Executive Summary
These two business proposals bring the concept of corporate social responsibility and technological utilization in the rapidly growing global travel and leisure market. It sees a bright prospect in setting up an 1.) online travel agency, specifically in Victoria, Australia or New South Wales and 2.) eco lodge site in any part of Australia.
For the first business proposal, it caters to a greater portion of major businesses and corporations in New South Wales or Victoria, two Australian states that have the biggest number of travel agencies and travelers. It also has the head offices of a large number of international airlines.
The second poroposal aims to provide travelers with an accommodation service that integrates the attributes and values of the Australian state or locality. It also hopes to educate the global travelers about the life and living of the local people and the environment.
1. Proposed Business in Creating an Online Travel Agency
According to Travel Agency Services Market Research Report (2012), travel agencies have undergone systematic technical change that brought structural changes and consolidation in the last five years. On the side of demand, as corporate travel increases, its revenue estimate is forecasted at 1.5% to $3.16 billion in 2012. (2012, p. 1) The travel for leisure aspect of the industry is also said to have increased in the same year. As such, online travel agency has a good prospect and it significantly competes with the the traditional bricks-and-mortar travel agencies shops. At present, online travel sales are now a significant and growing portion of total sales in the travel and leisure industry, one of the largest industries in the world. (Gebhart, 2011, p. 1)
Hence, there is a positive prospect in setting up an online travel agency, specifically in Victoria, Australia or New South Wales, states which have a greater portion of major businesses and corporations. These two Australian states have the biggest number of travel agencies since its residents consistently travel overseas, especially to its Asian neighbor. Also, New South Wales is home to the head offices of a large number of international airlines. (2012, p. 1)
Aside from the corporate clients, the online travel agency is also geared to attract young travelers, who often travel as “backpackers.” This is because these people are the ones who buy online.
According to Gebhart (2011), there are about 3,000 retail travel shops in Australia. It has a very strong retail presence. These small agencies are often small, has a turnover below $3 million, owned by a husband and wife or two business partners, with consultants ranging from three to four persons. (Gebhart, 2011, p. 1)
Hence, this proposed online travel agency needs to tailor its services to the local travel market. It has a unique knowledge of what the customers want and the way they buy (buying patterns) to rapidly build its scale and compete with foreign brands such as Expedia and Travelocity. (Thompson, 2008, p. 234) To capture its corporate clients, the agency needs to create a strong and wide database of the hotels located throughout the country and the flight information of all the major international airlines of the world (which New South Wales already houses). It needs to set up a call center of 2,000 representatives who could use its proprietary database to service travel inquiries for up to 50,000 to 70,000 a day. It must also build a loyalty program that rewards corporate personnel who arranges travels with the agency.
The main services this agency will offer are the following:
- Competitively priced airfares
- Various types of accommodation
- Ground transports
- Travel insurance
- Visa assistance
It is estimated that this online travel agency needs around $50,000 to set up. It should cover the cost of computers, phones, printing facilities and advertising. Advertising is the major cost for a new travel agency.In an anual operations, this online travel agency can expect to spend $5,000 in advertising but this depends on how the agency will spend its advertising budget. The cost of renting a small office in the suburbs (since most fo the transactions are online) ranges from $15,000 to $25,000 per annum. The cost can double if the agency decides to transfer to the city.
The source of these start up costs can be derived by the principal through his own personal infusion of $20,000. The rest is expected to be gatehred from various stakeholders and venture capitalists who find the business idea lucrative. In terms of turnover, the online travel agency can expect to bring in several million dollars or more within the first five years. It just have to invest in ample advertising, staff and office space.
Specifically, the agency intends to accomplish the following:
- Sales of $160,000 by year two.
- Maintain a 10% margins on all of its airline travel.
- Achieve 75% of sales from the Internet.
- Establish strategic networks an dlinks with local and internaitonal service providers.
After a five year operations, the online travel agency will gear up its resources to open its business for franchising. Franchising will give it a new oportunity in terms of purchasing power. Because most Australian travel customers go by branding, it will allow the agency to provide a justification to increase its pricing as well as it is a commercial tool to be rewarded by overrides.
2. Proposed Business in Ecotourism
According to Boley, Nickerson, & Bosak (2011), adventure travelers often look for a different trip in all parts of the world. Today’s global consciousness about environmental protection and sustainable business, this love of the outdoors is transformed into eco tourism. Ecotourism, which is also referred to as “sustainable tourism,” covers a range of travel ideas. Traditionally, it means travel within natural surroundings. (Garín-Muñoz & Pérez-Amaral, 2011, p. 1,071) Eco travelers appreciate the learning process of the local culture and wilderness adventures as well as other people’s way of life. A stake in these kinds of tours is that the travelers will share the love for the natural environment to the modern and industrialized parts of the world.
