Travel Agency Marketing Plan

Adventure Travel International (ATI)

Situation Analysis

2.0 Situation Analysis

According to the Department of Commerce, the U.S. travel and tourism industry is the nation's third largest retail industry and will be number one by the year 2000. Revenues from travel have increased approximately 100% in the last decade with U.S. travel agencies producing over $100 billion in revenues each year. Adventure travel, a segment of the travel and tourism industry, is growing at least 10% per year. More than 50% of the U.S. adult traveling population, or 147 million people, have taken an adventure trip in their lifetime, 98 million in the past five years. Thirty-one million adults have engaged in hard adventure activities like whitewater rafting, scuba diving, and mountain biking. An additional 25 million engaged in both a hard- and soft-adventure activity. Activities most commonly participated in during adventure vacations: camping (85%), hiking (74%), skiing (51%), snorkeling or scuba diving (30%), sailing (26%), kayaking or whitewater rafting (24%), and biking trips (24%).

Customers tend to be young and affluent, ages 18-34, and one fourth are from households with annual incomes of $75,000 or more. In addition, statistics show that 8,000 U.S. companies offered adventure packages that generated $7 billion in 1997. There was a 66% increase in executive participation in adventure travel between 1992 and 1996. California holds the largest population of adventure travelers, who tend to live in urban areas. ATI will be located in an urban area within the state of California. In addition, it will be the only adventure travel agency in an area with 300,000 people and a large concentration of outdoor recreation enthusiasts and customers who match ATI's target profile.

Planning an adventure trip requires knowledge of the travel industry and popular adventure sport destinations, as well as adventure travel activities. Adventure travel customers are a specialty group. These are primarily young professionals who often lack the time and experience necessary to effectively plan an adventure trip on their own. ATI will communicate its ability to meet the demands of this market and fill this need.

2.1 Market Summary

The travel and tourism market is separated into two main categories, business and leisure travel. Each contribute about 45% to total revenues. The remainder of revenues are 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.

Adventure travel generates approximately $15 billion of the approximately $100 billion-dollar annual industry revenues. Approximately $2-4 billion of these revenues come from California adventure travelers. Based on these and other figures, ATI estimates the Woodville adventure travel market to be approximately $6 million annually. ATI estimates that it will capture about 8% of this market.

Target Markets



Market Analysis

Market Analysis
		2003	2004	2005
Potential Customers	Growth				CAGR
National Adventure Travelers	10%	10,890,000	11,979,000	13,176,900	10.00%
Woodville Adventure Travelers	15%	132,250	152,088	174,901	15.00%
Internet	20%	4,320,000	5,184,000	6,220,800	20.00%
Total	12.78%	15,342,250	17,315,088	19,572,601	12.78%

2.1.1 Market Demographics

Adventure travel falls primarily under the leisure travel category. Revenues from leisure travel earned by U.S. travel agencies exceed $50 billion annually. Adventure travel is a sub-category of leisure travel and can be further broken down into hard and soft adventure travel. Both hard and soft adventures involve physical, athletic activities. Hard adventure activities, as the name suggests, generally involve risk and require substantial athletic competence. Soft adventure activities are less physically demanding and more passive than their hard adventure counterparts.

Adventure travelers are slightly more likely to be men age 18-34. However an increasing number of adventure travelers are women (some statistics suggest that women comprise 49% of the adventure market). Men on average spend more than women on their adventure travels. ATI's primary customers are married couples, ages 25-35, with children and household incomes over $50,000. ATI will be located in the heart of the Pacific Northwest. The natural beauty and abundance of outdoor activities attract many fitness oriented individuals. Per capita, the area has more people than any other in the nation who actively participate in mountain and water sports, such as skiing, climbing, kayaking, whitewater rafting, mountain biking, etc. These are the people in ATI's target market. ATI will focus on the sale and promotion of adventure travel primarily to individuals, but also to corporate clients in the Woodville area.

2.1.2 Market Needs

Adventure travel activities are a specialized product, and first-hand knowledge of these activities 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. ATI is confident in its ability to do so. ATI can save the customer time and money, and help to ensure that they are satisfied with their vacation.

2.1.3 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 has dropped. Additional trends include caps on agency commissions by many of the larger airlines, increases in adventure travel, and reduction of profit margins. More than 50% of the U.S. adult traveling population, or 147 million people, have taken an adventure trip in their lifetime, 98 million in the past five years. Approximately 31 million adults have engaged in hard adventure activities like whitewater rafting, scuba diving and mountain biking. An additional 25 million engaged in both a hard and soft adventure activity. The growth trend in adventure travel is predicted to continue.

Market Forecast



2.1.4 Market Growth

The travel industry is growing. Reasons for this growth include a healthy domestic economy and devaluation of currency in other regions which has made travel less expensive for U.S. residents. Leisure travel increased by 3.2% in 1997 and 2.0% in 1998. The healthy economy has increased business which in turn boosted domestic business travel 4.8% in 1997 and 3.6% in 1998. Adventure travel, growing 10% annually, is one of the fastest growing segments of the travel industry. Statistics show that 8,000 U.S. companies offered adventure packages that generated $7 billion in 1997. There also has been a 66% increase in executive participation in adventure travel between 1992 and 1996.

Target Market Growth



2.2 SWOT Analysis

In the following four sections are the most relevant issues to ATI's successful operation. ATI's strengths include its management, experienced staff, marketing savvy, and targeted focus. ATI 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 and are discussed in one of the following sections.

