacent office space by the third year. This will enable the company to increase its staff and host its marketing events and presentations.
Equipment and Technology
TravelWish’s key technology will be a Microsoft Access customer database . This tool will not require an additional investment since it will be part of the company’s Microsoft Office package. The primary function of this customized system will be to keep track of customer information and requests. All demographic and contact information as well as past and current itineraries will be entered into the system. Detailed information regarding the current travel request as well as preferences and special requests will also be collected. Customer information will be carefully protected and will not be released to outside parties.
The database will be integrated with TravelWish’s website. All information from the on-line travel request form (requesting a travel itinerary, information and/or quotes) will be easily imported into the database. The system will also be used for marketing and forecasting. Periodic and ad-hoc reports will be generated to aid in making product development, forecasting and marketing decisions.
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TravelWish will begin operations with two personal computers. As the staff grows, every key employee will have a computer. The stations will be connected through a Local Area Network. They will be equipped with Microsoft Office XP Professional. This software suite is a less expensive solution and will meet TravelWish’s word-processing, financial management, communication, database and presentation needs. In addition, TravelWish will purchase QuickBooks, Microsoft Publisher and Macromedia Dreamweaver 4 for enhanced financial and human resources management, publishing and web site development. The company will use the Internet extensively for destination and supplier research. E-mail will be the primary way of communication with international partners. E-mail is also an inexpensive way of sending itineraries, travel information and the monthly Newsletter.
To ensure excellent communication, TravelWish will provide every key employee with a separate telephone line. The company will purchase a fax, copier, printer and scanner-in-one unit to facilitate request and itinerary transmissions with clients and suppliers, and document handling procedures.
Travel Consulting and Itinerary Development Process
The main operational processes of TravelWish are consulting customers, contacting suppliers and arranging tourist services. Following is a description of the key stages in the travel consulting and planning process:
1. Initial contact and information collection – Travel consultants will try to meet with all clients in person but travel arrangements can also be discussed over the phone and/or by e-mail. During the first encounter, the client’s contact information, demographics and preferences will be entered into the customer database. Initially performed by the travel specialist, this procedure will later be carried out by the office assistant who will then direct the customer to an appropriate travel specialist.
2. Initial consultation – A consulting session, rather than an information collection meeting, this step is the key to attracting and retaining loyal customers. The travel specialist will give personal attention to the client’s individual needs and wishes. Whether he/she is seeking an independent or a scheduled tour, a knowledgeable travel consultant will win the customer’s loyalty by providing accurate, reliable and complete information.
If the customer selects a scheduled itinerary, the travel consultant will complete the booking and provide the client with destination materials and travel documents. The next step for this type of customers will be # 8.
3. Airline tickets - To provide one-stop shopping TravelWish will offer airline tickets to customers who choose this option. If the company has a contract with an appropriate supplier, it will accept independent airline ticket requests. TravelWish will buy airline tickets from wholesalers (consolidators). Commissions offered by consolidators range between 8% and 12%.
4. Itinerary development – If the customer selects an independent tour, the travel specialist will modify an existing itinerary or create a new one. An international touroperator will be contacted for price and destination information. If a touroperator is not available, TravelWish will work directly with suppliers. In order to develop high quality itineraries, staff members will spend a substantial amount of time researching suppliers and destinations. Whenever possible, trips to selected destinations will be organized.
5. Contact client – A key to retaining the customer is contacting him in a timely manner.
6. Follow up meeting/communication – The client will have the opportunity to discuss the new itinerary with a knowledgeable travel specialist.
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7. Pre-travel arrangements and information – Travel arrangements will be finalized. If requested, the traveler will receive assistance with travel documents. He/she will be able to purchase travel insurance and an international calling card. As TravelWish expands its services, the customer will also be able to buy travel literature and accessories.
Travelers will receive a customized packet, including destination information regarding local customs, laws and regulations, medical information, sights of interest, climate, dress codes, travel documents, currency and others. The customers will receive a suggested packing list as well as a quick-access card for every country. This will be a credit card size card with TravelWish’s phone number, a local agent’s contact information, the U.S. embassy’s contact information and some key phrases in the local language. TravelWish will strive to provide a stress-free preparation time and travel experience.
8. Assistance during travel – TravelWish will always be alert for problems at the destination. During their trip customers will be able to contact a local representative or TravelWish directly. Strong connections with international partners will ensure that problems are resolved quickly and effectively.
9. Follow up and evaluation - After a trip is complete, the travel specialist will contact the customer and show sincere interest in their travel experience. This will emphasize personal attention and provide quality control. Travelers will be asked to evaluate the travel specialist, local agents, suppliers and the overall travel experience. Clients will be given the opportunity to file a complaint if dissatisfied. They will receive a partial refund if travel arrangements were not as agreed upon. TravelWish will seek compensation from its suppliers. The refund policy will be outlined in contracts prior to travel.
Financial Control and Payment Schedule33
A common problem in a travel agency’s operations is time spent on an itinerary that doesn’t bring profit. Customers often request an itinerary and change their wishes a number of times after the initial request. Every change requires research, contacts and time. Since labor is TravelWish’s highest expense, the company cannot afford to waste the time of the travel specialists. As the business grows, TravelWish will have a sample itinerary for most destinations. Regardless of travel date, if a client requests a second major change to their original itinerary, TravelWish will require a 20% non-refundable deposit. This technique will ensure that the customer follows through and buys the firm’s services.
Tourists will be required to pay a 50% deposit two months before their departure date. The rest of the money will be required 45 days before the trip. In most cases TravelWish will pay its suppliers a 10% deposit two months before the arrival date. TravelWish will pay the other 90% to its suppliers 45 days before the arrival date. When applicable, commissions will be received from suppliers 45 days before the arrival date. The company will accept all payment methods because its key strategy is to honor every customer’s wish.
TravelWish will require a minimum of 10% commission from touroperators. If the tour package is obtained at a net price from the supplier, TravelWish will add a 10% markup. Since TravelWish offers airline tickets primarily for customer convenience, the company will be more flexible when working with consolidators. The firm will aim for a minimum of 8% commission. TravelWish will receive and average of 15% commission from selling travel insurance.
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Itinerary development and destination research take up a substantial amount of the travel specialists’ time. In addition to commission/markup, TravelWish will charge the following standard fees for reservations and itinerary development:
Individual/family independent tours $50 Group independent tours $20 Conventions $30 Promotional tours $0 Scheduled tours $15 Airline tickets $20 Insurance and others $10
Complex itineraries will require higher service fees. A 3% charge will be incorporated in the fees of clients paying by credit card.
In case of cancellations, the 20% deposit (for itinerary changes) and service fees will not be refunded. Customers will receive a 75% refund on the rest of their payment if they cancel 4 weeks before departure. Unless there are special circumstances, there will be no refunds a month or less before departure.
Supply and Distribution
TravelWish will focus on selling directly to its customers – individual tourists and special interest groups. To maximize sales the company will also offer scheduled and independent tours to other travel agencies.
