Continental Travel Business Plan – Harvard Branch

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Executive Summary

The Harvard Branch of Continental Travel is located 30kms east of the CBD on the busy main shopping strip in Harvard and has been operating for only 6 weeks and is still very new to the area. The Branch is open from 9:00am to 5:30 pm each day, and closes at 6pm on Fridays and it is not open on the weekend. The customer demographics represented in the suburb, are from low socio-economic through to high income, with the two key demographic groups that characterize the area, young families with toddlers and primary school aged children also older families with adolescent children in their mid teens to early twenties. There have been a number of new facilities recently built catering for the needs of these two groups and for the growing population of Harvard which include a new child care center for the younger families, a new retirement village for the aging population and a new multi level shopping center at Harvard Park consisting of 500 retail outlets.

The predominant ethnic profile of Harvard is Anglo-Australian with a significant percentage of first, second and third generation Greek and Italian-Australians and more recent, the profile has expanded to include an increasing proportion of new immigrants of Chinese and Vietnamese origin.

The Harvard Branch had been staffed by personnel from the neighboring branches with no previous working relationship consisting of long-serving employees with an average 7 years experience and of short-term staff. All the staff have Anglo-Australian background except for one of the Part Time Travel Associates who is of Greek origin. Although the attrition rate within Continental’s Branches is within the average range, there has been a slight increase in turnover over the last 2 months, in particular with the more junior members of the team. Recent satisfaction surveys indicate a 65% staff satisfaction level and 54% staff advocacy.

At present, Harvard does not have a customer base although some of the Senior Travel Consultants have brought a number of their clients over to the new branch with them; this is still insufficient to sustain their own targets, let alone the performance of the entire branch. Most travel inquiries received to date all appear to be interested in domestic holidays, with some of the inquiries made for international travel destinations.

1. Situation Analysis

Australians have been known to be avid travelers and it is not uncommon to find that most Australians have lived overseas at some point in their lives, with the majority traveling overseas for a vacation at least once every 3 years with those within the 20-35 age category undertaken international travel at least every 1-2 years.

The terrorist attacks on September 11,2001, caused significant turmoil in the travel industry especially on international travel and within Australia the effect of this promoted an increase in domestic tourism. The sales of travel insurance also increased whereby Continental made a significant loss in the 6 months after 9/11across all its operations, with a 20% downturn in sales.

The collapse of Ansett Airlines impacted greatly on the domestic tourist market as it reduced the capacity of the domestic airline industry, which caused a loss in confidence in the domestic airlines. The war in Afghanistan and the Bali Bombing, the 2004 Tsunami in Asia brought about further decline in international travel, particularly to the Asian region being one of the premier tourist destinations for Australian travelers. The confidence of Australians to travel abroad is expected to make a very slow recovery given these events making it very difficult for travel agencies to meet their sales targets and still promote growth.

The staff profile within Harvard Branch needs strengthening, as the teams have not worked together previously. The staffing mix needs to reflect the culture and demographic of Harvard where most of the population are of Italian, Greek, Chinese and Vietnamese origin. At the present all staff is of Anglo-Australian, except for one of the Part Time Travel Associates who is of Greek origin. Although the attrition rate within Continental’s Branches is within the average range, there has been a slight increase in turnover over the last 2 months, particularly with the more junior members of the team. Recent satisfaction surveys indicate a 65% staff satisfaction level and 54% staff advocacy.

2. Marketing Summary

Typically the travel and tourism market is normally separated into two main categories, business and leisure travel. Each would normally contribute about 45% to total revenues. The remainder is generated from combined business/leisure trips. The market is further separated into domestic and international travel. Domestic travel accounts for approximately 70% of industry revenues. Business travel can be divided into two categories, the medium to large corporate account, and the small independent businessman. Leisure travelers are classified according to the types of trips they take, income, or age. The four primary leisure travel groups are:

1. Adventure, Special Interest, R&R, Honeymoons & Sightseeing Trips.

2. High-Income Travelers.

3. Budget-Conscious Travelers.

4. Families, Students & Seniors.

3. Market Demographics

The Harvard Branch of Continental Travel is located 30kms east of the CBD. While a wide range of customer demographics are represented in the suburb, from low socio-economic through to high income, two key demographic groups characterize the area: young families with toddlers and primary school aged children, and “empty nesters” – older families with adolescent children in their mid teens to early twenties. There have recently been a number of facilities built, catering for the needs of these two groups. For younger families, a new childcare centre, and for the ageing population a new retirement village and nursing home have been established. A multi-level shopping centre, Harvard Park, has also just opened, with over 500 stores now operating.