This proposal is for an eco lodge site in any part of Australia. It aims to provide travelers with an accommodation service that integrates the attributes and values of the Australian state or locality. It also hopes to educate the global travelers about the life and living of the local people and the environment. (IFC, 2004, p. 5)
The prices will be in the moderate range and we expect to accommodate 15 percent of the island's international visitors and 25 percent of the visitors who are here on government business.
Travelers will be attracted by:
- A mid ranged price;
- Amenities such as telephone, fax, television, air conditioning (optional), and full-time lodge personel
- Environmental and cultural setting
- Word-of-mouth advertising from international travelers and customers; and,
- The lodge’s quiet, peaceful location
This ecolodge will spend 10-15% of sales on its marketing and advertising during its inital five years of oeprations. Its strategies include an effective marketing program which is focused on keeping the travelers happy, ensuring repeat business, and expanding its services to attract other types of travelers.
It shall also handle both customized and traditional ecotourism tours and atractions for its dwellers. The company is to be registered as a corporation. It shall promote an informal horizontal management structure wherein there is a high level of collaboration between management and staff. (Hamel & Valikangas, 2003, p. 53) The eco lodge will develop and train very efficient service staff and eco tour guides.
The company will be built in partnership with the local Australian community, which will own 100 percent of the eco lodge’s land and infrastructure. The other sources of funding for the development of the eco lodge are the Australian Agency for International Development (AusAID). In this arrangement, a revenue-sharing agreement will be negotiated. The company will expect the full support of the community and their participation. In return, they will be given 60% of net sales from the lodge until a period of ten years.
During this period, the local community can renegotiate an updated management agreement with the company. They may undertake all the eco lodge’s operations by themselves or enter a new contract with a new management company. (Smith, 2003, p. 63)
The eco-lodge, as experienced by other eco lodges in the world, can expect more than 7,000 visitors a year. The community profits will be reinvested in social service projects such as educational facilities, health services and community training programs. (Carroll, 2001, p. 367)
The company will integrate various social and environmental programs in its operations. These include the following: establishing of an eco-tourism center in the business vicinity; support of the research centers within the community (estimated to cost around $10,000 a year); making a transparent management and profit sharing agreement with the local community of the business location.
A special feature of this business idea is that it enjoins the local community in the business’ decision making processes. Both the company and the community (as representative by its five Eco Tourism members) will decide on the following business aspects: systems of work at the eco-lodge; infrastructure, policies, marketing strategies/programs, and itinerary development.
The local community is greatly aware of the company’s business activities and efforts. There is a sense of joint ownership in this venture. Also, it enables the Eco Tourism Committee to take an active approach to decision-making. They also take part in managing the staff, in recruiting staff, and in solving staff problems and applying specific itinerary improvements.
The best thing about this business is that it helps develop the community in various aspects of development, especially in the areas of education, handicraft, cultural preservation, agriculture and urbanization programs. All these projects will eventually produce social and economic benefits aside from those which are generated by the eco lodge business. The community is also served well by being part of the manpower resources of the eco lodge. They are trained to occupy all lodge staff positions. Another extra service is that the travelers also buy the community products and the eco lodge purchases these goods from them. Overall, the local community’s cultural resources are slowly being incorporated into the eco lodge’s business, most especially in its tour programs.
References:
Boley, B. Bynum, Norma Polovitz Nickerson, & Keith Bosak, September 2011. Measuring Geotourism: Developing and Testing the Geotraveler Tendency Scale (GTS). Journal of Travel Research, 50, pp. 567-578.
Carroll, A., April 2001. Models of Management Morality for the New Millenium. Business Ethics Quarterly, 11(2), pp. 367-369.
Garín-Muñoz, Teresa; Pérez-Amaral, Teodosio, October 2011. Internet usage for travel and tourism: the case of Spain. Tourism Economics, 17(5), pp. 1071-1085.
Gebhart, Fred, February 12, 2011. Key Challenge for Aussie Agents: Charging for Knowledge. Travel Market Report. Available at: < http://www.travelmarketreport.com/content/publiccontent.aspx?PageID=1369&articleid=5141&LP=1> [Accessed 07 February 2012].
Hamel, G. & Liisa Valikangas, September 2003. The Quest fro Resilence. Harvard Business Review, 81(9), pp. 52-63.
IBIS World, 2012. Travel Agency Services Market Research Report. [online] IBIS World. Available at: <http://www.ibisworld.com.au/industry/default.aspx?indid=490> [Accessed 07 February 2012].
IFC, 2004. Ecolodges: Exploring Opportunities for Sustainable Business. [online] International Finance Corporation. Available at: < http://www.scribd.com/doc/16729055/Ecolodges-Exploring-Opportunities-for-Sustainable-Business-February-2005> [Accessed 07 February 2012].
Smith, N. Craig, Summer 2003. Corporate Responsibility: Whether and How. California Management Review, 45(4), pp. 63.
Thompson, A., Strickland, A., & Gamble, J., 2008. Crafting and Executing Strategy, 17th ed. New York: Mc Graw Hill.