There is a variety of travel supplier categories available in the international travel industry. TravelWish is committed to affiliating with small, European-based touroperators who have exceptional expertise in their geographic area. Management is currently seeking trustworthy, knowledgeable partners in Central and Southeastern Europe who have personal connections with local suppliers. During several trips to Europe the owner plans to personally meet and evaluate business partners. Suppliers will be evaluated on the basis of experience and references from other customers, suppliers and partners. The company will not work with large wholesalers in order to ensure superior quality.
If a reliable touroperator is not available, TravelWish will work directly with suppliers. The owner has strong connections in Eastern Europe and she is familiar with the local accommodation, transportation and event management industries.
TravelWish will not sell airline tickets through a Computerized Reservation System. If a customer wishes to purchase air transportation, TravelWish will obtain a ticket through a consolidator.
Research and Development
TravelWish is committed to encouraging the growth and creativity of its employees. Travel Specialists will be compensated for destination and supplier research as well as for itinerary development. In order to increase its destinations and offer tours throughout all of Europe, TravelWish will continuously research new destinations and develop itineraries. To obtain the most current information, research will be performed mostly on-line. The owner, and later on travel specialists, will personally meet new international suppliers and evaluate destinations through trips to Europe.
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Development, Milestones and Exit Plan
Long-Term Goals
TravelWish will strive towards the following long-term goals:
• Increase the number of destinations to include all of Europe • Increase the variety of services offered • Remain small, local and personalized • Increase awareness of major destinations and improve the image of Eastern Europe • Increase tourist flow to and help for the economic stabilization of Eastern Europe • Become a leader in the sustainable tourism movement • Make enough profit to provide all employees with excellent compensation
Strategies and Milestones
In order to expand the variety of is services and offer destinations throughout all of Europe, TravelWish will need to create a network of reliable European partners. We want to develop strong contacts with a variety of local suppliers (touroperators, lodging facilities, transportation agencies, special events coordinators, attractions and others). Before the company offers a destination, a staff member will personally meet with all local partners and establish a contact with a local touroperator. TravelWish will have a trustworthy local representative in every region the company works with. The firm plans to offer services in any destination throughout Europe by 2008.
As the number of destinations grows, the number of employees will also increase. TravelWish will seek employees with extensive knowledge of a specific European region. Staff members must know at least one European language and be able to find credible information quickly. The owner plans to hire a separate travel specialist responsible for each geographic region the company works with. By 2008 TravelWish plans to have 10 employees: a general manager, 6 travel specialists (one will be promoted to a supervisor), an office assistant, a marketing director and a technical assistant.
TravelWish will strive to build a strong customer base. The firm aims to serve 915 customers during the third year. The company will rely on return customers and does not plan to increase its target market beyond the New York City Metro area. TravelWish will grow and remain in business through increasing its destinations and variety of services rather than by targeting a larger market.
In order to increase awareness of Eastern Europe, TravelWish will hold a number of promotional activities. The firm will hold seminars and lectures dedicated to a specific country/region. TravelWish will partner with local international restaurants to offer promotions. The firm will also partner with a local university and create contacts with international students and community members in the United States. TravelWish will invite them to share their culture with potential customers. The company will organize weeks dedicated to a specific country/region.
By improving the image of Eastern Europe, TravelWish will help increase the overall tourist flow to the region. The company will provide up-to-date information about the region and thus promote it as a safe and secure destination. The increase of incoming tourism to post-communist Europe will ultimately help the economic development of the area.
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TravelWish will create an image as a responsible member of the travel industry through its actions. The firm will create itineraries that will not interfere with the life and traditions of indigenous people. The company will respect and inform travelers about local laws, culture and customs. While conducting its tours, TravelWish will consider the requirements of the local environment. Travel specialists will educate customers about the value of local natural and cultural resources. As TravelWish’s revenues increase, the company will sponsor projects that help the preservation of these resources.
Exit Plan
When she is ready to leave the business, the owner plans to hand down TravelWish to a family member. This can be the next generation or another relative. This strategy will increase the likelihood that the culture and concept of the company will be preserved. If no family member is interested in continuing the business, Jan George will sell the company.
Financial Assumptions and Use of Funds33
Start-up Expenses
The start-up expenses below are included in the Year 0 Balance Sheet. Equipment and furniture, leasehold improvements and cash (a beginning cash balance for January 2003) will be paid during January 2003 and are included as accounts payable on the Year 0 Balance Sheet. The rest of the start-up expenses, included as other current assets and inventory in the Year 0 Balance Sheet, will be purchased on short-term credit, which will be paid off at the end of 2002 with owner’s personal savings.
Capital expenditures: Purchase of equipment and furniture $12,000 Quote from Office Depot Leasehold improvements $3,000
Working capital: Purchase of inventory $500 Quote from Office Depot Start-up marketing activities $6,000 Travel $2,400 Meet European partners Legal fees $350 Set up of S Corporation Consulting $550 Telephone and fax $250 Cash $1,000
Total start-up expenses $26,050
Equipment and furniture purchases (office equipment) are described in detail in the Operations section, page 24. Inventory includes office supplies for the first month of 2003. Start-up marketing activities include 5,000 brochures for the first year, a direct mail mailing, a grand opening promotional event, magazine advertisements and listing in directories for the first year. Refer to the Marketing section on page 18 for further details. $2,400 will be used for travel to establish relationships with European suppliers.
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Sales and Cost of Goods Sold
TravelWish’s sales during the first year are based on the average assumptions described below. The company expects about 250 customers (passengers) spending an average of $2,300 each. Financial statements, attached in the Appendix, are developed on a cash basis, assuming that all sales- and COGS- related cash flow will occur two months before actual travel dates.
• Individual/family independent tours: 80 passengers, $2,000 per passenger, May-September and December
• Group independent tours: 4 tours, 15 passengers per tour, 12 days per tour, $1,800 per passenger, May-August
• Convention: 50 passengers, 10 days, $1,000 per passenger, November • Promotional tour: 15 passengers, 15 days, $1,000 per passenger, end of April • Scheduled tours: 4 tours every month between June and September; 12 passengers per tour, 12 days
per tour, $1,500 per passenger, June-September • Airline tickets: $1,000 per ticket
o 50% of independent travelers will purchase airfare from TravelWish (The firm’s targeted customers are convenience, one-stop shoppers).
o 15% of scheduled passengers will purchase airfare from TravelWish (TravelWish will lose some of these sales to travel agents).
o 5 passengers will purchase airfare only. • Insurance and others: $250 per service
o 90% of independent travelers will purchase insurance and other services from TravelWish (The percentage of travelers who buy insurance has significantly increased since September 11, 2001. Many U.S. medical insurance policies do not cover expenses abroad. During consulting sessions, travel specialists will strongly suggest the purchase of travel insurance and carefully explain the benefits).
o 20% of scheduled passengers will purchase insurance and other services from TravelWish (TravelWish will lose some of these sales to travel agents).
o 5 passengers will purchase insurance and other services only. • Service fees: Service fees will be charged according to the fee schedule described in the Operations
section on page 27. • Cash flow and financial control: As detailed in the Operations section, page 26, customers will
make all payments, and suppliers will be paid within the month, which is two months before the departure/arrival date. When applicable, commissions will be received from suppliers 45 days before the arrival date. Consequently, sales- and COGS-related cash flow will occur two months before actual travel dates.
