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Web Reservations International

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1 Web Reservations International
2006 Case Study ® 2008,Takefumi Kawahara, Matt Bouchard, Darius Parker, Danielle Boucher

2 Overview Founder Ray Nolan Web Reservations International websites
Affiliates A brief history of Web Reservations International EOY 2006 Mission, Vision, Objectives, Strategies 2007 New Vision and Mission External Analysis Opportunities & Threats CPM EFE Internal Analysis Financial Data Strengths and weaknesses IFE Financial ratios Strategic Analysis SWOT Matrix SPACE IE matrix Grand Strategy Matrix Matrix Analysis QSPM Possible alternative strategies Our Recommendation Strategies Long range objectives Implementation Issues Proposed annual objectives (goal) and polices Proposed procedures for evaluation Epilogue Resources Utilized Questions

3 Ray Nolan – Founder and CEO of WRI
Employment History Chief Executive Officer and Co-Founder Web Reservations International Limited Chief Executive Officer and Founder Chief Executive Officer WRI Group Boo Coretime Board Membership and Affiliations Board Member Founder Raven Computing

4 is a leading provider of online reservations to the budget, independent and youth travel market. It offers confirmed online reservations for over 12,000 hostels and budget hotels in 165 countries worldwide. The site also offers budget travelers free podcasts, customized city guides, a travel social network and more. is headquartered in Dublin and is fully owned and operated by Web Reservations International Ltd (WRI). Headquarters: Sydney, Australia

5 We provide your information to necessary third party service providers when you reserve or purchase travel services through the website. We also use your details to operate and, occasionally, to inform you of new features, services and products from On occasions, we may supply statistics about our customers to third parties such as hostels or other agents. These statistics never contain personally identifying information. If at any time you believe that has not adhered to these principles, please notify us via the contact form and we will use all commercially reasonable efforts to determine and correct the problem promptly.

6, Inc. (WRES) provides a business-to-business e-commerce solution for online marketing and reservations to the highly fragmented global hotel industry. The Company's Internet-based reservation system connects hotels to travel web sites creating an e-commerce network. This network enables these web sites to provide travelers with the ability to collect information and make real-time, confirmed hotel reservations online. As of February 29, 2000, the Company's network consisted of approximately 11,500 hotel properties in 142 countries and 1,075 travel web sites and call centers as well as over 1,800 web sites that are part of its affiliate program managed by Be Free. As of that date, WRES also had contracts in place to add approximately 12,900 additional properties to its network. NASDAQ: WRES

7 The premier site for hostelling information. Online listings for over 10,000 hostels worldwide.

8 Confirmed online bookings for cheap accommodation worldwide. features hostels, cheap hotels, holiday apartments, campsites, bed and breakfasts and guesthouses online. Low rates guaranteed.

9 Our Price Promise We bring you a great selection of properties in cities worldwide ranging in category from 1 to 5-star hotels. Discounthotels guarantee that our Special Internet Rates are the lowest rates you will find online. Our Security All bookings are made securely, in real-time and are guaranteed for you. We use the highest level of encryption to ensure that it is safe for you to use your credit card online. Our Experience Our staff has years of experience in the travel industry. We bring you the best hotels, the best service, and the lowest price.

10 A few of WRI’s 2,500 International Affiliates
European online travel agency specializing in worldwide travel Low-fare European airline globally trusted and respected source of world travel and destination information and booking travel guide series that accompanies the free-spirited on treks across the globe Lonely Planet's is one of the best places to seek out advice on a wide range of travelling issues’ Our Vision is that every North American traveler will choose us to experience the real Europe by train Cheap Flights - Lowest European Fares, Low Cost Airline online travel service that enables students to travel for less.

11 History of Web Reservations International (WRI)
Founded by Ray Nolan, is privately held and headquartered in Dublin, Ireland, with offices in Sydney, Australia, San Mateo, California and Shanghai, China Online travel growth triples Expansion plans: The recruitment of over 200 hostels and budget hotels each month to the system, increasing the number of beds available for booking by 14,000 per month. Increased focus on adding activity and tour products for the BIYT market. These include bungee jumping and bus tours. These products will be offered through and new websites. Sponsorship of a US College tour to promote its online booking sites for students. Development of system, which provides travelers with full itinerary booking and management. - Best E-Commerce and Best Overall website Spider award

