Adventure Tours Australia Business Model - Example

Adventure Tours Australia (ATA) Business Plan Name: University: Date: Executive Summary Hard adventure tourism is one of the fastest growing tourism segments in Australia. However, analysis indicates that, despite the huge growth being recorded, the industry remains underexploited and this creates an attractive business opportunity for Adventure Tours Australia, which is one of Australia’s largest soft adventure tour service providers. This business plan has provided the market feasibility indicates that ATA stands to exploit a huge market opportunity by entering into this market. Hard adventure activities that the company will provide include bushwalking, scuba diving kits, ice skating, ballooning, snorkelling, white water rafting, fishing, cave exploration, biking, bungee jumping, camping, rappelling, sky diving, and other outdoor activities. The customers will consist of both domestic and international tourists with the key target markets being Asia, the UK, Europe, China, India and Japan, North America and New Zealand, the younger generation and the wealthy with enough disposable income to spend on vacation and leisure. The business plan has also elaborated the technical and financial feasibility analysis that indicates that the company has the technological and financial strength to implement the business plan. Table of Contents Name: 1 Executive Summary 2 Table of Contents 3 1.0 Introduction 4 2.0 Business Model Canvas 4 2.1 Target Market 4 2.2 Value Proposition 6 2.3 Customer Relationships 6 2.4 Key Activities 6 2.5 Key Resources 7 2.6 Key Partners 7 2.7 Cost and Revenue Structures 7 3.0 Market Feasibility 8 3.1 External Factors to Bear 9 3.1.1 Government Policies 9 3.1.2 Industry Dynamics 9 4.0 Technical Feasibility 10 4.1 Technology 10 4.2 Product Production Option 10 4.3 Resources for Product Development 10 5.0 Financial Feasibility 10 5.1 Projected Revenue and Cost 10 5.2 Sources of Finance 11 6.0 Human Resource Feasibility 11 7.0 Conclusion 11 References 13 1.0 Introduction Adventure Tours Australia (ATA) is renowned tour operator in Australia. Founded in 1990, the company has recorded growth in terms of client numbers over the last two and a half decades to become a major player in Australia’s tours and travel industry (ATA 2015). The firm’s currently main area of business is in the provision of high-end adventure trips with a focus on the wealthy clientele. For all the time the ATA has been in operation, the company has focused only on soft adventure tourism (ATA 2015). However, there are lots of opportunities that are available in “hard adventure tourism’ that remains unexploited. Therefore, to ensure sustained growth and success, ATA needs to consider venturing into hard adventure tourism that is booming in Australia. This business plan proposes the business model, analyses market opportunities and threats available based on feasibility study, financial feasibility, and human resource feasibility. 2.0 Business Model Canvas 2.1 Target Market ATA has a wide customer segments that it will target with its hard adventure product. The first target market will be based on geographical locations. In this respect, ATA will target Europe, the UK, North America, China, Japan, New Zealand and India as market reports indicate that the majority of adventure tourists who visit Australia originate from these parts of the world (figure 1). As can be seen in figure 1 below, 18% of adventure tourists came from China, 25% from Europe, 15% from the UK, 13% from north America, 5% from New Zealand, 3% from India, 16% from other Asian countries and 4% from the rest of the world (Tourism Victoria Research Unit, 2014). Source: Tourism Victoria Research Unit (2014). The second target market will be young attractive persons. The younger generation is the largest consumer of hard adventure tourism services. According to the Statadventure (2016), about 40% of all adventure tourists who visited Australia were young people from 25-44 years. As such, this makes this age group the main customer segment that ATA will target with its hard adventure products once launched in the country. The younger generation will be appropriate target customer group for a variety of reasons. First, the majority of people within this age group are employed, thus have enough disposable income to spend on vacation. Second, this customer group will be targeted because hard adventure is a risky product and most of them require physical fitness, as is the case with skating, surfing and scuba diving among other products (Department of Foreign Affairs and Trade. 2016). Additionally, the younger generation will be targeted because people within this age group like engaging in outdoor activities. The other target customers will be the wealthy and health conscious customers. High income earners will be targeted because it consists of professionals with enough disposable income to spend on hard adventure products (Reportlinker, 2016). Because acquiring hard adventure products and putting in place the right infrastructure is an expensive venture, this means that even the fees that ATA will charge for any product would be expensive and this means that only the people with enough disposable income would be able to afford to enjoy the services. Besides, high income earners would an ideal target customer group because they are willing to spend as much money as they can to get personalized attention whenever they can and this will be offered through hard adventure. 