International Travel Agency Business Plan

Adventure Travel International

Executive Summary
Adventure Travel International (ATI) will begin operations in September 1999 and provide adventure and sport/travel packages to people in the Paci ic !orthwest" speci icall# the greater $oodville area% An opportunit# or ATI&s success e'ists because the national tourism and travel industr# is growing at ()" and adventure travel at 1*) annuall#% +urther" the $oodville adventure travel market is growing at least 1,) annuall# and there are no providers who speciali-e solel# in adventure travel in the greater $oodville area% ATI is poised to take advantage o this growth and lack o competition with an e'perienced sta " e'cellent location" and e ective management and marketing% The compan#&s goals over the ne't three #ears are.

Sales o /01*"*** b# #ear three% 2aintain margins o 1*) on all airline travel% Achieve 11) o sales rom the Internet% 3evelop strategic alliances with service providers nationall#" internationall#" and in the $oodville area%

In order to achieve these goals ATI needs to ocus on the three ke# areas o .

4 ective segmentation and targeting o adventure travelers within the larger travel market% Success ull# position ourselves as adventure travel specialists% 5ommunicate the di erentiation and 6ualit# o our o ering through personal interaction" media" and regional marketing% 3evelop a repeat7business base o lo#al customers in order to create su icient sales%

ATI will be a sole proprietorship owned and operated b# Shea 3elane# in the town o Atkins 8rove" 5ali ornia% The ounder and emplo#ees o ATI are e'perienced travel industr# pro essionals and are passionate about the activities ATI will promote and o er% ATI&s total start7up capital re6uirement is appro'imatel# /1*,"1**% Start7up will be inanced through the owner&s personal investment and a long7term note o /91"*** secured rom the $oodville +irst !ational :ank% The travel agenc# market is competitive" and technolog#" namel# the Internet and 5omputeri-ed ;eservation S#stems (5;S)" has changed the wa# travel agencies operate% The Internet gives agencies and individuals the abilit# to per orm travel related research% 3iscount air are brokers have taken advantage o the Internet b# o ering tickets online at discounted rates% This has increased price competition% 5omputeri-ed ;eservation S#stems have increased the speed and e icienc# o the agenc#7to7customer transaction% The# have also increased the start7up costs or travel agencies who wish to be competitive% <ne notable trend in the travel industr# is increased deregulation% 3eregulation has increased the need or di erentiation and has" in man# cases" lowered the prices o air are and other travel7related services% Additional trends include caps on agenc# commissions b# man# o the larger airlines" increases in adventure travel" and reduction o pro it margins% The travel industr# is highl# ragmented% There are large national chains" small home7based businesses" consolidators on the Internet" etc% 2embership numbers in some o the travel7related associations give some indication o the number o participants in this market% The American Societ# o Travel Agents (ASTA) reports ,1"*** members in 1=1 countries" most o whom are small businesses% ATI has appro'imatel# =*

immediate competitors in the greater $oodville area" including two agencies that are branches o national travel agenc# chains% ATI is researching the market to identi # potential opportunities or uture sales in this rapidl# changing environment% ATI&s long7term goal is to establish itsel as an internationall# recogni-ed provider o top7o 7the7 line adventure travel% This goal does not prohibit ATI rom participating in additional segments% It does" however" provide a corporate ocus and a di erentiated o ering% ATI&s target customers are health7conscious couples and individuals" with median household incomes o appro'imatel# /1*"***% The# are interested in popular adventure activities such as skiing" whitewater sports" and mountain biking% ATI&s most important target customers" however" will be married couples" ages ,17=1" with children and household incomes over /1*"***% The $oodville area" like much o the Paci ic !orthwest" has a large concentration o outdoor recreation enthusiasts% These health7conscious individuals" couples" and groups interested in popular adventure sports" such as skiing" ka#aking" trekking" etc%" are ATI&s primar# customers% ATI&s target market is an e'ploitable niche" and ATI will provide a speciali-ed and thus di erentiated service% ATI has established relationships with providers o travel7related products and services% Two ma>or airlines have been selected as our primar# ticket providers in part because the# do not cap the agent&s pro it on tickets% This allows us to capture the 1*) margin on ticket sales that was or man# #ears the industr# standard% 2arket research has enabled us to identi # and establish working relationships with service providers around the world% ATI has been able to identi # opportunities to capture margins o up to ,1) rom certain parties% Sourcing will be continuousl# evaluated% ATI will take advantage o trade shows" travel industr# publications" and other sources o industr#7related in ormation to monitor the 6ualit# o its o ering% ATI has a number o ma>or competitors that the compan# will seek to ac6uire market share rom% The# are.