12 History of WRI Continued in chosen as 1 of 40 for the world summit award for one of the best sites in the E-business category - Web Reservations International ranked second at the Deloitte Technology Fast 50 Awards Ceremony - have won the Emerging Entrepreneur of the Year Award at the 2003 Ernst & Young Entrepreneur Awards in Ireland - WRI acquires Receives investment from Summit Partners, a leading international private equity and venture capital firm -acquired Belgian based Hostels of Europe (450 Hostels) Web Reservations International unveils m-commerce technology This service, built on the O2 I-mode platform, makes the company’s budget, youth and independent travel site,, and it’s hotel reservations site,, available to travelers via mobile phones. - Launched a brand new website which specializes in group bookings for hostels all over the world - is acquired

13 History of WRI Continued wins Golden Spider for Best Travel Site Best Travel, Tourism and Hospitality website at the tenth Annual Eircom Golden Spider Awards in Dublin - Web Reservations International, one of the world’s leading e-travel reservation companies, today appointed Mark Opzoomer and Brian Dunne to its board as non-executive directors - Hostelworld.Com Celebrates Four Million Unique Hostel Accommodation Bookings

14 2006 Mission/Vision Statement
“To provide on-line confirmed bookings for hostels, budget accommodation centers and package tours, as well as comprehensive content such as city and country guides”

15 2006 Strategies and Objectives
Technological development To cater to the traveling youth demographic whom are technologically advanced 80 percent of youth travelers carry with a mobile phone 86 percent travel with a digital camera and a surprising 21 percent even take a laptop computer on their trips Expand and dominate all forms of European travel

16 2006 Issues How to continue to maintain its dominant position in the BYIT (Budget, Youth, and Independent Travelers)market and transfer its technology and business model to the low-cost hostel market or other sectors of the travel industry Trust and security in relation to WRI’s 500 web sites and affiliate programs Lack of an overall WRI branding Quick expansion in necessary to acquires competitors market share such as Expedia. Rising fuel costs Inflation

17 To be the paramount company for any and all travel desires.
A New Vision To be the paramount company for any and all travel desires.

18 A New Mission Web Reservations International’s (WRI) mission is to provide booking services for a large array of travel ideas in worldwide destinations. (2,3) We aim to satisfy anyone and everyone from elderly couples searching for retirement locations to youth looking to backpack across an entire continent, no matter what continent that may be. (1,2,3,7) Our innovative websites allow for users to book and compare a surplus of destinations with the click of a mouse. (4) Our knowledgeable and pleasant staff go above and beyond to provide for multicultural assistance and a memorable WRI experience, and are valued for that exact reason. (6,9) We are constantly looking for a way to better our company as a service to our customers as well as generating profits to our investors. (5) WRI has a simple business model where every party in the distribution chain benefits: the property, the partner and, of course, the end customer. (5,6,7) Web Reservations International is aware that a wide variety of travelers exist with many different environmental and social needs and views and we aim to satisfy and cater to every one of them. (8)

19 WRI’s New Mission The new mission answers the following questions
Customers: Who are the firm’s customers? Products or services: What are the firm’s major products? Markets: Geographically, where does the firm compete? Technology: Is the firm technologically current? Concern for survival, growth, and profitability: Is the firm committed to growth and financial soundness? Philosophy: What are the basic beliefs, values, aspirations, and ethical priorities of the firm? Self-concept: What is the firm’s distinctive competence or major competitive advantage? Concern for public image: Is the firm responsive to social, community, and environmental concerns? Concern for employees: Are employees a valuable asset of the firm?

20 External Audit: Opportunities
BYIT (Budget, Youth, and Independent Travelers) market growing Go public Growing online travel market Rebounding travel industry Worldwide industry Baby Boom market

21 External Audit: Threats
Oil Prices Inflation Exchange rate volatility Geopolitical uncertainty Competitors

22 Competitive Profile Matrix
WRI Expedia Priceline Critical Success factors Weights Rating Weighted Score 0.0 to 1.0 1 to 4 Global Market Share 0.15 3 0.45 2 0.3 Global Name Recognition 4 0.6 Technology 0.12 0.36 0.48 Customer Experience 0.07 0.21 0.28 Customer Loyalty 0.11 0.44 0.33 U.S. Market Share 0.05 1 0.2 Social Networking Available Financing 0.14 Business Services / Business Travelers 0.09 0.27 0.18 Accommodations Offered Totals 3.13 3.39 2.84