The predominant ethnic profile of Harvard is Anglo-Australian with a significant percentage of first, second and third generation Greek and Italian-Australians. More recently, the profile has expanded to include an increasing proportion of new immigrants of Chinese and Vietnamese origin.

Harvard Branch is located on the busy main shopping strip in Harvard and is Continental’s newest branch in the State, having opened just six weeks ago. As such, it does not have an existing client base. The Branch is open from 9:00am to 5:30 pm each day, and closes at 6pm on Fridays. It is not open on the weekend.

The staff profile within the Harvard Branch appears divergent, but is not atypical. Personnel from the neighboring branches have staffed the Branch and as such, the teams have not worked together previously. There are a high proportion of long-serving employees, with an average 7-year tenure, together with an equally significant percentage of short-term staff. All staff are Anglo-Australian except for one of the Part Time Travel Associates who is of Greek origin. The attrition rate within Continental’s Branches is within the average range, although there has been a slight increase in turnover over the last 2 months, particularly with the more junior members of the team. Recent satisfaction surveys indicate a 65% staff satisfaction level and 54% staff advocacy.

4. Market Needs

Domestic and International Packages are a specialized product, and first-hand knowledge of these packages is necessary in order to effectively promote and sell them. Many potential customers are unsure of the location they wish to reach. Part of the value associated with travel agencies is the knowledge they possess about destinations. Customers look to the agency to provide them with sound advice for a competitive price. Continental Travel Group at Harvard is confident in its ability to do so. Continental Travel Group at Harvard can save the customer time and money, and help to ensure that they are satisfied with their vacation.

5. Market Trends

One notable trend in the travel industry is increased deregulation. Deregulation has increased competition and the need for differentiation. In many cases, the prices of airfare and other travel-related services have dropped. Additional trends include caps on agency commissions by many of the larger airlines, increases in adventure travel, and reduction of profit margins.

6. Market Growth

The travel industry is growing. Reasons for this growth include a healthy domestic economy and the increased value of the Aussie has made travel more attractive for Australian residents. The healthy economy has increased business, which in turn will see a boosted domestic business travel for 2007.

7. SWOT Analysis

In the following four sections are the most relevant issues to Continental Travel Group at Harvard’s and for its successful operation. Harvard’s strengths include its management, experienced staff, marketing experience, and targeted focus. Harvard will capitalize on these and other strengths, to take advantage of opportunities and manage threats. Firm weaknesses are primarily those inherent in a start-up venture.

7.1. STRENGHTS

· International network of more than 1200 stores

· Workforce of over 6500 employees

· Annual T/O of $3.5 Billion

· Expanding at rate of more than 20% a year

· Recognised as the fastest growing business of its kind in the world

· High proportion of long-serving employees average of 7 year tenure

· MANAGEMENT: Harvard’s manager has a successful record in this industry. His experience and the network of valuable connections he has developed will contribute greatly to Harvard’s success.

· LOCATION: Harvard branch is ideally located.

· EXPERIENCED STAFF: The Harvard team is experienced in the travel business. Most senior members have over five years experience.

7.2 WEAKNESSES

· Lack of differentiation between offerings of major players resulting in price base competition

· Only one staff of Greek origin when significant percentage of ethnic profile are Greek and Italian

· No Chinese or Vietnamese consultants working at branch

· Still to establish a customer/client base

· Branch is closed on the weekends

· Increase in turnover of Junior members within the Team

· Poor staff satisfaction and advocacy levels

· START-UP STATUS: Harvard is a start-up business in the area.