TravelWish only has variable Cost of Goods Sold , an average of 88% of sales. These costs include net- priced tours and travel services obtained from suppliers. TravelWish will add an average of 10% markup to all net prices (or receive a 10% commission, depending on contract) except to insurance and other services. Insurance and other services will be marked up (or commissionable) at 15%. Service fees have no cost of goods sold. As identified by the ratio analysis on page 34, TravelWish’s gross profit margin will remain fairly constant: about 12%.
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Operating Expenses
Advertising expenses will be higher before and during the beginning of the high travel season. This will be the time when customers make travel decisions so TravelWish will dedicate it to active promotion and advertising. Advertising will also be higher in September, to ensure the projected sales during the months of September and October. TravelWish will limit advertising immediately before and during the low travel season to informative ads regarding the company’s promotions. Directory listings for the following year will be prepaid in December. This trend is well illustrated by the cash flow of TravelWish’s advertising expenses, detailed below. All of these expenses are included in the Advertising line of the first-year Income Statement and described in the Marketing section, page 19.
JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV DEC Total Magazines and Newspapers (excl. NYT) 200 250 300 350 300 200 75 75 100 50 50 50 2,000
The New York Times 282 282 282 282 1,128
Direct Mail 100 150 250
TV/Radio 1,000 1,000 2,000 Ivy League University Publications 95 95 190 95 95 570
Directories 1,200 1,200
Total Advertising 1,395 627 1,922 727 582 200 75 75 195 50 50 1,250 7,148
Other sales and marketing expenses include brochures (listed under literature; prepaid in December for the following year), promotional activities (monthly cultural and educational presentations), trade shows (in November, prepaid two months in advance) and travel to meet European partners in October (prepaid two months in advance). U.S. travel agents will receive a 10% commission for selling TravelWish’s tours. The company will mostly offer its scheduled tours to travel agents (12.5% of sales), therefore budgeting 1.25% of sales for sales commissions every month.
Research and development expenses include the purchase of materials (literature about destinations and special interest travel; $1,500 during the first year) and consulting ($1,000 during the first year). The company will consult with an attorney and/or an insurance agent to discuss new laws and regulations, relevant to the business. These expenses will be higher during the low travel season. When business is slow, travel specialists can afford more time for research and development.
General and administrative expenses are listed in detail on the first-year Income Statement. Administrative salaries include a $30,000 yearly salary for the owner and a $62,568 yearly salary (including taxes and benefits) for one travel specialist during the first year. Equipment rental/small purchases include maintenance supplies for office equipment, purchased after periods of intensive sales. TravelWish will make two payments for business insurance (in January and June) in the amounts of $165. 34 A payment of $5,400 to an investment banker for the sale of stock is listed under legal fees in January. Office expenses will be fairly constant and include office supplies/stationary.
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Annual Growth Assumptions (Years 1-3)
During years 2 and 3, TravelWish’s sales will grow according to the following schedule:
Estimated Annual Growth Rates: 2004 2005
Sales
Growth % (applied to
previous year values) Growth % Individual/family independent tours 20% 100% Group independent tours 20% 100% Conventions 100% 0% Promotional tours 0% 0% Scheduled tours 300% 150% Airline tickets 79% 104% Insurance and others 79% 104% Service fees 79% 104%
Sales will be relatively low during the first year of operations. The first year will be dedicated to active promotion. During the second year, 2004, as a result of active promotion, sales will increase rapidly and TravelWish will reach its current capacity. During the third year, as TravelWish adds an additional travel specialist, the company will double its destinations. As the company continuous to increase the number of travel specialists, destinations and sales will increase respectively.
TravelWish can assume a high growth of convention travel and scheduled tours due to the company’s marketing and sales strategy. By the second year, the firm will have strong contacts with local organizations and will attract them to participate in European conventions. TravelWish will reach its capacity to organize convention-related travel in 2004. The company will develop itineraries and establish contacts for scheduled tours during the first year. TravelWish will have a reliable network of suppliers and U.S. travel agents (who will sell most scheduled tours) by 2004, which will allow for the projected growth.
TravelWish will assume that customers will continue to purchase supporting services under the same assumptions as in year one. Therefore, the sales of airline tickets, insurance and other services, and service fees will grow by the weighted average of the core services. The weighted average takes into consideration the percentage of total sales of the core services and their individual growth rates.
Cost of Goods Sold will grow by the weighted average growth rate of the sales of all products and services (79% during 2004, and 104% during 2005).
During years 2 and 3, TravelWish’s Operating Expenses will grow according to the following schedule:
Estimated Annual Growth Rates:
Growth % (applied to
previous year values) Growth %
Operating Expenses 2004 2005 Sales & Marketing 5% 10% Research & Development 8% 6% General & Administrative 25% 30%
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TravelWish will be able to achieve the projected growth in sales with a minimal increase in sales and marketing during 2004. The increase in convention travel will be achieved through strong personal contacts with local organizations. The company will relay the marketing expenses associated with scheduled tours to U.S. travel agents. By the second year TravelWish will have good contacts with local travel agents. Sales commissions, paid to travel agents, will grow proportionally to sales and are not included in the growth schedule above. During 2005, the growth rate of sales and marketing expenses will be higher in order to ensure the projected increase of independent tours. TravelWish will also rely on low-cost advertising methods, such as public relations, in-house produced flyers, an Internet website, electronic newsletters and word of mouth.
By 2004, TravelWish will have accumulated a substantial amount of research and development materials. Therefore, the growth rate of these expenses will continue to decrease. The company will increasingly use the Internet to research destinations and current travel information.
TravelWish’s highest general and administrative expenses are human resources. During the first year, in addition to the owner/manager, TravelWish will employ 1 travel specialist. In 2004, the firm will employ an office assistant. During year 3, another travel specialist will be hired. A third travel specialist, the marketing director and the technical assistant will be employed during the 4th year of operations. In 2007, TravelWish will hire an additional travel specialist. In 2008, the number of travel specialists will grow to 6. The owner’s yearly salary of $30,000 will remain constant during the first three years. For more details regarding personnel, please refer to the Human Resources Management section, starting on page 20.
The growth rate of the general and administrative expenses is based on the above assumptions regarding personnel, and a weighted average increase in the other general and administrative expenses. In relation to the increase in personnel, TravelWish is planning to spend $3,000 in 2004, and $5,000 in 2005 on office furniture and computers.