;ollins ? @a#esA Sundance TravelA 8lobal Adventure Travel%

!one o these competitors have the combination o price" scope" or local ocus that ATI will be able to o er% ATI&s pricing strateg# will be a ma>or consideration% 2uch o it will be determined b# market standards% ATI will attempt to maintain margins o 1*) on all airline travel% 2argins on all other products and services var# depending upon the provider but are e'pected to average ,*)% ATI will make ever# e ort to maintain a competitive pricing polic#% @owever" as ATI builds its reputation as the premier provider o adventure travel" it e'pects to earn the abilit# to charge a premium or its services% The compan# will also pursue an aggressive marketing campaign% 3uring ATI&s irst #ear o operation it will hold a grand opening and will organi-e and sponsor several athletic events% All ATI emplo#ees promote ATI&s services to local athletic clubs% !egotiations with area health clubs have begun and additional promotions will likel# occur through these strategic alliances% Specialt#" rather than large national publications" will serve as media vehicles or ATI advertising% Bocal radio stations will also be used% Personal selling will occur" though phone solicitation will be limited% ATI plans to occasionall# station sales personnel in locations around $oodville such as shopping malls% ATI&s goal is to develop personal amiliarit# between its emplo#ees and the communit#% ATI will be a small organi-ation and its emplo#ees will share in management duties and decision making% Shea 3elane# will act as the 8eneral 2anager" but it will be important or each member o the team to be capable in all aspects o the business% Prere6uisites or all ATI emplo#ees include at least ive #ears travel industr# e'perience" knowledge and abilit# in the t#pes o activities ATI will promote" and 5erti ied Travel 5ounselor (5T5) certi ication or applicable positions% The 5T5 designation can be obtained through the Institute o 5erti ied Travel Agents (I5TA)%

Prices will be competitive with the remainder o the market% The compan#&s estimated sales or the irst #ear o operations are appro'imatel# /1=("***" increasing 1*) annuall# or the ne't two #ears% ATI will begin operations with our ull7time positions% The positions are as ollowsA general manager and president. Shea 3elane#A marketing and advertising director. Cordan :arnesA accountant. Paul 2clellanA and one travel agent% The compan# does not e'pect an# problems with e'penses or cash low within the ne't three #ears% Annual cash low or the irst #ear o operation becomes positive in the second 6uarter o operation%

1.1 Objectives Sales o /01*"*** b# #ear three% 2aintain margins o 1*) on all airline travel% Achieve 11) o sales rom the Internet% 3evelop strategic alliances with service providers nationall#" internationall#" and in the $oodville
area%

1.2

ission

Adventure Travel International (ATI) is a travel agenc# that speciali-es in adventure tourism and travel% It will provide consulting and custom travel arrangements and packages% ATI&s mission is to become the oremost provider o adventure travel to the people o the Paci ic !orthwest% ATI&s emplo#ees and owner are outdoor adventure and travel enthusiasts as well as seasoned travel industr# pro essionals% ATI seeks to connect adventure travel newcomers and veterans with service providers" adventure activities" and accommodations that it the client&s desires" budget" and skill level%

1.! "eys to Success 4 ectivel# segment and target adventure travelers within the larger travel market% Success ull# position ourselves as adventure travel specialists% 5ommunicate the di erentiation and 6ualit# o our o ering through personal interaction and media% 3evelop a repeat7business base o lo#al customers

Situation Analysis
2.# Situation Analysis

According to the 3epartment o 5ommerce" the D%S% travel and tourism industr# is the nation&s third largest retail industr# and will be number one b# the #ear ,***% ;evenues rom travel have increased appro'imatel# 1**) in the last decade with D%S% travel agencies producing over /1** billion in revenues each #ear% Adventure travel" a segment o the travel and tourism industr#" is growing at least 1*) per #ear% 2ore than 1*) o the D%S% adult traveling population" or 1(E million people" have taken an adventure trip in their li etime" 99 million in the past ive #ears% Thirt#7one million adults have engaged in hard adventure activities like whitewater ra ting" scuba diving" and mountain biking% An additional ,1 million engaged in both a hard7 and so t7adventure activit#% Activities most commonl# participated in during adventure vacations. camping (91))" hiking (E())" skiing (11))" snorkeling or scuba diving (=*))" sailing (,0))" ka#aking or whitewater ra ting (,())" and biking trips (,())% 5ustomers tend to be #oung and a luent" ages 197=(" and one ourth are rom households with annual incomes o /E1"*** or more% In addition" statistics show that 9"*** D%S% companies o ered adventure packages that generated /E billion in 199E% There was a 00) increase in e'ecutive participation in adventure travel between 199, and 1990% 5ali ornia holds the largest population o adventure travelers" who tend to live in urban areas% ATI will be located in an urban area within the state o 5ali ornia% In addition" it will be the onl# adventure travel agenc# in an area with =**"*** people and a large concentration o outdoor recreation enthusiasts and customers who match ATI&s target pro ile% Planning an adventure trip re6uires knowledge o the travel industr# and popular adventure sport destinations" as well as adventure travel activities% Adventure travel customers are a specialt# group% These are primaril# #oung pro essionals who o ten lack the time and e'perience necessar# to e ectivel# plan an adventure trip on their own% ATI will communicate its abilit# to meet the demands o this market and ill this need%

2.1

ar$et Summary

The travel and tourism market is separated into two main categories" business and leisure travel% 4ach contribute about (1) to total revenues% The remainder o revenues are generated rom combined business/leisure trips% The market is urther separated into domestic and international travel% 3omestic travel accounts or appro'imatel# E*) o industr# revenues% :usiness travel can be divided into two categories" the medium to large corporate account" and the small independent businessman% Beisure travelers are classi ied according to the t#pes o trips the# take" income" or age% The our primar# leisure travel groups are. 1% ,% =% (% Adventure" Special7Interest" ;?;" @one#moons ? Sightseeing Trips% @igh7Income Travelers% :udget75onscious Travelers% +amilies" Students ? Seniors%

Adventure travel generates appro'imatel# /11 billion o the appro'imatel# /1** billion7dollar annual industr# revenues% Appro'imatel# /,7( billion o these revenues come rom 5ali ornia adventure travelers% :ased on these and other igures" ATI estimates the $oodville adventure travel market to be appro'imatel# /0 million annuall#% ATI estimates that it will capture about 9) o this market%

