Voyage: A Business Plan

Voyage will be a limited liability tourism company located in Muscat city centre plaza, 3km from Muscat international airport. Voyage will entertain tourists from all over the world who will be visiting Oman. Moreover, it will provide travel facilities to Omani residents as well. The agency will give the tourists unforgettable lifetime experience of Omani tourist sites such as traditional cultural sites like Bahla Fort, Nizwa Fort, and Nakhal Fort. Voyage will also provide tourism opportunities for modern Oman such as Sultan Qaboos Grand Mosque, Al Alam Palace, Oman coastline, and Royal Opera House Muscat, among others. Other than recreational tourism, Voyage will provide Umrah and Hajj services to Omani residents as well. Along with guided tours, the company will also offer services such as accommodations, reservations, dining, and transport facilities.

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Mission

The mission of the company is to provide hassle-free travel services to all its clients and offer unrivalled tourism services to tourists by becoming a one-stop solution for everything travel-related.

Vision

Corporate vision of Voyage tourism is to become best travel agency in Oman and expand to neighboring countries in future.

Business goals

  • To respond to customer queries in real time
  • To provide tour services that justify value for money
  • To become market leader in tourism industry of Oman within 5 years of operations
  • To raise Oman’s impression by showing positive image of the country to tourists
  • To provide employment opportunities to local youth

Market and Industry Analysis

Oman’s travel and tourism market has been continuously growing over the last decade, mainly due to the support of the government. In order to reduce the country’s economic dependence on oil, the Omani government is looking for non-conventional sources of income, and it has made tourism a major priority (Oxford Business Group, 2017). The government has launched the Oman Tourism Development Plan 2040 with an investment of $35 billion and is giving incentives and reliefs to the tourism industry (Vision 2040, 2019). The Sultanate plans to attract 11 million visitors a year according to the Vision 2040. This plan aims to increase tourism income contribution of GDP from 2.2% to 6% by 2040 (Ministry of Commerce, 2018). The Musandam Peninsula and Mina Sultan Qaboos Waterfront, Ras Al Hadd are major tourist attractions of the country. Moreover, Oman also has 5 UNESCO world heritage sites (UNESCO, 2020). MENA region in 2018 saw an influx of 87 million visitors, equivalent to 6% of total world arrivals. Though dominated mainly by its neighbouring country, the United Arab Emirates and its state Dubai, Oman is also making steady improvements in tourism (UNWTO, 2019). During the tourism season in 2018, from July 21 to September 21, more than 8 lac visitors arrived at Salalah International Airport. Moreover, the tourist arrival in Oman is expected to rise at a compound annual growth rate of 5% during 2018 to 2023 and tourism market is expected to reach 3.5 million by 2023 (Arabian Business, 2018). Cruise ship tourism experienced the highest growth of 46% in 2019 as compared to previous years (Travel Daily, 2019).

Another major reason for the growth in visitors is the ease in visa provision by the country. The Omani government has launched the e-Visa program through which, the visitors can apply for visas online and get their visa approved within 24 hours, after payment of processing charges (Oman e-visa, 2020). Besides the growing tourism and arrivals, what makes Oman an interesting proposition for investment is the country’s ranking in the Ease of Doing Business reports according to which, the country ranked 68th in 2019. The government is making efforts to improve Oman’s ranking, which is evident from the country’s improved ranking by ten positions in 2019 compared to the previous year. According to a study, a new business in Oman can be started from scratch within six days (Doing Business, 2019).

Porter Forces Analysis

To assess the competitive environment of Voyage, Porter`s five forces analysis was conducted which is given below

Threats of new entrants

Oman has a free-market economy where anyone can enter the market at any time. Oman has jumped ten places in ease of doing business rankings in 2019 and currently sits at 68 (Oman Observer, 2019). Moreover, Oman is the first-ranked country in the Gulf Corporation Council cross-border trade index (Oman Observer, 2019). These parameters make Oman an interesting proposition for investment, particularly in the tourism industry, which is supported by the government as well. Furthermore, it is aided by moderate regulatory requirements for investment in the tourism sector. For instance, Oman Tourism Ministry is subject to issue license for touristic activity with 30 days of submission of documents (Barwani, 2019). These factors make entry of a new firm to tourism industry fairly easy.