Break-Even Analysis
2003 Fixed Expenses $161,690 2003 Gross Profit Margin (%) 12.05% Average Spending per Customer/Passenger§ $2,300 Break-Even (in terms of sales) $161,690/12.05% = $1,341,825.70 Break-Even (in terms of customers) $1,341,825.70/$2,300 = 583 customers
Based on the calculations above, TravelWish will break even and make a profit during the third year of operations – year 2005. During 2005, the company’s projected sales are $2,097,877. According to this analysis, TravelWish should make a profit of $756,051 during the third year. Due to the use of average numbers and the planned growth of the company, the projected profit during 2005, as shown on the Income Statement, is only $3,247. The number of customers will grow by the average growth rate of the sales of all products and services (79% during 2004, and 104% during 2005). The projected number of customers is 488 during year 2004, and 913 during year 2005. This also indicates that TravelWish will break even and start generating profit during the third year of operations.
§ Based on 250 customers during 2003
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Financing
TravelWish will need about $180,000 for start-up financing. These funds will be needed to cover part of the start-up expenses (part of them will be covered with owner’s personal savings of $10,050) and to generate positive cash flow until the company breaks even in year 3.
A service company, TravelWish does not have enough assets to obtain a loan for such an amount. Therefore, the business will be financed with equity. An S Corporation, TravelWish will issue 36,000 shares of $5 stock in January 2003. The owner and her family will purchase 51% of the shares to retain ownership of the company. Family members have agreed to give their voting rights to Jan George, allowing her to retain control of the company.
TravelWish will sell the remaining 17,640 shares through an investment banker. The firm has budgeted $5,400 (3% of total stock value) for an investment banker fee (listed under legal fees on the first-year Income Statement). TravelWish will not be able to issue dividends until the fourth year.
Equity financing is a lower-risk financing method. The owner, however, will have to give up some control of the business to other stockholders. Equity financing will also limit the potential return on investment by increasing owners’ equity. Potential investors are often willing to accept the lower return on investment in exchange for ownership and a share of the profits.
Ratio Analysis and Conclusion
Ratios Year 1 2003
Year 2 2004
Year 3 2005
Current Ratio 0.00 0.00 0.00 Quick Ratio (Acid Test) 0.00 0.00 0.00 Return on Total Assets -105.52% -487.37% 17.88% Total Assets Turnover 6.56 68.97 115.53 Total Debt to Total Assets 0.00 0.00 0.00
Gross Profit Margin 12.05% 12.02% 12.02% Operating Profit Margin -16.08% -7.07% 0.15% Net Profit Margin -16.08% -7.07% 0.15% Return on Sales -133.41% -58.77% 1.29%
Return on Owners' Equity -105.52% -487.37% 17.88% Total Debt to Owners' Equity 0.00 0.00 0.00
It will take TravelWish over two years to begin generating profits. During the third year, TravelWish will make a profit of $3,274 and will generate 17.88% return on equity. The overall return on equity ratio (using average figures for the first three years), however, is 8.14%. Earnings per share during the first profitable year will be $0.09. The price per earnings ratio during the same year will be about 56 times.
The ratio analysis above indicates that, based on its current projections, TravelWish will not generate high returns. In order to begin generating profits earlier and increase its profitability, the company should consider offering services with a higher gross profit margin. TravelWish could increase the sales of insurance and other services (15% gross profit margin) or/and increase its service fees.
Appendix
Table of Contents
Page
• Financial Statements 36
o Income Statement – Year 1 36
o Income Statement – Years 1-3 37
o Cash Flow Statement – Year 1 38
o Cash Flow Statement – Years 1-3 39
o Balance Sheet – Year 0 40
o Balance Sheet – Years 1-3 41
• Organizational Chart 42
• Logo and Advertising Slogans 43
• Map of Europe 44
• Sample Tours 45
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*** INCOME STATEMENT (Year 1 by month) ***
Sales Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Year 1 Individual/family independent tours $0 $0 $30,000 $30,000 $30,000 $30,000 $30,000 $0 $0 $10,000 $0 $0 $160,000 Group independent tours $0 $0 $27,000 $27,000 $27,000 $27,000 $0 $0 $0 $0 $0 $0 $108,000 Conventions $0 $0 $0 $0 $0 $0 $0 $0 $50,000 $0 $0 $0 $50,000 Promotional tours $0 $15,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $15,000 Scheduled tours $0 $0 $0 $18,000 $18,000 $18,000 $18,000 $0 $0 $0 $0 $0 $72,000 Airline tickets $0 $8,000 $16,000 $18,000 $18,000 $18,000 $10,000 $0 $25,000 $2,000 $0 $0 $115,000 Insurance and others $0 $2,700 $5,400 $7,880 $7,950 $5,950 $4,200 $0 $9,000 $950 $0 $0 $44,030 Service fees $0 $0 $1,470 $1,755 $1,755 $1,755 $1,195 $0 $2,450 $290 $0 $0 $10,670
Total Sales $0 $25,700 $79,870 $102,635 $102,705 $100,705 $63,395 $0 $86,450 $13,240 $0 $0 $574,700
Cost of Goods Sold Total Variable COGS $0 $22,995 $70,290 $90,398 $90,458 $88,758 $55,770 $0 $75,150 $11,608 $0 $0 $505,427 % of Total Sales 0.00% 89.47% 88.01% 88.08% 88.08% 88.14% 87.97% 0.00% 86.93% 87.67% 0.00% 0.00% 87.95%
Gross Profit $0 $2,705 $9,580 $12,237 $12,247 $11,947 $7,625 $0 $11,300 $1,632 $0 $0 $69,273 % of Total Sales 0.00% 10.53% 11.99% 11.92% 11.92% 11.86% 12.03% 0.00% 13.07% 12.33% 0.00% 0.00% 12.05%
Operating Expenses Sales & Marketing Advertising $1,395 $627 $1,922 $727 $582 $200 $75 $75 $195 $50 $50 $1,250 $7,148 Commissions $0 $321 $998 $1,283 $1,284 $1,259 $792 $0 $1,081 $166 $0 $0 $7,184 Literature $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,000 $2,000 Promotions $550 $550 $550 $550 $550 $550 $550 $550 $550 $550 $550 $550 $6,600 Trade Shows $0 $0 $0 $0 $0 $0 $0 $0 $750 $0 $0 $0 $750 Travel $0 $0 $0 $0 $0 $0 $0 $2,400 $0 $0 $0 $0 $2,400