23 External Factor Evaluation Matrix
Key External Factors Weights Rating Weighted Score 0.0 to 1.0 1 to 4 Opportunities BYIT (Budget, Youth, and Independent Travelers) market growing 0.13 4 0.52 Go public 0.10 2 0.20 Growing online travel market 0.09 3 0.27 Rebounding travel industry 0.08 0.16 Worldwide industry 0.05 0.15 Baby boom market 0.11 0.44 Threats Oil Prices 1 Inflation 0.22 Exchange rate volatility 0.24 Geopolitical uncertainty Competitors Totals 2.60

24 Profit and Loss Account (December 31, 2006, in U.S. Dollars)
FY 2006 FY 2005 Result Turnover (Sales) 35,946,905 28,713,681 Increased 7.2M Administrative Expenses (12,049,219) (8,607,230) Increased 3.4M Operating Profit 23,897,687 20,106,451 Increased 3.8M Interest Receivable and Similar Income 424,145 181,825 Increased 240T Interest Payable and similar charges (2,385,792) (3,374,961) Decreased 1M Profit on Ordinary Activities Before Tax 21,936,040 16,913,314 Increased 5M Tax (2,709,848) (2,468,688) Retained Earnings 19,226,192 14,444,627 Increased 4.8M *The currency is converted from EUR to USD (1€ = $1.32) as at December 31, 2006

25 Turnover (Sales) (in U.S. Dollars)
Turnover is amounts invoiced for services provided to customers during the year Rest of the world increased $6M Total turnover increased $7M or 40% mainly due to the sales increase in international

26 Employees and Remuneration
Total staff costs increased $900,000 Cost per employee increased $6,000 due to the increases in other benefits and share based payments

27 Balance Sheet (in U.S. Dollars)
Current liability increased primarily due to the bank loan of $8.6 million. Instead, corporation tax decreased $570,000. The bank loan was secured over certain assets of the company and over certain assets of WorldRes Limited, a subsidiary undertaking. Long-term liability increased due to the redemption of shares. FY 2006 FY 2005 Result Fixed Assets Tangible assets 1,008,421 976,391 Increased 32T Intangible assets (Domain name) 4,304,612 4,668,278 Decreased 360T Financial assets (Investment in subsidiary) 265 Same Total Fixed Assets 5,313,298 5,644,934 Decreased 330T Current Assets Debtors (Accounts Receivable) 13,874,586 12,012,814 Increased 1.9M Cash at bank and in hand 913,857 17,812,007 Decreased 17M 14,788,443 29,824,822 Current Liability (11,308,344) (1,985,739) Increased 9.3M Net Currents Assets 3,480,099 27,839,082 Decreased 24M Total Assets Less Current Liabilities 8,793,398 33,484,016 Long-term liability - (44,006,376) Decreased 44M Provisions for Liabilities and Charges (474,801) (476,562) Almost same Total Net Assets after Tax 8,318,596 10,998,922 Decreased 2.7M *The currency is converted from EUR to USD (1€ = $1.32) as at December 31, 2006

28 Balance Sheet (in U.S. Dollars)
Financed By: FY 2006 FY 2005 Result Capital and Reserves Called-up share capital 30,444 32,325 Almost Same Share premium account 1,882,709 1,789,502 Increased 93T Capital conversion reservfe fund 337 Same Profit and loss account 6,403,097 (12,821,086) Increased 19M Capital redemption reserve 2,009 - Shareholders' Fund/(Deficit) 8,318,596 (10,998,922) Shareholders’ funds recovered from the deficit. During 2005, WRI changed its policy in relation to measurement and recognition of financial instruments. As a result, WRI recognized a liability of $38 million on initial recognition of the financial liability element of the preference share instruments in 2004 *The currency is converted from EUR to USD (1€ = $1.32) as at December 31, 2006

29 Internal Audit: Strengths
Privately held Credible CEO (Ray Nolan) Knowledgeable personnel (multicultural staff) Large scale of operation Distribution network Profitable business model

30 Internal Audit: Weaknesses
Lack of public funding Lack of public information Minimal presence in North America Low profit margin Customer Loyalty

31 Internal Factor Evaluation Matrix
Key Internal Factors Weights Rating Weighted Score 0.0 to 1.0 1, 2, 3 or 4 Internal Strengths 3 or 4 Privately held 0.10 4 0.40 Credible CEO (Ray Nolan) Knowledgeable personnel (multicultural staff) 0.08 0.32 Large scale of operation Distribution network 3 0.30 Profitable business model 0.12 0.36 Internal Weaknesses 1 or 2 Lack of public funding 2 0.20 Lack of public information 0.16 Minimal presence in North America 1 Low profit margin 0.06 Customer loyalty 0.04 Totals 2.86