2.2 Value Proposition Value proportion is an important marketing element that any company that hopes to succeed in succeeding in a market must do right. This is because value proportion defines the promise of value that a company intends to deliver (Ataman 2010, p. 866). Doing value proportion right is also important as it determines whether or not targeted customers will choose the product offered or not. As for ATA, the idea value proportion that the company will have to consider creating will be “Dedicated to Delivering Safe, Secure, and exceptional hard Adventure experience to Young People on Vacations and holidays.” This value proportion will be ideal for ATA with its new hard adventure products because it promises the younger generation the value that they stand to get by buying the company’s hard adventure products. 2.3 Customer Relationships Customer relationship is critical to the success of any business and the same applies to ATA. For this reason, the company will commit to ensure that there is a good relationship between the company and all its customers. To achieve this, the company will ensure that customers are actively engaged by keeping them informed of any issue that arises that they might want to know as well as seeking their views and concerns to ensure that they are addressed promptly. The company will use a variety of platforms to engage with the stakeholders. These would include creating a toll free number, where customers can call and have their issues addressed through the company’s public relations department (Buttle & Maklan, 2015). The company will also take advantage of the power of social media my engaging the customers through social network platforms. Additionally, the company will also ensure that customer who visit the company in person are handled with respect and dignity to ensure high satisfaction level so that they can remain loyal to the company, something which is important for the company’s success. 2.4 Key Activities ATA’s hard adventure product will give tourists opportunity to engage in a number of exciting but challenging activities that would certainly leave them craving for more and more. First, with the hard adventure, tourists will get the opportunity to engage in mountain climbing. Tourists will get the opportunity to climb to the top of Australian mountains, such as Mount Kosciuszko, Mount Townsend, Mount Twynam and Rams Head among others under the guidance of the company’s team of expert mountain climbers (Reportlinker, 2016). Tourists will also be provided with bushwalking experience of their lifetime by taking them to some of Australia’s largest rainforests. Other key activities would include scuba diving kits, ice skating, ballooning, snorkelling, white water rafting, fishing, cave exploration, biking, bungee jumping, camping, rappelling, sky diving, and other outdoor activities. 2.5 Key Resources Hard adventure tourism is an engaging activity and to implement the plan, quite a number of resources will be needed. First, the company will require boards and fishing items, bicycles for biking purposes and safety belts, helmets and clothes for mountain climbing (Buckley 2003, p. 127). The company will also have to acquire air balloons that would be used for ballooning expedition, vehicles and airplanes for transport purposes. Other important resources would include scuba diving kits, skating equipment, and lighting system for cave exploration, rafting equipments and snorkeling items among other resources that would be necessary for the successful implementation of this business plan. 2.6 Key Partners The company will consider partnering with Adventure Travel Trade Association, which is an international tourism adventure network responsible for promoting sustainable tourism globally (Bergin & Khosa, 2016). Partnering with this organization will help ATA in promoting sustainable hard adventure services considering that sustainability has become an important source of competitive advantage in the tourism industry. Additionally, the firm will consider partnering with the Australian Federation of Travel Agents to promote the growth and success of the business. 2.7 Cost and Revenue Structures The cost structure for the company is dived into fixed and variable costs. The fixed costs to be incurred in offering hard adventure products include salaries and wages to the staff, insurance, property taxes, license, utility expenses, asset depreciation expenses and electricity costs (Beard et al., 2012). The variable costs for the company will include traveling costs as this would vary depending on the locations where visitors are taken to explore and to enjoy hard adventure products. Regarding revenue structure, the company’s revenue stream as is the case currently would come from the fees that would be charged for the usage of the hard adventure products. The fees charged will vary depending on the type of product, which would value from $10,000-$1000, 000. It is also important to note that, for some products, such as ice skating and scuba diving, the fees charge will vary depending on the duration that a tourist takes enjoying the facilities and products. Tourists will also be given the option to make annual subscription for continuous use of the products. 