7.3 OPPORTUNITIES

· Australians have traditionally been considered as avid travellers, vacations taken at least once in every 3 years

· Age group of 20-35 travel internationally at least 1-2 years

· Increase in domestic vocations with increased uncertainty in international travel due to wars, terrorist attacks and natural disasters

· New shopping centre with over 500 stores just opened

· Ethnic population with very high percentage of Greek and Italian- Australians

· Increasing population of new immigrants of Chinese and Vietnamese

· Young families and empty nesters

· Older families with adolescent children in their mid teens to early twenties

· Branch is closed on weekends

· The team has not worked together previously

· Package Tours and Cruises

· Selling insurance products

· Incentives from airlines and major hotels

7.4 THREATS

· Decline in international travel due to wars, terrorist attacks and natural disasters in popular tourist/holiday destinations

· The collapse of local airlines reducing the capacity to service the domestic destinations

· Increase in fuel prices

· Web-based travel sites offering cut price travel deals

· Jetstar and Virgin Blue offering flights and packages at highly competitive rates

· New shopping centre with 500 stores just opened including major competitors such as Jetset and Harvey World including smaller independents

· The aging population in the area

· INTERNET AND PRICE COMPETITION: When the airlines were deregulated, price competition increased. Further, the Internet has provided a sales medium for consolidators who compete on price and has also given consumers the ability to plan and arrange trips for themselves. Thus, the traditional agency faces greater competition.

· ECONOMIC DOWNTURN: The strong domestic economy has been good for the travel and tourism industry. Continued growth is anticipated. However, unforeseen or unanticipated economic recession would reduce disposable income and threaten Harvard’s sales.

8. COMPETITION

Competition in the Travel Industry in Harvard has increased over the past five years in line with the broader environment. This includes the presence of major players such a Harvey World and Jetset, as well as a number of smaller independent competitors who have recently opened in the new Harvard Park Shopping Centre.

Overall, there is a general lack of differentiation between the offerings of the major players and comparative information is readily available to consumers, resulting in price-based competition. This situation has been exacerbated by the extension of web-based travel sites, offering cut-price travel deals, together with the entry of Jetset and Virgin Blue offering flights and package deals at highly competitive rates.

In the travel industry, as in other industries, there are large national chains, small home-based businesses, consolidators on the Internet, etc. Direct national competitors include: Harvey World Travel, Jetset Tours, Virgin Blue, and Other smaller operators

9. SERVICES

Sales are generated through travel bookings the consultants make which include:

· Airline Bookings

· Accommodation bookings

· Car Hire

· Cruises

· Package tours

· Insurance Sales

Profit margins are highest with Package Tours and Cruises, each yielding a 14% profit, with insurance products yielding the highest with a 17% profit margin. Airline and accommodation bookings yield a 2% margin, however the airlines and major hotel chains offer agents incentives such as free trips and accommodation during monthly promotions, should they exceed a predefined number of bookings. Car hire yields the lowest margin of just 1%.

10. KEY TO SUCCESS

· Effectively segment the travel market and target Greek, Italian, Chinese and Vietnamese travelers.

· Successfully position us as travel specialists.

· Communicate the differentiation and quality of our offering through personal interaction and media.

· Develop a repeat-business base of loyal customers.

11. CRITICAL ISSUES

· Market growth projections for the travel industry and for domestic and international travel are accurate.

· National economic conditions, which are favorable to the travel industry, will not experience significant decline in the next five years.

· International conditions will remain favorable for service providers.

· Capability to produce effective, targeted communications that promote the benefits of adventure travel and Harvard’s focus and services.

12. MACROENVIRONMENT

· Due to a good economy, travel and tourism is growing.

· Population segments have different needs and wants. This requires effective target marketing.

· Internet sales threaten the traditional firm, and technological advances require greater knowledge and sophistication in most industries.

· International conditions, which are favorable, greatly affect the industry. Political unrest, military action, and other issues determine availability to many foreign destinations.

13. MARKETING STRATEGY

Continental Travel Group at Harvard believes that the goal of business is to create and keep customers. Its marketing strategy will reflect this goal as it builds its reputation in the Harvard area. Though Continental operates in the travel industry, it provides much more than travels. Continental Travel Group at Harvard offers people the ability to get away and remember how much they love the challenge and excitement of experiencing new holiday and travel ventures providing benefits that offer excitement, ear-to-ear grins, and a whole lot of fun. Harvard will also promote the benefits of its services. These benefits include saving time and money, and confidence in the vacation’s success.

14. MISSION and VALUES

Our Purpose

To bring travel to those who desire it.

