Business plan– Travelagents.co.il
Market facts: There are approximately 480 travel agencies in Israel. About 230 travel agencies are to be excluded from the database either because they belong to a competitor (Ophir Tours, Diesenhaus, Issta, Aviation Links), they work with us (Mona Tours) or they sell outgoing only. That leaves us with about 250 travel agencies we can approach. The geographical location of those agencies is: 40% in the center, 25% in the north, 15% in Jerusalem, 15% in the south and 5% in the Sharon region. Each agency has on an average 7 agents. There are a few groups of travel agencies such as AX, U-Travel, NRS, Alpha Club, Ayala, Lachish Tours, and Nazerene. Seasonality: The third quarter is the busiest one, including the summer vacation and the high holidays in September. Sales & Marketing: Daily promotions via email, utilizing our database including 99% of all travel agencies. 1% either does not have email or prefers to receive promotions by fax only. Personal meeting with each agency manager/owner. In this meeting a presentation about TA will be held and the advantages for working with us will be presented. Type of services we want to sell: Accommodations – 100% at first. Once other services such as car rentals, transfers, attractions, cruises and packages will be available on-line the ratio will naturally decrease. However, our focus will remain room nights at all times. Success factors: Price. We are 5%-50% cheaper than our competition’s net rate. 54% of the consumers will switch their travel agent with a cheaper one. 50% of all consumers chose their travel agent based on the rates he offers. Availability. Our site is showing live inventory and once a room is booked, no additional step is required. Automated process. From start to end. Every agent can complete a reservation, search for a service, book it, pay for it and print a voucher. Incase help is required, we are available 24/7. Expected turnover from the travel agency segment: If each agency books 3.5 reservations per week, assuming each reservation is around $350, than the turnover will reach 50K ($50,000/9 months/4.5 weeks/$350=3.5 reservations per week). To achieve this number annually from hotel reservations only than 2.5 reservations are to be made weekly by each travel agency. Since we’re starting late into the year we must rely on the higher numbers.
To reach the 3 Million we had from the Israeli market, and assuming each travel agency will generate 50K with us, than we must have 60 travel agencies work with us. The potential we have is 250 agencies, 4 times as much.
Risk factor: Low risk – 59% Above average risk – 27% High risk – 4% Cash paying agencies – 10% Average credit given to agencies is 45 days. From 1-5 in stability (1 being weak and 5 being stable), travel agencies segment is rated at 3 (average). Payment – must be able to offer a credit option to the travel agent without taking the risk. Leumi Card’s solution is the answer. Human Resource requirements: 5 employees for the remainder of the first year (2004): 1 x Manager 5 x marketing (50 agencies per person) Additional employees will be added based on direction the company is headed (consumer website, Easy Zimmer, etc). Goals: Each sales person will be responsible for 50 travel agencies. Each travel agency is to be visited at least once during the first month of hire, in order to meet with the owner/manager. Assuming 5 people are hired and thoroughly trained by April 1 st, 250 agencies are to be visited in April. All initial visits are to be pre-set by the employee. Each agency is to be re-visited every 2 weeks than after. Salary: First 3 months salary will consist of a base salary of 4,500 NIS + bonuses for each agency booking with us per month as follows: 01-10 offices - 500 NIS 11-20 offices - 1000 NIS 21-30 offices - 1500 NIS 31-40 offices - 2500 NIS 41-50 offices - 3000 NIS The bonus is assumed based on $35 profit/reservation, assuming it will be covered by a percentage added on top of the rate. Once the first quarter is finished, salary will go back to base and commissions will be paid on sales made through our site. Up to $125,000.00 actual reservations turnover/month – 2% Up to $210,000.00 actual reservations turnover/month – 3% Up to $375,000.00 and over actual reservations turnover/month – 4%.
Preliminary Financial Forecast 2004 Travelagents.co.il forecasted – April-June 100 travel agencies booking bi-monthly during this period @ $350/reservation (alternatively 600 reservations) Total gross turnover Travelagents.co.il forecasts April-June Based on 10% profit (from the top), excluding commissions paid to employees Total gross income Travelagents.co.il forecasts April-June Salaries & wages of 6 people (base) Transportation (one car) Gas Rent + tax Hiring costs (one time fee) Miscellaneous (telephone, cell, office supplies, travel expenses, F&B, electricity, internet) CPA Office Total expenses Total profit before tax Turnover
$210,000 $210,000 Income $21,000 $21,000) Expenses $19,000 $ 1,700 $ 3,200 $18,300 $ 5,000 $ 6,600 $ 2,400 $56,200 $(35,200)
Travelagents.co.il forecasted – July-September 200 travel agencies booking at least 1 rez/week during this period @ $350/reservation (alternatively 2400 reservations) Total gross turnover Travelagents.co.il forecasts July-September Based on 10% profit (from the top), excluding commissions paid to employees Total gross income Travelagents.co.il forecasts July-September Salaries & wages of 6 people (base) Transportation (one car) Gas Rent + tax Miscellaneous (telephone, cell, office supplies, travel expenses, F&B, electricity, internet) CPA Office Total expenses
Turnover
$840,000 $840,000 Income $84,000 $84,000) Expenses $19,000 $ 1,700 $ 3,200 $18,300 $ 6,600 $ 2,400 $51,200
Total profit before tax
$32,800
Travelagents.co.il forecasted – October-December Turnover 200 travel agencies booking at least two reservations a week during this period @ $350/reservation (alternatively 4800 reservations) $1,680,000 Total gross turnover $1,680,000 Travelagents.co.il forecasts October-December Based on 10% profit (from the top), excluding commissions paid to employees Total gross income Travelagents.co.il forecasts October-December Salaries & wages of 6 people (base) Transportation (one car) Gas Rent + tax Miscellaneous (telephone, cell, office supplies, travel expenses, F&B, electricity, internet) CPA Office Total expenses Total profit before tax Income $168,000 $168,000) Expenses $19,000 $ 1,700 $ 3,200 $18,300 $ 6,600 $ 2,400 $51,200 $116,800