Target

ar$ets

ar$et Analysis ar$et Analysis ,**= Potential %ustomers &ational Adventure Travelers 'oodville Adventure Travelers Internet Total 2.1.1 ar$et (emogra)*ics 8rowth 1*) 1*"99*"*** 11"9E9"*** 1="1E0"9** 11) ,*) 1=,",1* ("=,*"*** 11,"*99 1"19("*** 1E("9*1 0",,*"9** ,**( ,**1 5A8; 1*%**) 11%**) ,*%**) 1,%E9)

1,%E9) 11"=(,",1* 1E"=11"*99 19"1E,"0*1

Adventure travel alls primaril# under the leisure travel categor#% ;evenues rom leisure travel earned b# D%S% travel agencies e'ceed /1* billion annuall#% Adventure travel is a sub7categor# o leisure travel and can be urther broken down into hard and so t adventure travel% :oth hard and so t adventures involve ph#sical" athletic activities% @ard adventure activities" as the name suggests" generall# involve risk and re6uire substantial athletic competence% So t adventure activities are less ph#sicall# demanding and more passive than their hard adventure counterparts% Adventure travelers are slightl# more likel# to be men age 197=(% @owever an increasing number o adventure travelers are women (some statistics suggest that women comprise (9) o the adventure market)% 2en on average spend more than women on their adventure travels% ATI&s primar# customers are married couples" ages ,17=1" with children and household incomes over /1*"***% ATI will be located in the heart o the Paci ic !orthwest% The natural beaut# and abundance o outdoor activities attract man# itness oriented individuals% Per capita" the area has more people than an# other in the nation who activel# participate in mountain and water sports" such as skiing" climbing" ka#aking" whitewater ra ting" mountain biking" etc% These are the people in ATI&s target market% ATI will ocus on the sale and promotion o adventure travel primaril# to individuals" but also to corporate clients in the $oodville area%

2.1.2

ar$et &eeds

Adventure travel activities are a speciali-ed product" and irst7hand knowledge o these activities is necessar# in order to e ectivel# promote and sell them% 2an# potential customers are unsure o the location

the# wish to reach% Part o the value associated with travel agencies is the knowledge the# possess about destinations% 5ustomers look to the agenc# to provide them with sound advice or a competitive price% ATI is con ident in its abilit# to do so% ATI can save the customer time and mone#" and help to ensure that the# are satis ied with their vacation%

2.1.!

ar$et Trends

<ne notable trend in the travel industr# is increased deregulation% 3eregulation has increased competition and the need or di erentiation% In man# cases" the prices o air are and other travel7related services has dropped% Additional trends include caps on agenc# commissions b# man# o the larger airlines" increases in adventure travel" and reduction o pro it margins% 2ore than 1*) o the D%S% adult traveling population" or 1(E million people" have taken an adventure trip in their li etime" 99 million in the past ive #ears% Appro'imatel# =1 million adults have engaged in hard adventure activities like whitewater ra ting" scuba diving and mountain biking% An additional ,1 million engaged in both a hard and so t adventure activit#% The growth trend in adventure travel is predicted to continue%

ar$et +orecast

2.1.,

ar$et -ro.t*

The travel industr# is growing% ;easons or this growth include a health# domestic econom# and devaluation o currenc# in other regions which has made travel less e'pensive or D%S% residents% Beisure travel increased b# =%,) in 199E and ,%*) in 1999% The health# econom# has increased business which in turn boosted domestic business travel (%9) in 199E and =%0) in 1999% Adventure travel" growing 1*) annuall#" is one o the astest growing segments o the travel industr#% Statistics show that 9"*** D%S% companies o ered adventure packages that generated /E billion in 199E% There also has been a 00) increase in e'ecutive participation in adventure travel between 199, and 1990%

Target

ar$et -ro.t*

2.2 S'OT Analysis In the ollowing our sections are the most relevant issues to ATI&s success ul operation% ATI&s strengths include its management" e'perienced sta " marketing savv#" and targeted ocus% ATI will capitali-e on these" and other strengths" to take advantage o opportunities and manage threats% +irm weaknesses are primaril# those inherent in a start7up venture and are discussed in one o the ollowing sections%

2.2.1 Strengt*s

2A!A8424!T. ATI&s manager has a success ul record in this industr#% @is e'perience and the network o valuable connections he has developed will contribute greatl# to ATI&s success%
B<5ATI<!. ATI will be ideall# located% The Paci ic !orthwest is a mecca or people who meet ATI&s target audience pro ile% In addition" $oodville is located (1 miles rom the coast and less than two hours rom the mountains% +ive rivers are within a two7hour drive% These geographic eatures will continue to attract potential customers% 4FP4;I4!543 STA++. The ATI team is e'perienced in the travel business and in adventure sports% All members have over ive #ears e'perience% 2oreover" the# are willing to sacri ice e'tra time and e ort to build a success ul business% Along with the intangible bene its derived rom succeeding in an independent endeavor" ATI will o er pro it sharing and potential partnership opportunities to its ground7 loor members% P<PDBA;ITG <+ A3H4!TD;4 T;AH4B. Adventure activities are ver# popular" and ATI is betting that the popularit# will continue to grow% 2an# o the adventure sports" such as ka#aking" mountainbiking" alpine and rock climbing" have had a kind o cult ollowing or man# #ears% @owever" in the last ive #ears" these sports have started to go mainstream%