Total Sales & Marketing Costs $1,945 $1,498 $3,470 $2,560 $2,416 $2,009 $1,417 $3,025 $2,576 $766 $600 $3,800 $26,082 % of Total Sales 0.00% 5.83% 4.34% 2.49% 2.35% 1.99% 2.24% 0.00% 2.98% 5.79% 0.00% 0.00% 4.54%
Research & Development Consulting $0 $0 $500 $0 $0 $0 $0 $0 $0 $0 $500 $0 $1,000 R & D Materials $200 $175 $175 $150 $100 $25 $25 $50 $75 $100 $225 $200 $1,500
Total R & D Costs $200 $175 $675 $150 $100 $25 $25 $50 $75 $100 $725 $200 $2,500 % of Total Sales 0.00% 0.68% 0.85% 0.15% 0.10% 0.02% 0.04% 0.00% 0.09% 0.76% 0.00% 0.00% 0.44%
General & Administrative Accounting $0 $0 $150 $0 $0 $150 $0 $0 $150 $0 $0 $150 $600 Admin Salaries $7,714 $7,714 $7,714 $7,714 $7,714 $7,714 $7,714 $7,714 $7,714 $7,714 $7,714 $7,714 $92,568 Depreciation $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000 Equipment Rental/Small Purchases $0 $0 $0 $0 $100 $0 $0 $100 $0 $0 $0 $100 $300 Insurance $165 $0 $0 $0 $0 $165 $0 $0 $0 $0 $0 $0 $330 Legal Fees $5,400 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,400 Office Expenses $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000 Office Rental $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $24,000 Telephone $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000 Utilities $100 $100 $80 $75 $75 $50 $50 $50 $75 $75 $80 $100 $910
Total G & A Costs $16,129 $10,564 $10,694 $10,539 $10,639 $10,829 $10,514 $10,614 $10,689 $10,539 $10,544 $10,814 $133,108 % of Total Sales 0.00% 41.11% 13.39% 10.27% 10.36% 10.75% 16.58% 0.00% 12.36% 79.60% 0.00% 0.00% 23.16%
Total Operating Expenses $18,274 $12,237 $14,839 $13,249 $13,155 $12,863 $11,956 $13,689 $13,340 $11,405 $11,869 $14,814 $161,690 % of Total Sales 0.00% 47.61% 18.58% 12.91% 12.81% 12.77% 18.86% 0.00% 15.43% 86.14% 0.00% 0.00% 28.13% Income From Operations ($18,274) ($9,532) ($5,259) ($1,012) ($908) ($916) ($4,331) ($13,689) ($2,040) ($9,773) ($11,869) ($14,814) ($92,417) % of Total Sales 0.00% -37.09% -6.58% -0.99% -0.88% -0.91% -6.83% 0.00% -2.36% -73.81% 0.00% 0.00% -16.08% Net Income After Taxes ($18,274) ($9,532) ($5,259) ($1,012) ($908) ($916) ($4,331) ($13,689) ($2,040) ($9,773) ($11,869) ($14,814) ($92,417) % of Total Sales 0.00% -37.09% -6.58% -0.99% -0.88% -0.91% -6.83% 0.00% -2.36% -73.81% 0.00% 0.00% -16.08%
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*** INCOME STATEMENT (Years 1 - 3) *** % of Total % of Total % of Total % of Total % of Total
Sales Year 1 Sales Year 2 Sales Year 3 Sales Year 4 Sales Year 5 Sales Individual/family independent tours $160,000 27.84% $192,000 18.67% $384,000 18.30% $384,000 18.30% $384,000 18.30% Group independent tours $108,000 18.79% $129,600 12.60% $259,200 12.36% $259,200 12.36% $259,200 12.36% Conventions $50,000 8.70% $100,000 9.72% $100,000 4.77% $100,000 4.77% $100,000 4.77% Promotional tours $15,000 2.61% $15,000 1.46% $15,000 0.72% $15,000 0.72% $15,000 0.72% Scheduled tours $72,000 12.53% $288,000 28.01% $720,000 34.32% $720,000 34.32% $720,000 34.32% Airline tickets $115,000 20.01% $205,850 20.02% $419,934 20.02% $419,934 20.02% $419,934 20.02% Insurance and others $44,030 7.66% $78,814 7.66% $160,781 7.66% $160,781 7.66% $160,781 7.66% Service fees $10,670 1.86% $19,099 1.86% $38,962 1.86% $38,962 1.86% $38,962 1.86%
Total Sales $574,700 100.00% $1,028,363 100.00% $2,097,877 100.00% $2,097,877 100.00% $2,097,877 100.00%
Cost of Goods Sold Total Variable COGS $505,427 87.95% $904,714 87.98% $1,845,617 87.98% $1,845,617 87.98% $1,845,617 87.98% Total Fixed Cost of Goods & Services $0 0.00% $0 0.00% $0 0.00% $0 0.00% $0 0.00%
Total Cost of Goods Sold $505,427 87.95% $904,714 87.98% $1,845,617 87.98% $1,845,617 87.98% $1,845,617 87.98%
Gross Profit $69,273 12.05% $123,649 12.02% $252,260 12.02% $252,260 12.02% $252,260 12.02%
Operating Expenses Sales & Marketing $26,082 4.54% $27,386 2.66% $30,125 1.44% $30,125 1.44% $30,125 1.44% Research & Development $2,500 0.44% $2,700 0.26% $2,862 0.14% $2,862 0.14% $2,862 0.14% G & A (without Depreciation) $130,108 22.64% $162,635 15.81% $211,426 10.08% $211,426 10.08% $211,426 10.08% Depreciation $3,000 0.52% $3,600 0.35% $4,600 0.22% $4,600 0.22% $4,600 0.22%
Total Operating Expenses $161,690 28.13% $196,321 19.09% $249,013 11.87% $249,013 11.87% $249,013 11.87%
Income From Operations ($92,417) -16.08% ($72,672) -7.07% $3,247 0.15% $3,247 0.15% $3,247 0.15%
Interest Income $0 0.00% $0 0.00% $0 0.00% $0 0.00% $0 0.00% Interest Expense $0 0.00% $0 0.00% $0 0.00% $0 0.00% $0 0.00% Income before Taxes ($92,417) -16.08% ($72,672) -7.07% $3,247 0.15% $3,247 0.15% $3,247 0.15% Taxes on Income $0 0.00% $0 0.00% $0 0.00% $0 0.00% $0 0.00%
Net Income After Taxes ($92,417) -16.08% ($72,672) -7.07% $3,247 0.15% $3,247 0.15% $3,247 0.15%
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*** CASH FLOWS (STATEMENT of CHANGES in FINANCIAL POSITION: Year 1 by month) ***
Sources of Cash: Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Year 1 Operations during the year: Net Income After Taxes ($18,274) ($9,532) ($5,259) ($1,012) ($908) ($916) ($4,331) ($13,689) ($2,040) ($9,773) ($11,869) ($14,814) ($92,417) Add items not decreasing cash Depreciation $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000 Increase in Accounts Payable ($16,000) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($16,000) Increase in Accrued Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Deduct items not increasing cash Increase in Accounts Receivable $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash from Operations ($34,024) ($9,282) ($5,009) ($762) ($658) ($666) ($4,081) ($13,439) ($1,790) ($9,523) ($11,619) ($14,564) ($105,417)
Financing & Other: Sale of Stock $180,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $180,000 Proceeds from Short Term Loans $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Proceeds from Long Term Loans $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash from Operations & Financing $145,976 ($9,282) ($5,009) ($762) ($658) ($666) ($4,081) ($13,439) ($1,790) ($9,523) ($11,619) ($14,564) $74,583
