Outline Industry Overview Company Overview/History SWOT Analysis Market Opportunity Analysis –Demand –Segment –Supply Objectives Strategy Evaluation Plan
Industry Overview People are now able to book their own flights and vacations while being able to jump from website to website in order to find the best deal. Among the most popular online travel agencies are Travelocity, Orbitz, Expedia, and Priceline. What makes this industry so strong is the growing amount of people as well as companies, using the internet. The internet is a great deal faster than finding a traditional travel agency.
Company Overview www.travelocity.com Travelocity is a leading provider of travel services. They market and distribute travel related options through their website and websites owned by their suppliers and distribution partners. Online, customers can access offers, and pricing information about airlines, hotels, car rental companies, cruise lines, vacation and last-minute travel packages, and other travel-related information. For business travelers, there is Travelocity Business. Since their launch in 1996, Travelocity has won many award in both the travel and internet categories of their business. Among these awards are the Stevie Award for Best New Product of Service. The award was in recognition to Travelocity’s TotalPriceSM, which offers comprehensive pricing information for rental car reservations with just one mouse click. Travelocity was also named the “World’s Leading Travel Internet Site” for the eighth consecutive year in a row in 2004.
Company History www.travelocity.com Travelocity received the highest overall ranking in the Online Customer Respect Study, conducted by the Customer Respect Group, in 2003. Travelocity received a rating of 9.2 out of 10 – the highest overall among all travel sites. Travelocity was named winner in the Transportation category at the Computerworld Honors 21st Century Achievement Awards in 2002. This award recognized Travelocity as an innovative company leading the global information technology revolution. Travelocity won the Best Online Distributor award at the 2002 Air Transport
SWOT Analysis Strengths: Award winning in online services Easy to use web site Increasing revenues Recent acquisition of lastminute.com (Europe) Weaknesses: Seasonal Traveling Increasing customer acquisition costs www.travelocity.com Opportunities: Increasing travel demand Repeat customers Business Travelers Threats: Many online competitors New innovations of competitors
MOA: Demand Demand for Business Travel is growing, and revenues are increased since the launch of the Travelocity Business segment. This allows business to book trips quickly and receive deals on them. The Travelocity TotalTrip segment and Last Minute Packages has increased its packages revenues $48million since its launch in 2003. www.travelocity.com
MOA: Segment Both the Business and Packages segments target consumers who want quick, easy, cheap transactions and don’t want or have the time to spend on travel agents. These groups of consumers need online programs to do their business. www.travelocity.com
MOA: Supply “The Travelocity Guarantee assures that when you book with Travelocity and encounter any problem with your booking, we'll work with our partners to make it right.” Travelocity offers the best guarantee for travel than any other online travel agency. They concentrate their advertising on this guarantee and it assures people of a worry free vacation. At least when it comes to the Travelocity end of the bargain. The thought of not having to worry about something going wrong with hotel reservations is enough to make many customers go through Travelocity. www.travelocity.com
Objectives Increase International transactions by 5% from the 2004 ytd totals. Increase revenues 10% from 2004. Reduce acquisition costs from $14million to $ 10million. www.travelocity.com
Strategy In order to increase the international transactions, Travelocity acquired lastminute.com, this made them the leading online travel agency in Europe. They need to concentrate more advertising in that area and make consumers aware of this acquisition. To increase revenues, Travelocity needs to spend time trying to cut costs, this way they can stay competitive with their prices. The main cost to be cut would be in the selling, general and administrative area. The largest cost being the customer acquisition. There has been an increase in advertising in order to acquire new customers. With the advertising being based on their guarantee, this could help retain customers and decrease the need for so much advertising, therefore decreasing the cost. www.travelocity.com
Financials www.travelocity.com Year Ending December 31, 200420032002 Revenues$502,549$394,508$338,772 Cost of Revenue224,386203,392187,612 Gross Profit278,163191,116151,160 Selling, general, and administrative 273,189249,893221,477 Operating Income (loss)(20,498)(100,331)(105,359)
Implementation Plan Increasing international business with lastminute.com Increasing business travel with Travelocity Business. Increase customer retention with Travelocity Guarantee Increase online transactions with easier website www.travelocity.com
Evaluation Plan Travelocity should evaluate their progress through their finances. Right now they have a negative operating income and if they can get a positive operating income, then they should look into what they have done to change that. www.travelocity.com