2.2.2 'ea$nesses

STA;T7DP STATDS. ATI is a start7up and the odds are stacked against small start7up companies%
BI2IT43 P4;S<!!4B. Though ATI&s sta is e'ceptional" the# will be aced with long hours or little pa# during the irst two #ears o operation%

+I!A!5I!8. Preliminar# estimates o sales and e'penditures suggest that ATI will remain inanciall# stable% @owever" un oreseen e'penditures or poor sales will threaten ATI&s cash position" which will be particularl# vulnerable in #ear one%

2.2.! O))ortunities

8;<$T@ 2A;I4T. The national adventure travel market is growing 1*) annuall#" and preliminar# estimates suggest that the $oodville market e'ceeds that growth rate%
P<T4!TIAB T< A5@I4H4 SAB4S +;<2 T@4 !ATI<!AB 2A;I4T. As ATI establishes itsel and gains inancial stabilit#" it can begin to market its services nationall#% ATI plans to begin this e ort via a $orld $ide $eb campaign in the irst #ear o operation and diversi # its communications e orts in #ears two and three% P<T4!TIAB T< :45<24 A P;42I4; P;<HI34;. ATI has the management and sta to produce a top76ualit# service% H4;TI5AB I!T48;ATI<!. The potential to integrate services and add branches e'ists%

2.2., T*reats

I!T4;!4T A!3 P;I54 5<2P4TITI<!. $hen the airlines were deregulated" price competition increased% +urther" the Internet has provided a sales medium or consolidators who compete on price and has also given consumers the abilit# to plan and arrange trips or themselves% Thus" the traditional agenc# aces greater competition%
B<5AB 5<2P4TITI<! (4FISTI!8 A!3 P<T4!TIAB). There are no agencies in the $oodville area that speciali-e solel# in adventure travel% @owever" an# one o the appro'imatel# =* can book an adventure trip% 2oreover" additional adventure travel specialists ma# ollow ATI&s lead% 45<!<2I5 3<$!TD;!. The strong domestic econom# has been good or the travel and tourism industr#% 5ontinued growth is anticipated% @owever" un oreseen or unanticipated economic recession would reduce disposable income and threaten ATI&s sales%

2.! %om)etition In the travel industr#" as in other industries" there are large national chains" small home7based businesses" consolidators on the Internet" etc% 2embership numbers o travel7related associations give some indication o the number o participants in this market% The American Societ# o Travel Agents (ASTA) reports ,1"*** members in 1=1 countries" most o whom are small businesses% The Association o ;etail Travel Agencies (A;TA) has another ="*** members% In addition" there are man# agencies not a iliated with these associations but with one or more o the appro'imatel# =1 travel7industr# organi-ations in the countr#% ATI has appro'imatel# =* immediate competitors in the greater $oodville area" including two agencies that are branches o national travel agenc# chains% 3irect national competitors include. 1% ;ollins ? @a#es. :ased on the east coast" ;ollins ? @a#es is the most well known and respected adventure travel agenc# in the world% The# have provided adventure travel packages or over ,* #ears and have success ull# integrated travel agenc# services and adventure travel activities% This o ers them complete control over the entire vacation% The# have the advantage o an established reputation" high76ualit# trips" economies o scale" and strategic alliances% @owever" their packages are e'pensive and appeal primaril# to a high7income clientele%

,%

=%

Sundance Travel. :ased in 5olorado" Sundance is a traditional agenc# and has been in business or 1* #ears% The# have graduall# made the move towards becoming adventure travel specialists and are now recogni-ed as such% Their strengths are e'perience" reputation" and inancial solvenc#% $eaknesses ma# include high personnel and management turnover and the lack o a clear plan or uture growth% 8lobal Adventure Travel. 8lobal was established in 1991 and has success ull# established themselves as adventure travel specialists% The# are based in the Bos Angeles area% 8lobal has done a good >ob positioning itsel through success ul marketing communications and management% The Bos Angeles area contains a large adventure travel market% It is" however" a ver# competitive area%

%om)etitor by -ro.t* and S*are

-ro.t* and S*are Analysis -ro.t* and S*are

%om)etitor /ollins 0 1ayes Sundance -lobal Travel &ort*.est 'oodville Travel

Price /1"1** /9E1 /91* /1"*** /901

8rowth ;ate =) 1) 1*) () *)

2arket Share ,=) 9) E) 1) 1)

Average Total 2., Service O22ering

/999%** /("99*%**

(%(*) ,,%**)

E%90) =9%9*)

ATI is a ull service agenc# and sells standard travel agenc# goods and services" including air are and travel packages% Additional services include assistance with passports" providing access to top7o 7the7line e6uipment and supplies" and a superior o ering that includes access to better than average terrain and

activities" accommodations" and entertainment% The value added o ATI&s o ering is its knowledge and e'pertise" competitive rates" and specialt# ocus on adventure travel" which translate into increased satis action or the customer%

2.3 "eys to Success

4 ectivel# segment the travel market and target adventure travelers%

Success ull# position ourselves as adventure travel specialists% 5ommunicate the di erentiation and 6ualit# o our o ering through personal interaction and media% 3evelop a repeat7business base o lo#al customers%