2.2.1 Strengths

• MANAGEMENT: ATI's manager has a successful record in this industry. His experience and the network of valuable connections he has developed will contribute greatly to ATI's success.
  
• LOCATION: ATI will be ideally located. The Pacific Northwest is a mecca for people who meet ATI's target audience profile. In addition, Woodville is located 45 miles from the coast and less than two hours from the mountains. Five rivers are within a two-hour drive. These geographic features will continue to attract potential customers.
  
• EXPERIENCED STAFF: The ATI team is experienced in the travel business and in adventure sports. All members have over five years experience. Moreover, they are willing to sacrifice extra time and effort to build a successful business. Along with the intangible benefits derived from succeeding in an independent endeavor, ATI will offer profit sharing and potential partnership opportunities to its ground-floor members.
  
• POPULARITY OF ADVENTURE TRAVEL: Adventure activities are very popular, and ATI is betting that the popularity will continue to grow. Many of the adventure sports, such as kayaking, mountainbiking, alpine and rock climbing, have had a kind of cult following for many years. However, in the last five years, these sports have started to go mainstream.

2.2.2 Weaknesses

• START-UP STATUS: ATI is a start-up and the odds are stacked against small start-up companies.
  
• LIMITED PERSONNEL: Though ATI's staff is exceptional, they will be faced with long hours for little pay during the first two years of operation.
  
• FINANCING: Preliminary estimates of sales and expenditures suggest that ATI will remain financially stable. However, unforeseen expenditures or poor sales will threaten ATI's cash position, which will be particularly vulnerable in year one.

2.2.3 Opportunities

• GROWTH MARKET: The national adventure travel market is growing 10% annually, and preliminary estimates suggest that the Woodville market exceeds that growth rate.
  
• POTENTIAL TO ACHIEVE SALES FROM THE NATIONAL MARKET: As ATI establishes itself and gains financial stability, it can begin to market its services nationally. ATI plans to begin this effort via a World Wide Web campaign in the first year of operation and diversify its communications efforts in years two and three.
  
• POTENTIAL TO BECOME A PREMIER PROVIDER: ATI has the management and staff to produce a top-quality service.
  
• VERTICAL INTEGRATION: The potential to integrate services and add branches exists.

2.2.4 Threats

• 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.
  
• LOCAL COMPETITION (EXISTING AND POTENTIAL): There are no agencies in the Woodville area that specialize solely in adventure travel. However, any one of the approximately 30 can book an adventure trip. Moreover, additional adventure travel specialists may follow ATI's lead.
  
• 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 ATI's sales.

2.3 Competition

In the travel industry, as in other industries, there are large national chains, small home-based businesses, consolidators on the Internet, etc. Membership numbers of travel-related associations give some indication of the number of participants in this market. The American Society of Travel Agents (ASTA) reports 25,000 members in 135 countries, most of whom are small businesses. The Association of Retail Travel Agencies (ARTA) has another 3,000 members. In addition, there are many agencies not affiliated with these associations but with one or more of the approximately 35 travel-industry organizations in the country. ATI has approximately 30 immediate competitors in the greater Woodville area, including two agencies that are branches of national travel agency chains. Direct national competitors include:

1. Rollins & Hayes: Based on the east coast, Rollins & Hayes is the most well known and respected adventure travel agency in the world. They have provided adventure travel packages for over 20 years and have successfully integrated travel agency services and adventure travel activities. This offers them complete control over the entire vacation. They have the advantage of an established reputation, high-quality trips, economies of scale, and strategic alliances. However, their packages are expensive and appeal primarily to a high-income clientele.
   
2. Sundance Travel: Based in Colorado, Sundance is a traditional agency and has been in business for 10 years. They have gradually made the move towards becoming adventure travel specialists and are now recognized as such. Their strengths are experience, reputation, and financial solvency. Weaknesses may include high personnel and management turnover and the lack of a clear plan for future growth.
   
3. Global Adventure Travel: Global was established in 1995 and has successfully established themselves as adventure travel specialists. They are based in the Los Angeles area. Global has done a good job positioning itself through successful marketing communications and management. The Los Angeles area contains a large adventure travel market. It is, however, a very competitive area.

Competitor by Growth and Share



Growth and Share Analysis

Growth and Share
Competitor	Price	Growth Rate	Market Share
Rollins & Hayes	$1,100	3%	23%
Sundance	$975	5%	8%
Global	$950	10%	7%
Travel Northwest	$1,000	4%	1%
Woodville Travel	$965	0%	1%
Average	$998.00	4.40%	7.96%
Total	$4,990.00	22.00%	39.80%

2.4 Service Offering

ATI is a full service agency and sells standard travel agency goods and services, including airfare and travel packages. Additional services 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 terrain and activities, accommodations, and entertainment. The value added of ATI's offering is its knowledge and expertise, competitive rates, and specialty focus on adventure travel, which translate into increased satisfaction for the customer.

2.5 Keys to Success

• Effectively segment the travel market and target adventure travelers.
  
• Successfully position ourselves as adventure travel specialists.
  
• Communicate the differentiation and quality of our offering through personal interaction and media.
  
• Develop a repeat-business base of loyal customers.

2.6 Critical Issues

• Market growth projections for the travel industry and for adventure 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 ATI's specialty focus and services.

2.7 Macroenvironment

• Disposable income is high but leisure time is limited and contested by other responsibilities and recreation options.
  
• 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 effect the industry. Political unrest, military action, and other issues determine availability to many foreign destinations.