Our People

Our company is nothing without our people, that’s why our health, well-being, and our personal and professional development are always of utmost importance.

Customer is King

We know that our customers are savvy and have a choice when it comes to their travel needs. We need to understand and serve their needs better than anyone else, so that we build their trust in us, and their loyalty to us.

15. MARKETING OBJECTIVES

· Customer – Double customer advocacy (i.e. recommending Continental Travel to friends and associates). Currently 33%

· Staff – Achieving 75% staff advocacy (i.e. staff recommending Continental Travel to people as a place to work) Currently 54%

· Become the market leader of Local and International travel in the Harvard area.

16. FINANCIAL OBJECTIVES

· Financial – Building the business from a Zero base, with 20% growth in turnover per annum.

17. TARGET MARKETING

· Harvard will target the following groups:

· Couples and individual travellers: This is the customer group that meets the demographic profile for travellers — ages 25-35, married, with household income greater than $50,000.

· Group travelers: These are groups that belong to local organizations.

· Corporate domestic and International travelers: Harvard will target local businesses in an attempt to secure corporate accounts.

· Harvard plans to focus its initial efforts on the International and Domestic travel market in the greater Harvard area. As Harvard Branch grows, marketing efforts will expand. The major purchasers that fit Continental Travel Group target market are located within the Greek, Italian, Chinese and Vietnamese community.

18. POSITIONING

At present, Harvard does not have a customer base. Some of the Senior Travel Consultants have brought a number of their clients over to the new branch with them; however this is insufficient to sustain their own targets, let alone the performance of the entire branch. Of the travel enquiries received from customers to date, most appear to be interested in domestic holidays, with a fair mix of enquiries to international travel destinations such as Europe in particular.

19. STRATEGY

19.1 Strategy 1: Develop brand recognition through the use of effective advertising, marketing communications and promotion. To build the Branch business from a Zero base with increases of 20% per annum.

Tactic: Develop a marketing mix designed to target the Harvard market.

Program: Print and electronic advertising campaign, using specialty publications and local radio as primary media.

Program: Use strategic alliances to conduct promotions and giveaways.

Tactic: Expand brand recognition to the national market through increased industry participation and presence.

Program: Utilize the networking benefits of industry associations, trade shows, and publications.

Program: Develop and promote Continental Travel Group website. The availability of information and the ability to schedule and purchase online will be beneficial to the customer and Continental Travel Group.

19.2 Strategy 2: Increase revenues and reduce costs by establishing repeat and corporate customers and to concentrate on doubling Customer advocacy to 33% over the next 12 months.

Tactic: Customer satisfaction program.

Program: Focus Harvard’s efforts on customization of domestic and International travel and utilization of its core competencies. Program: Post purchase and post trip follow-up. Research indicates that the communication between the firm and the customer after the sale positively influences repeat purchase.

Tactic: Corporate account acquisition.

Program: The corporate sales program will depend upon specialized literature and personal promotion. Corporate accounts generate recurring revenue and will help diversify Harvard’s sources of income.

Program: Corporate giveaway promotion. Trips will be awarded as prizes and will be promoted via local radio.

19.3 Strategy 3: Develop a strong cohesive and proficient team at the same time creating a workplace with high retention rate and equally high levels of job satisfaction and staff advocacy to 75%. Creating a high performance team culture and motivating and supporting the branch team to proactively grow the business and outperform its targets. Staff – Achieving 75% staff advocacy (i.e. staff recommending Continental Travel to people as a place to work) Currently 54%

Tactic: Conducting training and development activities to up skill staff Multi skill all existing staff to cover all areas of Travel and Bookings, OH&S, Company Policies, Standards and Procedures.

Program: Utilise all available training resources from all participating partners including Airline and Hotels, as well as any internal training facilities and resources within Continental Travel Group.

Tactic: Develop Career paths for Senior Consultants and Junior Travel Associates

Program: Provide Language courses for the development of dealing with people of Italian, Greek, Chinese and Vietnamese origin. Provide career progression to those that excel in what they achieve not only on seniority. Open avenues for high achievers into the corporate accounts portfolio and group bookings.

Tactic: Fast Track current demographic services

Program: Look at hiring potential candidates as part time Senior Consultants and Junior Travel Associates that already are multilingual.