Applications of Cash: Payment of Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Purchases of Fixed Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Repayment of Short Term Loans $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Repayment of Long Term Loans $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Increase/(Decrease) in Cash $145,976 ($9,282) ($5,009) ($762) ($658) ($666) ($4,081) ($13,439) ($1,790) ($9,523) ($11,619) ($14,564) $74,583
Change in Cash Balance Ending Cash Balance $146,976 $137,694 $132,685 $131,923 $131,265 $130,599 $126,518 $113,079 $111,289 $101,766 $90,147 $75,583 $75,583 Beginning Cash Balance $1,000 $146,976 $137,694 $132,685 $131,923 $131,265 $130,599 $126,518 $113,079 $111,289 $101,766 $90,147 $1,000 Increase/(Decrease) in Cash $145,976 ($9,282) ($5,009) ($762) ($658) ($666) ($4,081) ($13,439) ($1,790) ($9,523) ($11,619) ($14,564) $74,583
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*** CASH FLOWS (STATEMENT of CHANGES in FINANCIAL POSITION: Years 1 - 3) ***
Sources of Cash: Year 1 Year 2 Year 3 Year 4 Year 5 Operations during the year: Net Income After Taxes ($92,417) ($72,672) $3,247 $3,247 $3,247 Add items not decreasing cash Depreciation $3,000 $3,600 $4,600 $4,600 $4,600 Increase in Accounts Payable ($16,000) $0 $0 $0 $0 Increase in Other Payables $0 $0 $0 $0 $0 Increase in Accrued Liabilities $0 $0 $0 $0 $0
Deduct items not increasing cash Increase in Accounts Receivable $0 $0 $0 $0 $0
Cash from Operations ($105,417) ($69,072) $7,847 $7,847 $7,847
Financing & Other: Sale of Stock $180,000 $0 $0 $0 $0 Proceeds from Short Term Loans $0 $0 $0 $0 $0 Proceeds from Long Term Loans $0 $0 $0 $0 $0
Cash from Operations & Financing $74,583 ($69,072) $7,847 $7,847 $7,847
Applications of Cash: Payment of Dividends $0 $0 $0 $0 $0 Purchases of Fixed Assets $0 $3,000 $5,000 $0 $0 Repayment of Short Term Loans $0 $0 $0 $0 $0 Repayment of Long Term Loans $0 $0 $0 $0 $0
Increase/(Decrease) in Cash $74,583 ($72,072) $2,847 $7,847 $7,847
Change in Cash Balance Ending Cash Balance $75,583 $3,511 $6,358 $14,205 $22,052 Beginning Cash Balance $1,000 $75,583 $3,511 $6,358 $14,205 Increase/(Decrease) in Cash $74,583 ($72,072) $2,847 $7,847 $7,847
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YEAR 0 BALANCE SHEET TravelWish, Inc. Year Ending December 31, 2002
Assets Current Assets Cash $1,000 Investments $0 Accounts Receivable $0 Notes Receivable $0 Inventory $500 Other Current Assets $9,550 Total Current Assets $11,050
Plant & Equipment Land $0 Buildings $0 Building/Leasehold Improvements $3,000 Machinery & Equipment $0 Office Equipment $12,000 Automobiles $0 Accumulated Depreciation $0 Total Net Plant & Equipment $15,000
Other Assets $0 Total Assets $26,050
Liabilities & Owners' Equity Current Liabilities Short Term Debt $10,050 Accounts Payable $16,000 Other Payables $0 Accrued Liabilities $0 Total Current Liabilities $26,050
Long Term Debt $0 Total Liabilities $26,050
Owner/Stockholder Equity Common Stock $0 Retained Earnings $0 Dividends Payable $0 Total Owners' Equity $0
Total Liabilities & Equity $26,050
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*** BALANCE SHEET (Years 1 - 3) *** As of the Year Ending:
Assets Year 1 Year 2 Year 3 Year 4 Year 5 Current Assets Cash $75,583 $3,511 $6,358 $14,205 $22,052 Investments $0 $0 $0 $0 $0 Accounts Receivable $0 $0 $0 $0 $0 Notes Receivable $0 $0 $0 $0 $0 Total Current Assets $75,583 $3,511 $6,358 $14,205 $22,052
Plant & Equipment Land $0 $0 $0 $0 $0 Buildings $0 $0 $0 $0 $0 Building/Leasehold Improvements $3,000 $3,000 $3,000 $3,000 $3,000 Machinery & Equipment $0 $0 $0 $0 $0 Office Equipment $12,000 $15,000 $20,000 $20,000 $20,000 Automobiles $0 $0 $0 $0 $0 Accumulated Depreciation ($3,000) ($6,600) ($11,200) ($15,800) ($20,400) Total Net Plant & Equipment $12,000 $11,400 $11,800 $7,200 $2,600
Total Assets $87,583 $14,911 $18,158 $21,405 $24,652
Liabilities & Owners' Equity Current Liabilities Short Term Debt $0 $0 $0 $0 $0 Accounts Payable $0 $0 $0 $0 $0 Accrued Liabilities $0 $0 $0 $0 $0 Total Current Liabilities $0 $0 $0 $0 $0
Long Term Debt $0 $0 $0 $0 $0 Total Liabilities $0 $0 $0 $0 $0
Owner/Stockholder Equity Common Stock $180,000 $180,000 $180,000 $180,000 $180,000 Retained Earnings ($92,417) ($165,089) ($161,842) ($158,595) ($155,348) Dividends Payable $0 $0 $0 $0 $0 Total Owners' Equity $87,583 $14,911 $18,158 $21,405 $24,652
Total Liabilities & Equity $87,583 $14,911 $18,158 $21,405 $24,652
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Year 2008 Organizational Chart
Jan George Owner and
General Manager
Travel Consultants’ Supervisor
Travel Specialist
Southeastern Europe
Travel Specialist
Scandinavia
Travel Specialist Western Europe
and Mediterranean
Travel Specialist
Former Soviet Union
Travel Specialist Central Europe
Office Assistant
Marketing Director
Technical Assistant
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Logo and Advertising Slogans
! “TravelWish: Your Eastern European Specialist”
! “Make a Wish and Go!”
43
44
Sample Tours
BALKAN TOUR BULGARIA – GREECE – TURKEY – 15 days
DAY 1 Arrival in Sofia. Overnight.
DAY 2
Sightseeing tour by coach of one of the oldest European capitals (relics from Thracian, Roman, Byzantine and Medieval times) including visit to the National Historical Museum with Thracian oldest gold treasures and the Alexander Nevski Cathedral with a famous icon crypt. Free afternoon. Overnight in Sofia (Possible visit to Vitosha Mountain with lunch or dinner there).
DAY 3 Drive to the Rila Monastery – l0th c. (the oldest and the biggest Bulgarian monastery with magnificent architecture, woodcarvings, frescoes and icons). After lunch drive to Sandanski (Melnik) - spa resort with beautiful natural surroundings. Wine tasting. Overnight in Sandanski (Melnik).
DAY 4 Drive to Thessaloniki (GREECE). Free afternoon. Overnight in Thessaloniki.