Threats of competitors

A large number of tour operators are currently operating in Oman. Some of the biggest competitors of Voyage are BigTour Intrepid tours and Oman Day tours, who have the luxury of buying air tickets and hotel rooms from vendors at a low price and therefore earn a high amount of commission. However, due to a large number of customers, these big corporations are not capable of giving personalized services to their customers. Hence, Voyage will exploit this weakness of competitors by providing excellent personal service to tourists. It can be accessed from the discussion that competitive rivalry is high though it can be catered by effective management.

Power of buyers

The buyers of the tourism industry are tourists who hold significant power in the market. They have two options available to them. Either directly book the hotel and flight themselves or use the services of tour operators. Due to a vast number of tour agencies offering their services in Oman, customers can exercise high bargaining power.

Threats of substitutes

Threat of substitutes for Voyage is relatively low. Voyage primary business is to sell air tickets, and hotel bookings and secondary operations are tourists guidance. Tourists coming to Oman need rooms to stay, and therefore, there is no substitute available to hotels. Hotel bookings part of Voyage business will have virtually no substitute available. However, sea travel is a substitute for air travel. Travellers can choose to travel by sea due to various reasons. Sea travel to Oman is rising, which is evident by a 46% rise in arrival of tourists in 2019 compared to 2018. However, this made up of only 283,000 visitors arriving by sea out of 3.5 million visitors who visited the country in 2019 (Rokou, 2020).

Power of suppliers

Suppliers for the company Voyage are airline companies and hotels. The supplier power is low due to the abundance of both air carriers operating in Oman and a high number of hotels in the country. All major international air flight carriers such as British Airways, Fly Emirates, and Qatar airways carry their operations in Oman (Sky scanner, 2020). Therefore, airline companies have low power in selling tickets due to a vast number of competitors. Similarly, in the hotel industry, Oman hotel occupancy rate in 2019 was 37.4% which is means 72.6% of rooms stay vacant (CEIC, 2020). Therefore, hotels cannot exercise domination in dealing with tour operators.

Industry and Market Analysis

Voyage will face strong competitive reaction by breaking clients from existing tour operators. Customers would have contacted other operators if Voyage did not enter the market, which means the revenue stream of existing agencies would take hit. This will invite a huge reaction from competitors who may end up copying Voyage ideas to attract new and get back old customers. However, by providing efficient services at an affordable price, Voyage would be able to negate this factor. Moreover, rival agencies may cooperate and exchange their customers for running Voyage out of the market. Steps will be taken to make sure that the company does not get affected by noncompetitive practices of rivals.

Customer and value proposition

Voyage travel agency works to provide its customers with a memorable experience of tourism by fulfilling their every need. The company focuses on providing the best opportunities for travel at a cost that justify the price they are paying for their leisure time. Voyage focuses mainly on clients who are not regular travellers and makes sure they feel comfortable all the time.

Value proposition

Voyage will provide its clients with excellent travelling opportunities at a cost-effective price. Clients will be accompanied by an ethically trained staff who will be available for their help at one call. Customers will be offered all-inclusive and custom travel packages along with some seasonal offerings. Moreover, they will be given the ease of payment by paying the total sum in three instalments, i.e. advance, on-arrival and on-departure. Furthermore, Voyage offers one free meal on arrival and children under 12 are not charged any transportation and accommodation fee, which is one of its unique selling points.

Marketing strategy

Following factors of marketing mix will be addressed in Voyage`s marketing strategy

Marketing Mix

Product

Voyage will start its operations by issuing air tickets, processing visa applications, making hotel reservations. The company will also provide guided tours of Oman tourist attraction spots which will cover the transport of clients and their guidance of those places. Voyage will also offer consultancy services to locals willing to travel abroad. Based on customer preferences, more services will also be provided later.