2.4 %ritical Issues

2arket growth pro>ections or the travel industr# and or adventure travel are accurate%
!ational economic conditions" which are avorable to the travel industr#" will not e'perience signi icant decline in the ne't ive #ears% International conditions will remain avorable or service providers% 5apabilit# to produce e ective" targeted communications that promote the bene its o adventure travel and ATI&s specialt# ocus and services%

2.5

acroenvironment

3isposable income is high but leisure time is limited and contested b# other responsibilities and recreation options%
3ue to a good econom#" travel and tourism is growing% Population segments have di erent needs and wants% This re6uires e ective target marketing% Internet sales threaten the traditional irm" and technological advances re6uire greater knowledge and sophistication in most industries% International conditions" which are avorable" greatl# e ect the industr#% Political unrest" militar# action" and other issues determine availabilit# to man# oreign destinations%

Marketing Strategy
!.# ar$eting Strategy

ATI believes that the goal o business is to create and keep customers% Its marketing strateg# will re lect this goal as it builds its reputation in the $oodville area% Though ATI operates in the travel industr#" it provides

much more than travel% ATI provides adventure and reedom% 2an# o ATI&s customers spend 1* weeks o the #ear in an o ice% ATI o ers people the abilit# to get awa# and remember how much the# love the challenge and e'citement o an athletic endeavor% ATI will promote the bene its o adventure travel% These bene its include better health" e'citement" personal growth" ear7to7ear grins" and a whole lot o un% ATI will also promote the bene its o its services% These bene its include saving time and mone#" and con idence in the vacation&s success%

!.1

ission

Adventure Travel International (ATI) is a travel agenc# that speciali-es in adventure travel% $e provide consulting and custom travel arrangements and packages% ATI&s mission is to become the oremost provider o adventure travel to the people o the Paci ic !orthwest% ATI&s emplo#ees and owner are outdoor adventure and travel enthusiasts" as well as seasoned travel7industr# pro essionals% ATI seeks to connect adventure travel newcomers and veterans with service providers" adventure activities" and accommodations that it the client&s desires" budget" and skill level%

!.2

ar$eting Objectives Achieve an annual growth rate o at least 1*)% Promote adventure activities through strategic alliances with health clubs" local athletic organi-ations" and retailers% :# the end o #ear three" achieve 11) o sales through the Internet% :ecome the market leader o adventure travel in the $oodville area%

!.! +inancial Objectives 8enerate sales o appro'imatel# /11*"*** in #ear one and increase sales 1*) annuall#% 5apture and maintain a gross margin o 197,*)% Achieve positive net worth b# #ear two%

!., Target

ar$eting

ATI will target the ollowing groups.

5ouples and individual adventure travelers. This is the customer group that meets the demographic pro ile or adventure travelers 77 ages ,17=1" married" with household income greater than /1*"***% 8roup adventure travelers. These are groups that belong to local athletic organi-ations" such as c#cling or ka#aking clubs% 5orporate adventure travelers. ATI will target local businesses in an attempt to secure corporate accounts%

ATI plans to ocus its initial e orts on the adventure travel market in the greater $oodville area% As ATI grows" marketing e orts will e'pand% The ma>or purchasers that it ATI&s target market are located in urban areas within these states. 1% ,% 5ali ornia +lorida

=% (% 1% 0% E% 9% 9% 1*%

!ew Gork Te'as Illinois !evada @awaii !ew Cerse# Penns#lvania 8eorgia

!.3 Positioning +or individual and corporate clients who wish to participate in adventure travel" ATI is the premier adventure travel agenc# in the $oodville area% ATI&s e'perience with and enthusiasm or adventure travel is displa#ed in the e'ceptional service" value" and advice it provides or the customer%

!.4 Strategy Pyramids ST;AT48G 1. 3evelop brand recognition through the use o e ective advertising" marketing communications and promotion% Tactic. 3evelop a marketing mi' designed to target the $oodville market%

Program. Print and electronic advertising campaign" using specialt# publications and local radio as primar# media% Program. Dse strategic alliances to conduct promotions and giveawa#s%

Tactic. 4'pand brand recognition to the national market through increased industr# participation and $$$ presence%

Program. Dtili-e the networking bene its o industr# associations" trade shows" and publications% Program. 3evelop and promote ATI&s website% The availabilit# o in ormation and the abilit# to schedule and purchase online will be bene icial to the customer and ATI%

ST;AT48G ,. Increase revenues and reduce costs b# establishing repeat and corporate customers% Tactic. 5ustomer satis action program%

Program. +ocus ATI&s e orts on customi-ation o adventure travel and utili-ation o its core competencies% ATI would rather recommend that a potential customer purchase elsewhere than provide a trip outside o its e'pertise% Program. Post purchase and post trip ollow7up% ;esearch indicates that the communication between the irm and the customer a ter the sale positivel# in luences repeat purchase%

Tactic. 5orporate account ac6uisition%

Program. The corporate sales program will depend upon speciali-ed literature and personal promotion% 5orporate accounts generate recurring revenue and will help diversi # ATI&s sources o income% Program. 5orporate giveawa# promotion% Trips will be awarded as pri-es and will be promoted via local radio%

!.5

ar$eting

ix

ATI will emplo# a wide range o advertising communications and promotion to achieve its marketing goals% ;esearch on the demographics o ATI&s target market suggest that the most e ective communications will come through advertising in several specialt# publications and via local radio% In addition" direct interaction or promotion at health clubs" shopping malls" sporting events" etc% will be part o ATI&s marketing mi'%