20. MARKETING MIX

Continental Travel Group at Harvard will employ a wide range of advertising communications and promotion to achieve its marketing goals. Research on the demographics of Harvard’s target market suggests that the most effective communications will come through advertising in several specialty publications and via local radio. In addition, direct interaction or promotion at local clubs, shopping malls, local sporting events, etc. will be part of Harvard’s marketing mix.

21. SERVICES AND SERVICE MARKETING

Harvard will sell standard travel agency goods and services including airfare and travel packages. Additional services will include assistance with passports, providing access to top-of-the-line equipment and supplies, and a superior offering that includes access to better than average travel offers, accommodations, and entertainment. The value added of Harvard’s offering is its knowledge and expertise, competitive rates, and specialty focus on International and Domestic travel, which will translate into increased assurance and satisfaction for the customer. Harvard’s decision to focus on International and Domestic travel was made because economic indicators suggest that an increased demand for this service exists and members of the Harvard team are an experienced and enthusiastic team. It is hoped that this enthusiasm will be communicated to the customer, and Harvard’s experience will translate into satisfaction and repeat business.

22. PRICING

Much of Continental Travel pricing is determined by market standards. Harvard Branch will attempt to maintain margins of 20% on all airline travel. Margins on all other products and services vary depending upon the provider but are expected to average 20%. Harvard will make every effort to maintain a competitive pricing policy. However, as Harvard builds its reputation as the premier provider of International and Domestic travel, it expects to increase revenues with increased business.

23. PROMOTIONS

During Harvard’s Continental Travel Group first year of operation, it will hold a grand opening and will organize and sponsor several local events. Events will include, among others, school sports, fun run, and any other community functions. Harvard Continental Travel Group will provide various travel packages and other items as prizes. All of Harvard Continental Travel Group employees belong to local clubs and will, through interaction with other members, promote Harvard’s services. During the grand opening and other events, Harvard Continental Travel Group will provide literature with information about trips and travel packages, resort specials. Negotiations with local clubs will commence and additional promotion will likely occur through these strategic alliances. Specialty rather than large national publications will serve as media vehicles for Harvard’s advertising. Local radio stations will also be used. Personal selling will also occur, though phone solicitation will be limited. Harvard Continental Travel Group plans to occasionally station sales personnel in locations around Harvard, such as the new shopping centre. Continental Travel’s at Harvard goal is to develop personal familiarity between its employees and the community.

24. MARKET RESEARCH

Research on the travel and tourism industry will be purchased as necessary. Demographics and spending patterns of travelers will be secured and used to formulate communications strategy. Harvard Continental Travel Group will conduct customer surveys when a specific research problem is identified. Harvard Continental Travel Group subscribes to several industry publications and will attend trade shows to stay abreast of relevant issues.

25. FINANCIALS, BUDGETS AND FORECASTS

Profit margins are highest with Package Tours and Cruises, each yielding a 14% profit, with insurance products yielding the highest with a 17% profit margin. Airline and accommodation bookings yield a 2% margin, however the airlines and major hotel chains offer agents incentives such as free trips and accommodation during monthly promotions, should they exceed a predefined number of bookings. Car hire yields the lowest margin of just 1%.

The marketing budget will be evaluated quarterly, and at the end of year one, adjustments will be made to advertising schedules, media vehicles, effective frequency, etc. as necessary.

The following issues are relevant to Harvard’s marketing efforts:

· As a start-up, Harvard Continental Travel Group has no baseline by which it can determine the effects of its marketing efforts on sales. Year two marketing activities will benefit from the financial results of year one operation.

·· The marketing budget has been established based on anticipated revenues. Harvard Continental Travel Group plans to employ the use of more sophisticated budgeting methods as a baseline is established.

· Much of Harvard’s Continental Travel Group marketing efforts will involve personal interaction with customers in the Harvard area. Harvard Continental Travel Group must attempt to conserve resources when possible, especially in the early stages of operation. Local community and business marketing and other activities will be critical to Harvard’s success.

26. SALES FORECASTS

Continental Travel Group at Harvard expects sales to be slow in the first and possibly second quarter of operation. Sales growth is estimated at 20% annually.