Pricing

Based on data collected from tourists average per day spending of an individual in Oman is OMR 75. It includes food expenses, accommodation, and transportation costs. A one-week trip to Oman costs OMR 523 for an individual and OMR 1047 for couple (Budget Your Trip, 2020). Voyage travel and tours will offer its services at following concessional rates

  • Three days trip for OMR 320 for individuals and OMR 600 for couple
  • Seven days trip for OMR 500 for individuals and OMR 950 for couples

Moreover, Voyage will sell air tickets at 5 % commission only.

Placement

The office of Voyage travel and tours will be placed in Muscat city centre, which is only 3km away from Muscat International airport. Being located close to the airport will provide Voyage with an opportunity to attract tourists who come to the country with booking their hotel. Moreover, it will also help the agency to receive the clients at the airport easily.

Promotion

Voyage travel and tours will operate its business mainly through social media and website. Professional writers will be hired who will create search engine optimized content and agency will be promoted on social media by paid marketing campaigns. The decision to promote business via social media is because there are over 2 billion active monthly users of Facebook and 800 billion active users of Instagram (Social Media Impact, 2018). Moreover, social media has a 51% worldwide penetration rate (Statista, 2020). Strategy to promote the business online is helped by the fact that Oman has 153% mobile infiltration rate, which is third-highest in the world (Muscat Daily, 2018). Promotional activities will also be carried out via emails. Website visitors will be asked to leave their email address so that discount and promotional offers can be sent to them. Moreover, the company will also participate in travel industry seminars and conferences to promote its business.

Marketing objectives

Following are the marketing objectives of Voyage travel and tours:

  • To attract new customers consistently on quarterly-basis and ensure sustained growth
  • To be renowned for providing best travel facilities
  • To increase the brand awareness by 20% till the end of 2021
  • Earning loyalty of existing clients so that they consult Voyage for future travels
  • To introduce new and tempting packages every 4 months

Strategic management

Voyage travel and tours will actively work towards factor, which may result in development or decline in its sales such as competitor actions, customer preferences and market trends. The company will keep adding a new range of services to diversify its portfolio and increase its target market. Specialised computer software will be used to study industry swing and customer choices. This will help the organisation remain up to date with changes in the market and develop tailored packages according to customer choice. It will also help the company in identification of highest selling product. Moreover, customer feedback will be given utmost importance, and they will be asked to provide their reviews and suggestions. Feedbacks will assist Voyage in finding flaws in its services and help improve customer satisfaction level by correcting these mistakes.

Management plan

Voyage will initiate its business by hiring seven staff members on a contract basis. The staff will consist of the following personnel

  • A receptionist
  • Two travel agents, they will sell the company’s services to the customers and bring new clients
  • Business manager, who will deal with vendors on behalf of the company. He will be responsible for buying air tickets, making hotel reservations, and arranging transportation facilities
  • Two tour guides, they will receive customers on arrival at the airport and accompany them on tour and guide them about the visiting places
  • An office boy, to perform all other miscellaneous work of the office

Based on demand, more staff will be hired in the future.

The owner will be the overall manager of the business who will coordinate and supervise activities of the company. He will also be responsible for maintaining financial accounts of the company.

Operational Plan

Voyage travel and tours will be a simple entrepreneurial organization with the owner of the business overlooking and supervising all activities of the business. Reservation of hotel rooms will be made on an agreement between travellers and Voyage. Transportation will be hired on rent basis; this will help the company reduce fixed costs in the first year of operation. Depending on the demand, vehicles will be bought, and drivers will be hired as well. Voyage will purchase air tickets in bulk in advance to avail discounts which will help the company in cutting costs in the first year. Moreover, marketing and promotional activities of the company will be outsourced to a marketing company due to their expertise (McGovern, 2020). Voyage, in its first operational year, will only deal with products in which it has professional expertise.

Resources required

Voyage will need following resources to initiate its business:

  • Office furniture and stationery
  • Office computer system for booking the air tickets and hotels
  • License to operate as travel agency
  • Specialized software for analysis

Financing

Voyage will require OMR 20,000 to start the operations. Funds will be made available by the owner of the Voyage personally. OMR 2,000 will be used to buy office furniture and other equipment. OMR 3,000 will be utilized to acquire operating licenses and computer systems. OMR 10,000 will be used to purchase air tickets in advance which will be sold at commission later. OMR 3,000 will be paid for promotional activities before the commencement of business, which will help the company to have clients visiting the country within the first month of inauguration while remaining 2,000 will be held for other activities of the business.