DAY 5 Sightseeing tour by coach of the city including visit to the famous archaeological museum (with Alexander Makedonski’s treasure from Ravena). Dinner in a typical Greek tavern with folklore music and dances. Overnight.
DAY 6 Drive to Athens with lunch en route. Overnight in Athens.
DAY 7 Sightseeing tour of the center of the old Greek culture including visit to the famous Acropolis and the National Archaeological Museum (Krite- Micene culture). Dinner in Plaka (famous with its typical small Greek restaurants and taverns at the foothills of Acropolis).
Rila Monastery, Bulgaria
Rila Monastery, Bulgaria
The Acropolis, Athens, Greece
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DAY 8 Drive to Thessaloniki. Overnight.
DAY 9 Drive along the Halkidiki Peninsula and the Aegean Sea to Kavala and Alexandropolis. Lunch en route. Overnight in a motel near Alexandropolis.
DAY 10 Drive to Istanbul (TURKEY) along the Marmara Sea. Overnight.
DAY 11 Sightseeing tour by coach of the unique city situated on both sides of the Bosphorus and the Golden Horn on two continents: Europe and Asia, including visit to the famous old palace Topkapi, the Great Blue Mosque (a magnificent piece of Islam architecture), the new Versail- type palace "Dolmabachche" and over the big bridge to the Asian shore. Overnight.
DAY 12 Sightseeing tour by boat with lunch on board through the Bosphorus and visit to Prince's islands in the Marmara Sea. Dinner at the "Kervan Saray" restaurant with typical folklore music and national dances. Overnight.
DAY 13
Drive to Plovdiv (BULGARIA). Overnight.
DAY 14 Sightseeing tour of one of the oldest Thracian cities including the old town with visit to the Ethnographic Museum and some Renaissance houses - (magnificent pieces of architecture). After lunch drive to Sofia. Dinner at a folklore restaurant with typical Bulgarian folklore songs and dances. Overnight.
DAY 15 Departure.
Price: $2,100 per person - independent travel $1,800 per person - scheduled tour
Istanbul, Turkey
Plovdiv, Bulgaria
Bulgarian Folk Dancers
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“DISCOVER BULGARIA” TOUR - 8 Days
DAY 1 Arrival at Sofia airport. Check-in PRINCESS SOFIA hotel. Dinner.
DAY 2 We drive to Veliko Tarnovo via Troyan Monastery (XVIIth c.), a typical example of the Bulgarian Revival period architecture and art. Many eminent men of letters worked here during the XVIIIth century and a school was also founded. Check-in hotel VELIKO TARNOVO. Later in the afternoon, we go for a sightseeing tour of Veliko Tarnovo, the capital of the Second Bulgarian Kingdom (XIIth-XIVth c.), picturesquely situated on three hills on the banks of the meandering Yantra River. Dinner.
DAY 3 A morning sightseeing tour of the village of Arbanassi - an architectural reserve with traditional houses from the XVIIth c. and well preserved churches from the Bulgarian Revival period. The oldest one is "The birth of Christ" (1637-49) dug into the ground without a belfry and with hidden cupolas, but hiding a genuine art gallery with over 3,500 stunningly realistic figures and biblical scenes, painted by unknown artists. In the afternoon we drive to visit the Preobrazhenski monastery (XIVth c.) with fine architecture of its bell tower and murals, painted by the famous Bulgarian painter Zachary Zograph. In the evening there is an opportunity for an optional visit of the performance "Sound & Light" in Veliko Tarnovo. Dinner. Same accommodation.
DAY 4 Drive to Plovdiv via the open-air ethnographic museum "Etara" showing old Bulgarian crafts and arts. We cross the Balkan Range with beautiful views through the Shipka Pass and visit the Shipka Memorial church, built in typical XVIIth c. Russian style. We have a stop over in the town of Kazanlak to see the Rose Oil Production Museum and the famous Thracian Tomb (IVth c. B. C., under th e protection of UNESCO). We drive further across the eastern part of the Rose Valley and Sredna Gora range to arrive in Plovdiv. Check-in NOVOTEL PLOVDIV. Optional wine tasting with buffet dinner.
Plovdiv, Bulgaria
The Thracian Tomb, Kazanlak, Bulgaria
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DAY 5 After breakfast we go for a sightseeing tour of th e old part of Plovdiv (mainly on foot) with remains from Thracian, Greek, Roman and Mediaeval times, including a visit of the Roman Theatre (IInd c. A. D.) and Hindlian house. Later we drive southwards to Bachkovo Monastery (35 km) - the second biggest monastery in the country, situated at the foothills of the Rhodopes mountain, founded in 1083. The oldest preserved buildings are: the Ossuary with frescoes from the XIIth and XIVth c. and the church "St. Archangels" (XIIth- XIIIth c.). The church of "St. Nicolas" was painted by Zachary Zograph in 1840. The murals in the Refectory (built in 1604 and decorated in 1643) are believed to be a masterpiece of European Renaissance art. The monastery is under the protection of UNESCO. In the evening - an optional chamber music concert. Dinner. Same accommodation.
DAY 6 Drive to the Rila Monastery (Xth c.), situated in a beautiful nature reserve in Rila Mountain. On the way we stop in Borovets: the oldest Bulgarian mountain resort where we have an optional visit of the old King's hunting lodge "Bistritsa". It has original furniture and a unique Royal Family's collection of wildlife trophies. After lunch, we visit the monastery: this is the biggest and most remarkable Bulgarian monastery with impressive architecture and valuable woodcarvings, frescoes and icons (XIVth-XIXth c.). Dinner and overnight in TSAREV VRACH hotel, at the Rila Monastery complex.
DAY 7 Drive back to Sofia. Check-in PRINCESS SOFIA hotel. A sightseeing tour of the Bulgarian capital, including visits of the Al. Nevski Cathedral, the Russian church, the Rotund “St. George”, the National History Museum and the Vitosha mountain. Some free time in the afternoon before dinner. Optional folklore dinner with show and drinks in a typical restaurant at the foothills of Vitosha Mountain.
DAY 8 Departure.
Price: $1,650 per person - independent travel $1,350 per person - scheduled tour
Rila Mountains, Bulgaria
Bulgarian Folk Musician
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A WEEKEND IN BULGARIA
DAY 1 Arrival in Sofia. Overnight.
Sofia, Bulgaria
DAY 2 In the morning - sightseeing tour, including a visit to the Alexander Nevski Cathedral and the Cryp, with the richest icon collection. Lunch at the foothills of the Vitosha Mountain. Departure for Melnik - the smallest Bulgarian town, unique by its natural situation among the sandstone pyramids and rich with its cultural and historical monuments. Wine tasting of the famous Melnik wines. Overnight.
DAY 3 Sightseeing tour of Melnik (by foot). Departure for the Rila Monastery (l0th c.) - the biggest Bulgarian monastery included in the list of the World Heritage, with its picturesque location in Rila Mountain and fine works of architecture, paintings, icons and woodcarvings. Overnight in Sofia.
