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Business Plan for Launching a Luxury Adventure Tour Operator Based in Canada

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Business Plan for Launching a Luxury Adventure Tour Operator Based in Canada BUSINESS PLAN FOR LAUNCHING A LUXURY ADVENTURE TOUR OPERATOR BASED IN CANADA By Greg Hung And Nikolai Khlystov PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In THE MANAGEMENT OF TECHNOLOGY PROGRAM of the Faculty of Business Administration © Greg Hung, 2011 © Nikolai Khlystov, 2011 SIMON FRASER UNIVERSITY Summer 2011 All rights reserved. However, in accordance with the Copyright Act of Canada, this work may be reproduced, without authorization, under the conditions for Fair Dealing. Therefore, limited reproduction of this work for the purposes of private study, research, criticism, review and news reporting is likely to be in accordance with the law, particularly if cited appropriately. Approval Name: Greg Hung and Nikolai Khlystov Degree: Master of Business Administration Title of Project: BUSINESS PLAN FOR LAUNCHING A LUXURY ADVENTURE TOUR OPERATOR BASED IN CANADA Supervisory Committee: Sudheer Gupta _______________________________ Senior Supervisor Associate Professor of Technology & Operations Management; Director, Jack Austin Centre for Asia Pacific Business Studies, Beedie School of Business, Simon Fraser University Ian Hand ____________________________________ Second Reader Adjunct Professor, Beedie School of Business, Simon Fraser University Date Approved: ___________________________________________ 1 Abstract MOT Elite Travel Experiences (METE) is a tour operator and online travel agent start-up company based in Vancouver, British Columbia. METE is faced with the challenge of establishing itself as a business in the travel industry. However, recent advances in technology such as an increase in the number of broadband Internet users, search engine optimization, and the advent of smartphones have created an opportunity to capitalize on the growing popularity of online travel booking services. This trend towards online travel sales is stimulating new growth in the tourism industry and providing exciting opportunities for new entrants like METE. Analysis of current statistics and penetration rates for broadband internet and smartphone for countries travelling to Canada in the 25-44 year old age segment indicates that the United States, the United Kingdom (UK), Germany and France are the primary target markets for METE. Luxury travel has recovered from the recession of 2008-2009, and a growing, younger upper middle class and large proportion of High Net Worth Individuals (HNWI) in the under 45 year old segment in China are supporting a market for unique travel experience that METE plans to offer. The travel cycle introduces the inspiration, research, booking, experience, and sharing phases that comprise a framework to understand the relationship between travel and technology. METE plans to develop into competitive business as an on-line travel agent and tour operator that is able to deliver a comprehensive on-line and offline experience throughout the travel cycle. Keywords: travel, luxury adventure tours; METE; travel cycle; technology and tourism. 2 Dedication This paper is dedicated to my loving family that have supported me on my journey from Johannesburg, South Africa with our many stops in Canada to our second home in Vancouver, British Columbia. From my father Edward I have learned integrity, resiliency, independence, and fittingly, a thirst for knowledge and continuous learning that have led to me writing this paper. From my mother I have learned generosity, a curiosity for the world, and heart. To my sisters Candice and Sanya thank you for your support and I hope you find the success that you desire. I want to thank CORIX for providing an opportunity to see where my passion could take my career. Thanks to the support from Simon Fraser University and the Beedie School of business and the friends, colleagues and professors for providing an innovative academic environment and the opportunities that lead to where I am today. I want to thank Nikolai Khlystov for being a good friend, and believing in and supporting me during the program and the birth of METE. I remember attending an information session for the MBA Management of Technology Program in 2000 and I never would have imagined that now, 11 years later, I would be writing a final thesis paper to complete my MBA for a company that saw its creation during this program. Greg Hung I would like to thank my family for the support during the MBA program. I thank my mother Tatiana and my brother Konstantin for the kind attention and support that made it possible for me to successfully combine work, study and private life and complete the degree. I thank my father Vladimir for unconditional support during the most important part of my life; without him I would not be able to find my dream home in Canada. I also want to express appreciation to all my friends for patience and support, as they understood my challenges during the program and forgave the unfortunate lack of attention on my part. I also want to thank my friend and classmate Greg Hung for his friendship and support during the last two years. 3 I am grateful to the Simon Fraser University and the Beedie School of Business and their staff, and my classmates who contributed to my professional and personal development. I would especially like to thank Sudheer Gupta and Ian Hand, professors at Beedie School of Business. Their patience and positive comments guided me through research and were a great assistance in completing this paper. Nikolai Khlystov 4 Table of Contents Approval ........................................................................................................................................... 1 Abstract ............................................................................................................................................. 2 Dedication ......................................................................................................................................... 3 Table of Contents .............................................................................................................................. 5 Glossary ............................................................................................................................................ 8 Executive Summary ........................................................................................................................ 9 1: Introduction .............................................................................................................................. 11 2: Industry Overview .................................................................................................................... 14 2.1 Travel Industry Overview ...................................................................................................... 14 2.2 Top Tourism Destinations ..................................................................................................... 16 2.3 Luxury Travel Overview ....................................................................................................... 17 2.4 Market Segment and Estimated Size for Canada .................................................................. 19 2.4.1 Size and Characteristics of Market ........................................................................... 20 2.4.2 Summary of Key Findings ........................................................................................ 24 2.5 Travel Cycle and Technology ................................................................................................ 25 2.5.1 Phase 1: Dreaming/Inspiration ................................................................................. 26 2.5.2 Phase 2: Research ..................................................................................................... 27 2.5.3 Phase 3: Booking ...................................................................................................... 29 2.5.4 Phase 4: Experiencing .............................................................................................. 30 2.5.5 Phase 5: Sharing ....................................................................................................... 30 2.6 Key Opportunities Between Technology and Tourism ......................................................... 31 3: Industry Analysis ...................................................................................................................... 33 3.1 Industry Rivalry ..................................................................................................................... 33 3.2 Threat of Entry ...................................................................................................................... 34 3.3 Threat of Substitute ............................................................................................................... 35 3.4 Industry Attractiveness and Risks ......................................................................................... 35 4: Business Strategy ...................................................................................................................... 37 4.1 Market Entry .......................................................................................................................... 37 4.2 Featured Products and Services ............................................................................................. 38 4.2.1 Product and Service: Inspirational Phase ................................................................
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