Financial assumptions

Following financial assumptions are kept in consideration while planning Voyage’s business model

  • Voyage travels expect to convince at least 10 tourists to buy its packages
  • Company projects to issue at least 20 air tickets in first month
  • Tour packages and air ticket sales are expected to grow at 5% in first year of operation
  • Business manager will be given fixed salary of OMR 1500 per month, bonuses will also be given on boost of sales
  • Currently, tour agents earn OMR 1050 per month (Salary Explorer, 2020). Voyage will pay its travel agents OMR 1200 exclusive of commission
  • Office boy and receptionist will be paid on market terms

Voyage’s main source of income will be the commission which it will earn by making accommodations, issuing air tickets and transportation facilities given to tourists. Commission rate on air tickets will be 5% which will grow in future if the venture becomes successful. Similarly, an 8% commission on provision of tour packages will be earned. Cumulative losses on first year will accounted for against profit

Balance sheet

assets omr omr
non-current assets:
tangible assets 3,000
intangible assets 1,950
current assets:
advances 12,000
account receivables 6,000
stocks 12,000
cash and bank balance 5,050
40,000
equity and liablities:
equity 20,000
NON-CURRENT liablities: 10,000
current liabilities:
trade payables 5,500
short term loans 3,500
other payables 1,000
40,000

Cash-flow forecast

Month Package sold Tickets issued Commission earned (OMR)

Fixed costs

(OMR)

Variable costs

(OMR)

Balance

(OMR)

January 10 20 3,500 (5,200) (3,000) (4,700)
February 16 32 4,090 (5,200) (3,500) (4,610)
March 22 38 4,595 (5,200) (3,200) (3,805)
April 30 50 5,230 (5,200) (4,000) (4,970)
May 20 25 4,255 (5,200) (2,500) (3,445)
June 25 36 4,600 (5,200) (3,000) (3,600)
July 38 54 5,780 (6,500) (3,550) (3,770)
August 65 100 11,825 (6,500) (5,025) 300
September 75 134 15,265 (6,500) (5,520) 3,245
October 55 80 13,480 (6,500) (4,585) 1,460
November 31 59 8,700 (5,200) (1,900) 1,600
December 20 45 4,500 (5,200) (800) (1,500)

Material risks and their mitigation

Voyage may face challenges in the smooth functioning of its activities and may be exposed to the various social, economic, and political situation, which may pose a threat to the existence of the company. The risks faced by Voyage and their mitigation strategies are given as below:

  1. Economic Risk

Shrink in the economy of any country affects its tourism severely. Travellers are not willing to visit a country facing an economic crisis. However, the risk of Oman facing economic instability is virtually zero. All the economic indicators towards Oman are positive, and the IMF has predicted Oman`s real GDP to reach 6.2%, making it the fastest-growing economy in the GCC region (MOCI, 2018).

  1. Terrorism

The biggest risk faced by the tourism industry of any country is terrorism. Tourists only visit those where they feel safe. Any terrorism activity badly affects the travel industry of any country, and the market takes years to recover. Oman maintains an excellent record in providing safety to foreigners, and there has been not a single terrorist activity reported in the country in 2019 (State Department Oman 2019). Strong law enforcement makes Oman an interesting destination for visitors.

  1. Crimes

Another significant risk faced by the tourism industry in any country is crime and unlawfulness. Fear of getting snatched at the next corner of the street or being harassed makes people think twice before moving anywhere. Although not very high, a moderate threat of crime remains in Oman. Nonviolent crime, including robbery and snatching, remains the most among committed (Overseas Security Advisory Council US, 2019). Where appropriate, the company will use the services of security agencies to ensure the safety of its customers.

  1. Market Risk

Due to various socio-economic reasons and fall in global economies, there may be a fall in demand for air tickets and tourism market may decline heavily. To reduce the impact of this risk, Voyage will make exclusive offers to the clients. Voyage will make sure that it keeps selling products even if short term profits are compromised but in longer run voyage will retain its clients.

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