3.0 Market Feasibility Hard adventure tourism is a growing market in Australia and this makes it an appropriate market for consideration by ATA. In 2014, approximately 2 million international and 16.2 local overnight adventure tourists came to Australia (Tourism Victoria Research Unit, 2014). The majority of adventure tourists who visited Australia arrived mainly from Europe, China, the UK, India, North America and Japan. The majority of the visitors, however, was from China and spent approximately $4.8 billion in 2013, which accounted for about 16% growth compared to the previous year (Statadventure, 2016). The Adventure Tours (2016) indicates that, of all the adventure tourists who have been visiting Australia, a significant number come to enjoy hard adventure such as bushwalking, snorkeling, fishing, surfing, ice skating, sailing, mountain climbing and other outdoor activities. In 2014, for examples, about 66% of overnight international adventure tourists who visited Australia were for bushwalking/,forest walk, 28% for snorkeling, 18% for outdoor activities, 16% for sailing, kayaking and windsurfing, 15% surfing, 14% fishing and 13% scuba diving (Baran 2013). Regarding domestic adventure tourists, about 51% went for bushwalking, 33% for fishing, 17% swimming and other water activities, 15% for outdoor activities, such as horse riding, rock climbing, bungee jumping, and reef walking, 8% surfing, 7% snorkeling and 1% scuba diving (Tourism Victoria Research Unit, 2014). The statistics demonstrate that Australia has a lucrative business opportunity in hard adventure sports that would generate a lot of revenue for ATA if properly exploited. 3.1 External Factors to Bear 3.1.1 Government Policies Tourism like any like any other industry in Australia is regulated by the government that have enacted policies and laws that guides how business are supposed to be conducted in the industry. Because hard adventure tourism is a risky type of tourism, the government of Australia has enacted laws that require tour operators to ensure that the health and safety of tourists who engage in hard adventure tours services is guaranteed (Reportlinker, 2016). For this reason, ATA will have to ensure that good health and safety of the tourists engaging in hard adventure tourism is guaranteed through enhanced security and safety throughout the tour services. 3.1.2 Industry Dynamics Australia’s adventure tourism industry is highly competitive as the industry has many firms that compete for the market share. According to Statadventure (2016), there were at least 100 firms listed as ADS approved inbound tour firms in Australia. However, the majority of these tour operators provide only soft adventure tourism services. At present, very few outbound tour operators in Australia provide hard adventure tourism services. Few of the notable competitors in hard adventure tourism include OzXposure, The Imaginative Traveller, G Adventures, The Bama Way, AAT Kings, Footloose Adventure Travel, and ITC Luxury Travel (World Travel 2016). Accordingly, this implies that is a huge business opportunity for ATA by expanding its scope of business to starting offering hard adventure tour services. Analysis of Australia’s adventure tourism industry indicates that there are a number of factors that acts as barriers to tour operators in entering this lucrative tour segment (Buckley, 2000, p. 439). The first major barrier is that hard adventure tourism requires high physical resources to start and operate, which is not the case with soft tourism. For instance, to provide hard adventure tourism, an entrepreneur must ensure that the physical infrastructure and the necessary items, such as boats, scuba diving kits, skating items and resources, bicycles, and surfing resources are in place and these items are usually very costly and this creates a barrier to new firms entering the industry (Baran 2013). 4.0 Technical Feasibility 4.1 Technology Technology is one of the factors that have had a huge influence on adventure tourism. The Internet and mobile phones, in particular are some of the technological advancements that have revolutionized tourism industry by making traveling process easy and convenient by enabling tourists to dream, book and experience tour services (Buckley, 2006). Therefore, to capitalize on technological advancements, ATA will consider designing a mobile app in-house that would provide targeted customers with a platform, where they can view the products, book and experience the company’s adventure products. Additionally, the company will develop an online platform, where customers can make bookings regardless of their locations, thus minimizing queuing. 4.2 Product Production Option The company’s hard adventure products will be delivered by ATA directly to customers. Because ATA is an already well-established brand in Australian soft adventure tourism industry, there would be no need of subcontracting, licensing or forming a joint venture partnerships. However, because ATA does not own some of the facilities, such as diving, fishing, skating and other resources to be involved, the company will partner with the suppliers of these products to ensure that customers get what they need. 4.3 Resources for Product Development The company will require a variety of resources to ensure the implementation of the business plan. First, human resources will be required, such as skilled sky divers, mountaineers, and skaters among other experts to guide the tourists. Fortunately, skilled people with such skills can easily be sourced from the market by the company. The facilities and equipment to be used for hard adventure services will be bought from the market. 