!.5.1 Services and Service

ar$eting

ATI will sell standard travel agenc# goods and services including air are and travel packages% Additional services will include assistance with passports" providing access to top7o 7the7line e6uipment and supplies" and a superior o ering that includes access to better than average terrain and activities" accommodations" and entertainment% The value added o ATI&s o ering is its knowledge and e'pertise" competitive rates" and specialt# ocus on adventure travel" which will translate into increased assurance and satis action or the customer% ATI&s decision to ocus on adventure travel was made because economic indicators suggest that an increased demand or adventure travel services e'ists" the $oodville area does not have a true adventure travel specialist" and members o the ATI team are e'perienced and enthusiastic about adventure travel activities% It is hoped that this enthusiasm will be communicated to the customer" and ATI&s e'perience will translate into satis action and repeat business%

!.5.2 Pricing 2uch o ATI&s pricing is determined b# market standards% ATI will attempt to maintain margins o 1*) on all airline travel% 2argins on all other products and services var# depending upon the provider but are e'pected to average ,*)% ATI will make ever# e ort to maintain a competitive pricing polic#% @owever" as ATI builds its reputation as the premier provider o adventure travel" it e'pects to earn the abilit# to charge a premium or its services%

!.5.! Promotion 3uring ATI&s irst #ear o operation" it will hold a grand opening and will organi-e and sponsor several athletic events% 4vents will include" among others" an o 7road triathlon" 1*k race and 1k un run" and a mountain7bike race% ATI will provide various travel packages and other items as pri-es% All ATI emplo#ees belong to local athletic clubs and will" through interaction with other members" promote ATI&s services% 3uring the grand opening and other events" ATI will provide literature with in ormation about trips and activities% !egotiations with area health clubs have begun and additional promotion will likel# occur through these strategic alliances% Specialt# rather than large national publications will serve as media vehicles or ATI advertising% Bocal radio stations will also be used% Personal selling will also occur" though phone solicitation will be limited% ATI plans to occasionall# station sales personnel in locations around $oodville"

such as shopping malls% ATI&s goal is to develop personal amiliarit# between its emplo#ees and the communit#%

!.6

ar$eting /esearc*

<ngoing industr# anal#sis is conducted b# several organi-ations" including the D%S% 3epartment o 5ommerce" and is available or sale% ;esearch on the travel and tourism industr# will be purchased as necessar#% 3emographics and spending patterns o adventure travelers have been secured and used to ormulate communications strateg#% ATI will conduct customer surve#s when a speci ic research problem is identi ied% ATI subscribes to several industr# publications and will attend trade shows to sta# abreast o relevant issues%

Financials, Budgets, and Forecasts

,.# +inancials7 Budgets7 and +orecasts ATI&s marketing budget or #ear one o operations is taken rom the start7up investment and is e6uivalent to appro'imatel# 0) o anticipated irst7#ear revenues% The marketing budget will be evaluated 6uarterl#" and at the end o #ear one" ad>ustments will be made to advertising schedules" media vehicles" e ective re6uenc#" etc% as necessar#% The ollowing issues are relevant to ATI&s marketing e orts.

As a start7up" ATI has no baseline b# which it can determine the e ects o its marketing e orts on sales% Gear two marketing activities will bene it rom the inancial results o #ear one operations% The marketing budget has been established based on anticipated revenues% ATI plans to emplo# the use o more sophisticated budgeting methods as a baseline is established% 2uch o ATI&s marketing e orts will involve personal interaction with customers in the $oodville area% ATI must attempt to conserve resources when possible" especiall# in the earl# stages o operation% Sweat e6uit# in marketing and other activities will be critical to ATI&s success%

,.1 Brea$8even Analysis ATI&s break7even anal#sis" including monthl# sales break7even points" are located in the ollowing table% :reak7even calculations assume a ,*) gross margin% ATI plans to improve its margin b# #ear three or our% The improved margin will come as the result o economies o scale" strategic alliances" and ATI&s position as a premier service provider% ATI will be able to raise prices without a ecting demand% +i'ed costs ma# increase slightl# over the ne't two #ears%

Brea$8even Analysis

Brea$8even Analysis Brea$8even Analysis

ont*ly /evenue Brea$8even

/1"1*1

Assum)tions9 Average Percent :ariable %ost Estimated ont*ly +ixed %ost 9*) /1"1**

,.2 Sales +orecast 3etailed pro>ections are located in the sales orecast table% ATI e'pects sales to be slow in the irst" and possibl# second 6uarter o operation% Sales growth is estimated at 1*) annuall# through #ear three%

Sales

ont*ly

Sales +orecast Sales +orecast +G ,**, Sales 'oodville &ational ar$et ;Individual< ar$et /(,E"091 /(,"E09 /(E*"(1= /=9,",(1 /E*"109 /(1,"91= /,19"E11 /9E"*=, /=11"E9= /,9("0,0 /1*0"E=1 /=91"=01 /=1="*99 /11E"(*9 /(=*"(9E +G ,**= +G ,**( +G ,**1 +G ,**0

Total Sales

(irect %ost o2 Sales 'oodville &ational ar$et ;Individual< ar$et

+G ,**, /=(,"1(9 /=(",1( /=E0"=0,

+G ,**= /=*1"9E( /11"E(9 /=1E"E,,

+G ,**( /199",=9 /E("E11 /,E="91=

+G ,**1 /,19"10, /9,"190 /=*1"=(9

+G ,**0 /,(1"*E9 /9*"(*1 /==1"(9=

Subtotal (irect %ost o2 Sales ,.2.1 Sales by anager

ATI anticipates that the ma>orit# o revenues" E179*) will come rom individual customers in the $oodville area% This is especiall# true in the irst two #ears o operation% The remainder o revenues will come rom corporate clients and national customers who purchase via the Internet% :# #ear three" ATI hopes to capture more sales rom corporate and national customers" thus reducing its reliance on the $oodville area% Preliminar# goals or #ear three are.