DAY 4 Departure
Price: $275 per person - independent travel $225 per person - scheduled tour
Melnik, Bulgaria
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35
Bibliography and Citations
1 U.S. Industry & Trade Outlook 2000. pg. 50-1 – 50-8. The McGraw-Hill Companies and U.S. Department of Commerce/International Trade Administration, 2000.
2 WEFA Global Tourism Monitor Highlights, July 2000. http://www.wttc.org/ecres/pdfs/GTMHjuly.pdf, accessed on February 7, 2002.
3 Tourism Market Trends: World Overview & Tourism Topics. World Tourism Organization, 2001.
4 Tourism 2020 Vision: Europe. Volume 4. World Tourism Organization, 2000.
5 Tourism Satellite Accounting Research: Central and Eastern Europe. World Travel & Tourism Council, 2001.
6 2000 Profile of U.S. Resident Travelers Visiting Overseas Destinations, Reported from: Survey of International Air Travelers. Source: U.S. Department of Commerce, International Trade Administration, Tourism Industries, July 2001, http://tinet.ita.doc.gov/view/f-2000-101-001/index.html?ti_cart_cookie=20020209.195848.21479, accessed on February 9, 2002.
7 Quoted in Specialty Travel Index Magazine, Issue 44, Spring/Summer 2002. Alpine Hansen Publishers.
8 Quoted in “Looking Ahead: Trends 2002” by Risa R. Weinreb, Specialty Travel Index Magazine, Issue 44, Spring/Summer 2002. Alpine Hansen Publishers.
9 “Looking Ahead: Trends 2002” by Risa R. Weinreb, Specialty Travel Index Magazine, Issue 44, Spring/Summer 2002. Alpine Hansen Publishers.
10 McKinney's Consolidated Laws of New York Annotated, General Business Law, Chapter 20 of the Consolidated Laws, Article 10-A--Truth In Travel Act. New York State, http://www.state.ny.us/, accessed on February 9, 2002.
11 Ranking Tables for Metropolitan Area, Table 3, U.S. Census Bureau, http://www.census.gov/population/cen2000/phc-t3/tab03.pdf, Internet release date: April 2, 2001.
12 Ranking Tables for Metropolitan Area, Table 4, U.S. Census Bureau, http://www.census.gov/population/cen2000/phc-t3/tab04.pdf, Internet release date: April 2, 2001.
13 2000 Profile of U.S. Resident Travelers Visiting Overseas Destinations, Reported from: Survey of International Air Travelers. Source: U.S. Department of Commerce, International Trade Administration, Tourism Industries, July 2001, http://tinet.ita.doc.gov/view/f-2000-101-001/index.html?ti_cart_cookie=20020209.195848.21479, accessed on February 9, 2002.
14 Personal interview with Hristo Milev, Director of Department for Incoming Tourism, Balkan Holidays, Sofia, Bulgaria, December 19, 2001.
15 Quoted in Specialty Travel Index Magazine, Issue 44, Spring/Summer 2002. Alpine Hansen Publishers.
16 Personal interview with Ingrid Boldt, owner/manager of Lithia Travel, Ashland, Oregon, January 16, 2002.
17 Profile of General Demographic Characteristics: 2000, http://www.census.gov/prod/cen2000/dp1/2kh36.pdf, accessed on March 6, 2002.
18 Social Characteristics Table, DP-2, http://factfinder.census.gov/servlet/BasicFactsTable?_lang=en&_vt_name=DEC_1990_STF3_DP2&_geo_id=16000U S362505, accessed on March 6, 2002.
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19 Income and Poverty Status, DP-4, http://factfinder.census.gov/servlet/BasicFactsTable?_lang=en&_vt_name=DEC_1990_STF3_DP4&_geo_id=16000U S362505, accessed on March 6, 2002.
20 Profile of General Demographic Characteristics: 2000, DP-1, http://factfinder.census.gov/servlet/QTTable?ds_name=D&geo_id=06000US3606144919&qr_name=DEC_2000_SF1 _U_DP1&_lang=en, accessed on March 6, 2002.
21 Profile of Selected Economic Characteristics: 2000, QT-03, http://factfinder.census.gov/servlet/QTTable?ds_name=D&geo_id=06000US3606144919&qr_name=ACS_C2SS_EST _G00_QT03&_lang=en, accessed on March 6, 2002.
22 Profile of Selected Social Characteristics: 2000, QT-02, http://factfinder.census.gov/servlet/QTTable?ds_name=D&geo_id=06000US3606144919&qr_name=ACS_C2SS_EST _G00_QT02&_lang=en, accessed on March 6, 2002.
23 The Sustainable Development Network Program (SDNP), http://www.jsdnp.org.jm/susTourism.htm, accessed on March 7, 2002.
24 Telephone conversation with Gloria Woods, The New York Times Advertising Department, tel. (212) 556-8702, March 11, 2002.
25 The New York Times, http://nytadvertising.nytimes.com/adonis/html/open/travel_1.shtml, http://nytadvertising.nytimes.com/adonis/html/open/profile2.shtml, http://nytadvertising.nytimes.com/adonis/html/open/circulation.shtml, accessed on March 7, 2002.
26 Harvard Magazine, March-April 2002.
27 Printing by Flamingo Inc., http://www.color-brochures.net/insert.htm, accessed on March 7, 2002.
28 American Society of Travel Agents (ASTA), https://www.astanet.com/secure/registration-cg02.asp, accessed on March 7, 2002.
29 The Yellow Pages, http://www.yellowpages.com/, accessed on March 7, 2002.
30 Reported by corporate HR departments, http://swz.salary.com/salarywizard/layoutscripts/swzl_compresult.asp?jobcode=HS08000037&jobtitle=Travel+Coordi nator&jobtitlecomp=&narrowcode=AR02&narrowcodecomp=&narrowdesc=Hotel%2C+Gaming%2C+Leisure%2C+a nd+Travel&zipcode=&metrocode=119&statecode=NY&geo=New+York+-- +New+York&geocomp=&pagenumber=4&iscompare=&comparetype=&openlink=, accessed on March 8, 2002.
31 Southern Oregon University, Business Planning Course Site: Blackboard, http://courses.sou.edu, accessed on March 8, 2002.
32 The New York Times, Commercial Real Estate listing, http://www.cityfeet.com/nytimes/, accessed on March 16, 2002.
33 Developed after consultation with the following travel industry professionals: − Ellinor Gottesmann, consultant/broker in specialty travel; started-up, owned and managed The
Checkered Zebra , a specialty travel company, New York − Ingrid Boldt, travel specialist, owner/manager of Lithia Travel, Ashland, OR − Susan Holuber, travel specialist/consultant, co-owner/manager of About Family Travel, Ashland, OR − Rubens Alves, sales/marketing, co-owner/manager of About Family Travel, Ashland, OR − Boyan Manev, travel specialist/touroperator, co-owner/manager of SunShineTours, incoming
touroperator, Sofia, Bulgaria
34 Quoted by State Farm Insurance, New York City, telephone conversation on March 8, 2002.
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