5.0 Financial Feasibility 5.1 Projected Revenue and Cost Because hard adventure is a booming business, ATA is expected to register good performance right from the start. Our projections indicate that the company will generate loss of $75,000 during the first year of operation and this is expected to grow at the rate of 10% per year in the subsequent years. The business startup cost is projected at AU560, 000 because the company already has some facilities and resources such as vehicle and business premises. Accordingly, we project that the business will break even by the one year of business operations. The profit margin after break-even is projected at 10% but this will grow as the company increases its position in the market. Financial projections are shown in appendix 1. 5.2 Sources of Finance The finance to be used to finance the new business will be obtained from a variety of sources. The first source of finance will come from ATA company itself in which a fraction of the profits generated from soft adventure business that it currently engages in will be channeled to finance part of the new business. The second source of finance will come from bank loans. The company will have to seek loans from the banks to finance the business. Additionally, the company will use equity financing by seeking funding from investors. There are high chances of getting financing from both the banks and investors because ATA is a reputed company with a history of good performance. 6.0 Human Resource Feasibility ATA is a publicly-owned company. As a limited company, the company would delegate the management functions to the managers to be hired by shareholders. The manager to be hired to implement the business plan will be someone who is skilled, knowledgeable and experiences in matters to do with adventure tourism, especially hard adventure. The management structure will have the CEO and the board at the top and below them would be the general manager, line managers and members of the staff. The employees will be hired from external sources to help implement the business plan. This would involve advertising the positions and hiring the best candidates for the job. Candidates chosen will be provided with the right training and adequately compensated to increase their motivational and satisfaction level. The company will adopt a flat organizational structure to ensure ease of communication, coordination and service delivery. 7.0 Conclusion Hard adventure tourism is a business area that is experiencing huge growth and this makes it an attractive for businesses. This business plan has highlighted the opportunities that exist in the hard adventure tourism sector based on the market feasibility. The plan has also described the technical, financial and human resource feasibility issues associated with venturing in the market. Overall, effective implementation of the business plan as narrated with result in a success for ATA. References Adventure Tours. 2016, Adventure tours, viewed 17 May 2017 ATA. 2015, ATA wins ‘Best Tour Company’ at the Australian Adventure Travel Awards, viewed 17 May 2017 Ataman, M. B., Van Heerde, H. J., & Mela, C. F. 2010. The long-term effect of marketing strategy on brand sales. Journal of Marketing Research, vol.47, no.5, pp. 866-882. Baran, M. 2013, Study finds significant growth in adventure travel market, viewed 17 May 2017 Beard, C., Swarbrooke, J., Leckie, S., & Pomfret, G. (2012). Adventure tourism. Routledge, Oxford, NY. Bergin, A., & Khosa, R. (2016). Terrorism and the Australian tourism industry by Anthony Bergin and Raspal Khosa, viewed 17 May 2017 Buckley, R. (2006). Adventure tourism. CABI, Chicago. Buckley, R. 2003 ‘Research note adventure tourism and the clothing, fashion and entertainment industries, ‘Journal of Ecotourism, vol.2, no.2, pp.126-134. Buckley, R. C. 2000, ‘NEAT trends: Current issues in nature, eco and adventure tourism,’ International Journal of Tourism Research, vol.2, no.1, pp. 437–444. Buttle, F., & Maklan, S. (2015). Customer relationship management: Concepts and technologies. London: Routledge. Department of Foreign Affairs and Trade. 2016, Tourism Australia, viewed 17 May 2017 . Reportlinker. 2016, Australian tourism industry 2016-2020, viewed 17 May 2017 Statadventure. 2016, Australia adventure tours, viewed 17 May 2017 Tourism Victoria Research Unit. 2014, Adventure tourism market profile year ending June 2014 Tourism Victoria. pp.1-5. World Travel. 2016, Australia tour operators, viewed 17 May 2017 Appendix Appendix 1 Start-up Cost Items 2017 2018 Advertising $50,000 $20,000 Materials $500,000 $100,000 Miscellaneous $10,000 $5,000 Total Expenses $560,000 $125,000 Appendix 2 Statement of Comprehensive Income Sales Forecast Items June 2017-May 2018 June 2018-May 2019 (AU$) (AU$) Hot air ballooning, 50,000 90,000 Rock and mountain climbing 20,000 50,000 Sky diving 80,000 100,000 Scuba diving 90,000 100,000 Snorkelling 45,000 120,000 Cave exploration 60,000 75,000 White water rafting 40,000 60,000 Mountain biking 100,000 160,000 Total Sales 485,000 755,000 Expenses 560,000 125,000 Net Profit/Loss (75,000) 630,000 Read More