$oodville customers. (*)% 5orporate customers. =*)% !ational 5ustomers. 11)% Internet. 11)%

Sales Brea$do.n by

anager

ont*ly

Sales Brea$do.n by Sales by9 anager

anager +G ,**, +G ,**= +G ,**( +G ,**1 +G ,**0

Sales =ordan Barnes S*ea (elaney Ot*er Total Average ,.! Ex)ense +orecast The marketing budget is between 1) to 0) o revenues% ATI&s marketing director will assume responsibilit# or ever#thing e'cept the website development budget% All ATI sta are salaried" so labor hours" other than those included in the directors salar#" are not included in the budget% The# will" however" pla# a ke# role in man# o the planned promotional activities% All members are e'pected to take part in the promotion o ATI% There are no 971 positions% /=,*"E0= /10*"=9= (/1*"09=) /(E*"(1= /110"919 /=1,"9(1 /1E0"(,1 (/E0"((9) /(1,"91= /11*"9=9 /=99"1,E /19("*0= (/,,0"(*E) /=11"E9= /119"19( /(,0"9(* /,1="(E* (/,(9"*(9) /=91"=01 /1=*"(1( /(09"0== /,=("91E (/,E="91=) /(=*"(9E /1(="(99

ont*ly Ex)ense Budget

ar$eting Ex)ense Budget ar$eting Ex)ense Budget +G ,**, Print and /adio Advertising Personal Selling and Promotion Ot*er /11"*** /9"1** /1"*** 777777777777 Total Sales and Ex)enses Percent o2 Sales ,.!.1 Ex)ense by anager ar$eting /,9"1** 0%*0) +G ,**= /19"E1* /1*"0,1 /,"1** 777777777777 /=1"9E1 E%*() +G ,**( /,*"0,1 /11"099 /="*** 777777777777 /=1"=1= 9%9=) +G ,**1 /,,"099 /1,"910 /="*** 777777777777 /=9"1(( 9%91) +G ,**0 /,E",,1 /11"(,9 /="*** 777777777777 /(1"01= 1*%0*)

The ollowing chart details ATI&s primar# marketing% Cordan :arnes is responsible or the success o the programs and the proper management o the budget% Gear two e'penditures could easil# double i ATI generates su icient revenues% As e orts to communicate with the national and global markets increase" ATI e'pects to use several national publications or advertising% 3oing so will be costl#%

Ex)ense Brea$do.n by

anager

ont*ly

Ex)ense Brea$do.n by Ex)enses by anager

anager +G ,**, +G ,**= +G ,**( +G ,**1 +G ,**0

Ex)enses =. Barnes S. (elaney Ot*er Total Average /,="(90 /1"**( /* /,9"1** /9"1** /,1"9(0 /,"1** /="1,9 /=1"9E1 /1*"0,1 /,9"(=* /,"1** /("=9, /=1"=1= /11"EE1 /=1",E= /,"1** /("EE1 /=9"1(( /1,"9(9 /=("(** /,"1** /9"E1, /(1"01= /11",19

,., >in$ing Sales and Ex)enses to Strategy ATI&s marketing e orts have been designed to improve sales% ATI&s director o marketing will be responsible or tracking the various programs% I measurable results are not reali-ed" changes will be made to the marketing mi'% <ther actors" such as economic recession" sales below estimates" high costs associated with the use o certain media" and others ma# in luence ATI&s marketing budget and mi'%

Sales vs. Ex)enses

ont*ly

,.3 %ontribution

argin

ATI anticipates that contribution margin will improve beginning in #ear three% :# then" ATI will have developed a better mi'ture o revenue sources" strategic alliances" and brand e6uit#% 5orporate accounts will bring higher contribution margins" as will other group trips% Suppliers tend to give price breaks i the agenc# can book larger groups% In addition" ATI plans to charge as much as 1) over the industr# standard b# the end o #ear three" as it will be recogni-ed as an industr# leader%

%ontribution

argin

ont*ly

%ontribution

argin +G ,**, +G ,**= /(1,"91= /=1E"E,, /* 777777777777 /=1E"E,, +G ,**( /=11"E9= /,E="91= /* 777777777777 /,E="91= +G ,**1 /=91"=01 /=*1"=(9 /* 777777777777 /=*1"=(9 +G ,**0 /(=*"(9E /==1"(9= /* 777777777777 /==1"(9=

Sales (irect %ost o2 Sales Ot*er :ariable %osts o2 Sales

/(E*"(1= /=E0"=0, /* 777777777777

Total %ost o2 Sales

/=E0"=0,

-ross -ross

argin argin ?