Continental Travel Group at Harvard anticipates that the majority of revenues, 75-80% will come from individual customers in the Harvard area in the first two years of operation. The remainder of revenues will come from corporate clients and national customers who purchase via the Internet. By year three, Continental Travel Group at Harvard hopes to capture more sales from corporate and national customers, thus growing it business in the Harvard area.

Preliminary goals for year three are:

· Harvard Local customers: 40%.

· Corporate customers: 30%.

· National Customers: 15%.

· Internet: 15%.

27. EXPENSES BY BRANCH MANAGER

In Year two expenditures could easily double if Continental Travel Group at Harvard generates sufficient revenues. As efforts to communicate with the national and global markets increase, Harvard Branch expects to use several national publications for advertising. Doing so will be costly

Continental Travel Group at Harvard marketing efforts has been designed to improve sales. Harvard’s Branch Manager will be responsible for tracking the various programs. If measurable results are not realized, changes will be made to the marketing mix. Other factors, such as economic recession, sales below estimates, high costs associated with the use of certain media, and others may influence Harvard’s marketing budget and mix.

Continental Travel Group at Harvard anticipates that contribution margin will improve beginning in year three. By then, Harvard Branch will have developed a better mixture of revenue sources, strategic alliances, and brand equity. Corporate accounts will bring higher contribution margins, as will other group trips. Suppliers tend to give price breaks if the agency can book larger groups.

28. CONTROLS

Continental Travel Group at Harvard marketing efforts will be reviewed quarterly. Variance between sales goals for the first year of operations and revenues will be Harvard’s only real source of comparison. Continental Travel Group at Harvard will seek customer feedback on marketing efforts and may conduct surveys or focus groups to test ad effectiveness.

29. IMPLEMENTATION MILESTONE

· Continental Travel Group at Harvard grand opening event will take place in the first quarter. This will be a combined effort with the local Greek and Italian community club, 2 of Harvard Branch strategic alliances. The event will be hosted by a local radio station and will include a prize giveaway of a resort travel package within Australia.

· Continental Travel Group at Harvard will begin its corporate account marketing in the first quarter and hopes to secure at least one corporate account during that time.

· Continental Travel Group at Harvard website should be operational by the middle of the second quarter of operation. The website will be capable of online transactions with secure site protections. Continental Travel Group at Harvard banners will be placed at several Australian Web locations.

· Tracking of ad exposure will begin in the first month of operation. Harvard Branch has a designated 1800 number that is only used in advertising.

30. CONTINGENCY PLANNING

These are the issues that will most likely call for changes in Harvard’s operations. The threats and the manner with which they will be dealt are discussed:

30.1 INTERNET AND PRICE COMPETITION: When the airlines were deregulated, price competition increased. Further, the Internet has provided a sales medium for consolidators who compete on price, and has also given consumers the ability to plan and arrange trips for themselves. Thus the traditional agency faces greater competition. Continental Travel Group at Harvard plans to compete with other firms on the Internet by having its own website on which to conduct communications and sales. Price competition is a problem in any industry. Continental Travel Group at Harvard will not compete on price, mainly because it cannot win doing so. Continental Travel Group at Harvard will continue to communicate the benefits of its offering. It will attempt to remain competitively priced at the same time continue to offer best customer service in the Harvard area.

30.2 LOCAL COMPETITION (EXISTING AND POTENTIAL: There are several agencies in the Harvard area that specialize in both Domestic and International travel. However, we believe that we can provide the service and the right package. Moreover, additional travel specialists may follow Continental Travel Group at Harvard lead. Competition is already present. It is also possible that new agencies will enter the Harvard market with a similar offering. Continental Travel Group at Harvard will attempt to establish itself as a market leader and maintain that position if new competitors emerge. Additional safeguards include ongoing analysis of additional segments of the travel market in which Continental Travel Group at Harvard might successfully participate. In addition, opportunities for vertical and horizontal integration will be examined.

30.3 ECONOMIC DOWNTURN: The strong domestic economy has been good for the travel and tourism industry. Continued growth is anticipated. However, unforeseen or unanticipated economic recession would reduce disposable income and threaten Continental Travel Group at Harvard sales. In the event of an economic downturn, Continental Travel Group at Harvard will continue to promote and likely expand its offering.

31. ACTION PLANS TO INCORPORATE 19. STRATEGY


Source by Andre Berlouis

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