32 Financial Ratio Analysis (Time Comparison)

33 Financial Ratio Analysis (Competitor Comparison 2006)

34 Financial Ratio Analysis (Industry Comparison 2006)

35 Net Worth (December 31, 2006, in Thousands of U. S
Net Worth (December 31, 2006, in Thousands of U.S. Dollars Except Per Share Items) 1. Stockholders’ Equity + Goodwill = $8,318, ,261,070 $11,579,666 2. Net Income x 5 = $19,226,192 x 5= $96,130,960 3. Share price = N/A 4. Number of Shares Outstanding x Share Price = Method Average $53,855,313 *The currency is converted from EUR to USD (€1.00 = $1.32) as at December 31, 2006

36 SWOT Matrix WRI SWOT Matrix Strengths – S
Privately held / easier to make decisions Superb CEO (Ray Nolan) Knowledgeable Personal (multicultural) Large scale operation Distribution Network Profitable business model Weaknesses – W Lack of public funding Lack of public information Minimal presence in North America Low profit margin Customer Loyalty Opportunities – O BYIT (Budget, Youth, and Independent Travelers) Go public Growing online travel market Rebounding travel industry Worldwide Industry Retiring baby boomers SO Strategies Global expansion (S3, S5, S6, O3, O4, O5) Advertise / Expand to and (S3, S4, S6, O3, O4, O6) Advertise / Expand to Pacific (S3, S4, S6, O3, O4, O5) WO Strategies Go public / IPO (W1, W2, O2) Advertise / Expand to and (W3, O3, O4, O6) Agreements with airlines / hotels (W3, W5, O3, O4, O5) Target university students worldwide (W2, W3, O1, O4) Threats – T Oil Prices Inflation Exchange rate volatility Geopolitical uncertainty Major competitors / many competitors (Expedia, Travelocity, Orbitz, Priceline, etc.) ST Strategies Go Public / IPO (S2, S4, S5, S6, T5) Allow online flight booking (S1, S4, S5, S6, T5) Joint Venture w/ Google (S3, S5, T5) WT Strategies Go Public / IPO (W1, W2, T5) Allow online flight booking (W5, T5) Advertise low cost hostels and budget deals (W5, T1, T2, T5) Joint Venture w/ Google (W3, W5, T5)

37 Space Matrix Financial Strength rating is 1 (worst) to 6 (best)
Ratings 1 Fixed Assets Turnover 5.0 2 Working Capital 4.0 3 Return on Total Assets 6.0 4 Return on Net Worth 5 Profit Margin on Sales Industry Strength FS Total 26.0 BYIT market growing (more elderly) Internet travel booking increasing Rebounding travel industry Financial stability 2.0 Increasing merger and acquisition 3.0 Environmental Stability rating is -1 (best) to -6 (worst) IS Total 20.0 Competitive pressure -5.0 Increase in fuel prices (airline and cruise) -4.0 Rate of inflation -3.0 Exchange rates Geopolitical uncertainty Competitive advantage ES Total -19.0 Privately held Credible CEO (Ray Nolan) Knowledgeable personnel (multicultural staff) Distribution network Efficient Business Modle -2.0 CA total -15.0 ES average -3.80 CA average -3.00 IS average 4.00 FS average 5.20

38 Space Matrix Web Reservations International is fairly in an aggressive position and has moderate financial strengths in a growing industry.

39 Grand Strategy Matrix Rapid Market Growth Slow Market Growth
Weak Competitive Position Strong Competitive Position Quadrant I Market development Market penetration Product development Forward integration Backward integration Horizontal integration Related diversification

40 IE Matrix

41 Matrix Analysis Alternative Strategies IE SPACE GRAND COUNT
Forward Integration X 2 Backward Integration Horizontal Integration Market Penetration 3 Market Development Product Development x Related Diversification Unrelated Diversification Joint Venture Retrenchment Divestiture Liquidation