/9("*91 ,*%**)

/91"*91 ,1%**)

/91"9=* ,=%**)

/9*"*1= ,=%**)

/99"*1( ,=%**)

ar$eting Ex)ense Budget Print and /adio Advertising Personal Selling and Promotion Ot*er

+G ,**, /11"*** /9"1** /1"*** 777777777777

+G ,**= /19"E1* /1*"0,1 /,"1** 777777777777 /=1"9E1 E%*()

+G ,**( /,*"0,1 /11"099 /="*** 777777777777 /=1"=1= 9%9=)

+G ,**1 /,,"099 /1,"910 /="*** 777777777777 /=9"1(( 9%91)

+G ,**0 /,E",,1 /11"(,9 /="*** 777777777777 /(1"01= 1*%0*)

Total Sales and Ex)enses Percent o2 Sales

ar$eting

/,9"1** 0%*0)

%ontribution %ontribution

argin argin @ Sales

/01"191 1=%9()

/0=",10 1=%90)

/(0"119 1=%*E)

/11"(09 1=%11)

/1="=0, 1,%(*)

Controls
3.# %ontrols ATI&s marketing e orts will be reviewed 6uarterl#% Hariance between sales goals or the irst #ear o operations and revenues will be ATI&s onl# real source o comparison% ATI will seek customer eedback on marketing e orts and ma# conduct surve#s or ocus groups to test ad e ectiveness%

3.1 Im)lementation ilestones ATI&s grand opening event will take place in the irst 6uarter% This will be a combined e ort with a local rock g#m" one o ATI&s strategic alliances% The event will be hosted b# a local radio station and will include a pri-e giveawa# o an adventure travel package% ATI will begin its corporate account marketing in the irst 6uarter and hopes to secure at least one corporate account during that time% ATI&s website should be operational b# the middle o the second 6uarter o operation% The website will be capable o online transactions with secure site protections% ATI banners will be placed at several $orld $ide $eb locations% Tracking o ad e'posure will begin in the irst month o operation% ATI has a designated 9** number that is onl# used in advertising%

ilestones ilestones

Advertising edia %am)aign Strategic Alliance (evelo)ment Total Advertising Budget P/ -rand O)ening Promotion +irst Trade S*o. Total P/ Budget (irect Ot*er Ot*er Total (irect ar$eting Budget ar$eting

Start 3ate 9/1/1999 9/1/1999

4nd 3ate 1/1/,*** =/1/,***

:udget /11"*** /,"*** /1E"***

2anager C% :arnes S% 3elane#

3epartment 2arketing 2arketing

Start 3ate 1*/1/1999 (/1,/,***

4nd 3ate (/1/,*** (/11/,***

:udget /9** /1"*** /1"9**

2anager Sta S% 3elane# ? S% Ta#lor

3epartment 2arketing 2arketing

Start 3ate

4nd 3ate

:udget /* /* /*

2anager

3epartment

'eb (evelo)ment 'eb Site %om)letion Ot*er Total 'eb (evelo)ment Budget Ot*er

Start 3ate 9/1/1999

4nd 3ate 1,/1/1999

:udget /1"*** /* /1"***

2anager

3epartment

S% 3elane# 2anagement

Start 3ate

4nd 3ate

:udget

2anager

3epartment

%or)orate Account Program %ustomer Satis2action Program Total Ot*er Budget Totals 3.2 ar$eting OrganiAation

9/1/1999 9/1/1999

E/1/,*** 1/1/,***

/1"*** /1"*** /,"*** /,1"9**

P% 2clellan S% Ta#lor

Accounting 5ustomer Service

2arketing 3irector Cordan :arnes will be responsible or the planning and implementation o ATI&s Advertising" 5ommunications" and Promotion activities% 2r% :arnes will work under the supervision o Shea 3elane# and will instruct all ATI members in their roles in the marketing activities% ATI ma# use marketing consultants rom a local irm to help with strateg#%

3.! %ontingency Planning These are the issues that will most likel# call or changes in ATI&s operations% The threats and the manner with which the# will be dealt are discussed. I!T4;!4T A!3 P;I54 5<2P4TITI<!. $hen the airlines were deregulated" price competition increased% +urther" the Internet has provided a sales medium or consolidators who compete on price" and has also given consumers the abilit# to plan and arrange trips or themselves% Thus the traditional agenc# aces greater competition% ATI plans to compete with other irms on the Internet b# having its own website on which to conduct communications and sales% Price competition is a problem in an# industr#% ATI will not compete on price" mainl# because it cannot win doing so% ATI will continue to communicate the bene its o its o ering% It will attempt to remain competitivel# priced but will not de end its price structure% B<5AB 5<2P4TITI<! (4FISTI!8 A!3 P<T4!TIAB). There are no agencies in the $oodville area that speciali-e solel# in adventure travel% @owever" an# one o the appro'imatel# =* agencies can book an adventure trip% 2oreover" additional adventure travel specialists ma# ollow ATI&s lead% 5ompetition is alread# present% It is likel# that additional agencies ma# begin to present themselves as adventure travel specialists% It is also possible that new agencies will enter the $oodville market with a similar o ering% ATI will attempt to establish itsel as a market leader and maintain that position i new competitors emerge% Additional sa eguards include ongoing anal#sis o additional segments o the travel market in which ATI might success ull# participate% In addition" opportunities or vertical and hori-ontal integration will be e'amined% 45<!<2I5 3<$!TD;!. The strong domestic econom# has been good or the travel and tourism industr#% 5ontinued growth is anticipated% @owever" un oreseen or unanticipated economic recession would reduce disposable income and threaten ATI&s sales% In the event o an economic downturn" ATI will continue to promote and likel# e'pand its o ering% ATI alread# operates on a skeleton sta " and aside rom small budget cuts" there is little that can be done inanciall#%