42 Become a Publicly Owned Company (IPO) North American Expansion
QSPM Key factors Weight Become a Publicly Owned Company (IPO) North American Expansion Airline Affiliations AS TAS Opportunities 1 to 4 BYIT (Budget, Youth, and Independent Travelers) market growing 0.13 2 0.26 4 0.52 Go public 0.10 0.40 3 0.30 1 Growing online travel market 0.09 0.27 0.36 Rebounding travel industry 0.08 0.16 0.24 0.32 Worldwide industry 0.05 0.15 Baby boom market 0.11 0.22 0.33 Threats Oil Prices 0.20 Inflation Exchange rate volatility Geopolitical uncertainty Competitors Subtotal 1.00 2.63 2.89 2.28

43 QSPM Strengths 1 to 4 Privately held 0.10 1 3 0.30 2 0.20
1 to 4 Privately held 0.10 1 3 0.30 2 0.20 Credible CEO (Ray Nolan) 4 0.40 Knowledgeable personnel (multicultural staff) 0.08 0.32 0.24 Large scale of operation Distribution network Profitable business model 0.12 0.48 0.36 Weaknesses Lack of public funding Lack of public information Minimal presence in North America Low profit margin 0.06 0.18 Customer loyalty 0.04 0.16 Subtotal 1.00 3.44 3.32 2.06 6.07 6.21 4.32

44 Possible alternative Strategies
Market Development: Look to increase options allowing customers to book hotels for any destination. Add more hotels on the website in South America as well as the US. Market Penetration: Go after Expedia, Travelocity and Orbitz’s market share Product Development: Increase the amount of hotels on the site and have a variety of hotels that range in prices all over the World.

45 Possible alternative Strategies
We could also look into selling off our company to Google.  We can make a pitch to Google explaining how they offer countless amounts of services but do not yet have the booking services that WRI can offer.  WRI is a solid company with a network that reaches around the world.  We would explain how the industry is constantly growing and how it is becoming more habitual for world travelers to book reservations online.  Once our investors and Google have agreed on a price, the deal would be done.  The conditions of the deal could include things such as our investors receiving shares in Google.

46 1st Recommendation Become a Publicly Owned Company-Initial Public Offering (IPO) Get the approval from the Security and Exchange Commission (SEC) Write a S-1 that will describe everything that the company is doing and why Have the SEC review the S-1, and make any necessary changes if needed, then get an approval Get our shareholders approval by having our private investors vote on whether they should create the IPO by gathering information from our approved S-1 document. We will look to choose the NASDAQ stock market Our trading symbol will be WRI Funds will be utilized to build the worth of our company and form a joint venture with Google allowing for the booking of travel reservations on 30% of shares will be given to Stock Price: $15 Number of Shares: 2,000,000 Cost: $160,000

47 2nd Recommendation North American Expansion Budget: $2 million
Expand across the US by getting a larger variety of hotels on our website Be able to offer a variety of hotel rooms in every state creating greater options Expand more into the Caribbean, Mexico, and Canada Budget: $2 million

48 3rd Recommendation Airline Affiliations Budget: $3 million
Create affiliations with airlines so consumers can purchase plane tickets on our website Create package deals for our consumers that are willing to book flights on the website Work with major international tourist destinations to do more business on our website Budget: $3 million

49 Implementation Issues
Releasing financials to the public Stabilizing the stock price after the IPO Acquiring current investors support for implementing strategies Creating brand recognition in North America Counteracting increasing travel expenses

50 Proposed Annual Objectives and Policies
Increase turnover (amounts invoices for services provided) by 60% annually for the next 3 years 5% in Ireland 15% in Europe 40% in the rest of the World Reduce staff costs by 20% annually for the next 3 years 10% in wages and salaries 10% in benefits Transfer its technology and business model to the low-cost hostel market or other sectors effectively Provide adequate funding to R&D Assign technicians to further develop website and software

51 Proposed procedures for evaluation
Check reviews & feedbacks through SNS, blogs, and affiliated hotels & hostels Track average number of visitors per flagship website and affiliated licenses Quarterly & annual financial reports Quarterly & annual meetings to evaluate current plan and respond necessary changes

52 Epilogue partners with Genares worldwide reservation services to provide global distribution system booking engine - WRI opens New York office - show that the summer of 2007 was their busiest yet for backpackers - partners with to offer members excellent accommodation rates worldwide - with Ryanair contract for 5 years - Celebrates 1 million in revenues PayPal is added to goes live on iPhone receives a new look - Ray Nolan steps down from CEO position and is replaced by Feargal Mooney. Mooney was previously the Chief Operations Officer since 2002

53 Resources
Web Reservations International Financial Report 2006

54 Questions

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