ENTRP 486 Business Plan
Homestay
April 22, 2024
TABLE OF CONTENTS
EXECUTIVE SUMMARY
THE BUSINESS CONCEPT AND VALUE PROPOSITION
2.1 Our Offering
2.2 Revenue Streams & Product Pricing
2.3 Sales Structure, Process & Terms
INDUSTRY/MARKET ANALYSIS
3.1 Industry Overview and Industry Trends
3.2 Customer Market Pains
3.3 Tip of the Spear Customers and Customer Archetypes
3.4 Channels of Distribution and Target Distributors
3.5 Problem Space & Alternative Solutions
MANAGEMENT TEAM AND COMPANY STRUCTURE
4.1 Management Team
4.2 Board of Advisors
4.3 Human Resource Plan
PRODUCT DEVELOPMENT, GROWTH, & EXIT STRATEGY
5.1 Growth Plan, Major Milestones, and Timeline
5.2 Future Product Extensions
5.3. Risk Assessment
5.4 Exit Strategy
OPERATIONS PLAN
6.1 Operational Overview
6.2 Key Activities, Resources, and Partnerships
FINANCIAL ANALYSIS
7.1 Summary of Financial Projections and Financing Plan
7.2 Explanation of Assumptions
7.3 Summary of Sources of Capital and Start-up Expenses at time 0
7.4 Annual income statements for years 1 – 5
7.5 Annual cash flow for year 1 to 5
APPENDICES
8.1 Problem Space
8.2 Validation Surveys and Experiments Explained
8.3 MVP
8.4 Customer Archetypes
8.5 Business Model Canvas
8.6 Gantt Chart / Timeline
8.7 Exit Strategy Appendix
8.8-8.10 Additional Appendices
REFERENCES
Executive Summary
Problem and Solution
In today’s travel scene, genuine cultural immersion can feel like an overpriced luxury. Our survey of 163 travelers revealed that 46% feel there is a lack of accessible opportunities for cultural experiences when traveling. Enter Homestay, a company dedicated to providing accessible cultural experiences to all; 60% of respondents expressed eagerness for such a platform.
Value Proposition
Homestay is a platform that redefines travel by providing travelers with unique lodging, culturally immersive experiences, and opportunities for authentic connection through staying with local hosts worldwide.
Market Opportunity
Airbnb dominates the market with 6 million active listings, Homestay aims to carve out its niche in the rapidly expanding industry, currently estimated at $82.63 billion and expected to grow at an annual rate of 4.7% from 2023 – 2030.
Competitive Strategy
Homestay stands out amongst direct competitors such as “Lingoo,” and “Couchsurfing,” with its emphasis on personal interactions, diverse stay options, and unwavering commitment to safety. Unlike indirect rivals like Airbnb, we prioritize cultural immersion and authentic connections, delivering unique experiences that set us apart.
Market Strategy
Homestay caters to a diverse audience, from adventurous 18-24-year-old solo travelers to globetrotters aged 55-65+; these groups cover 87% of our interested respondents. Targeted marketing includes social media ads and partnerships with influencers, all focused on delivering exceptional travel experiences to ensure lifelong customers.
Revenue Model and Financial Projections
Based on our survey, the majority of customers’ willingness to pay ranges from $100-$200+ per night. Assuming we charge the host fees of 5% and the guest service fees of 12%, Homestay would need approximately 1,961 three-night stays at $100 per night to yield $100,000 in revenue in our first year.
Funding Requirements and Sources
Homestay will need an investment of $150,000 to get started which includes $137,400 towards expenses and $13,000 as a buffer. We also plan on crowd-funding and getting family investors.
Traction
Having secured 41 emails from interested parties, we’re now focused on growing our user base and improving platform functionality. We’re on track to revolutionize cultural experiences. Join us and let’s create unforgettable adventures together.
II) THE BUSINESS CONCEPT AND VALUE PROPOSITION
2.1 Our Offering
Platform in app and website form, that connects hosts and travelers to do homestays. Homestays are a type of accommodation, where a local person opens their home to a traveler or travelers to stay with them for any range of time. Our platform will be a much easier alternative to study abroad or typical homestay programs that require long commitments, often large amounts of money and lengthy application processes. The platform will offer a unique experience for travelers excited to culturally immerse and live alongside locals.
2.2 Revenue Streams & Product Pricing
Our company will be working in a sharing economy model. Much like Airbnb or Uber, Homestay offers hospitable people the ability to open their homes as hosts to guests at a nightly rate they choose. Hosts can market themselves on their host profiles on the app, within our guidelines. We, the company, will make revenue from charging hosts a 5% fee, as well as a guest service fee of 12%. This model is very similar to Airbnb’s
Since rates depend on many factors, such as the house and location, we will provide hosts with their own pricing guides. Overall though market research,( see appendix ) we believe our customers’ willingness to pay is in the $100-$200 a night range.
Hosts will have the freedom to offer other services, like guided excursions, or all-inclusive packages with their normal stay. Though, hosts may still choose to offer these just as their base offering as well. We have found that many travelers crave unique experiences and would love a local to show them the “non-touristy” places. See appendix
Our target market group would gravitate towards Homestay, because there is nothing else like it on the market for those looking to be fully immersed in a culture. Staying with a local is one of the most enriching experiences a person can get, and the platform will ensure one can find the right host for them. Our market groups may however resist, because they are unsure of how safe pit is.
2.3 Sales Structure, Process & Terms
Our sales structure will remain simple, with a small external sales force to act as a catalyst in the initial years. We believe utilizing a professional team, rather than developing our own is best. This team will meet with people in our target market to discuss services and work towards securing our first customers. Salespeople may offer quality assurance, discounts, and referral bonuses. Since transactions and “booking” take place on our platform, sales will be tracked using the platform.
III) INDUSTRY/MARKET ANALYSIS
3.1 Industry Overview and Industry Trends
The travel and hospitality business are promising industries. Homestays are essential in the provision of accommodation through Airbnb with hotels, tourism sites, and study abroad programs. Such types of accommodation exhibit the market’s profitability because travelers seek unique and individualized experiences. Due to the radical changes happening in the travel and hospitality industry, our business can incorporate Airbnb hotels, homestays, and tourist destinations. One trend in the market is the high demand for authentic experiences via immersive experiences. Another trend is the digitalization of the industry. Our business can utilize various digital platforms to ease the process of reservations and suggestions.
3.2 Customer Market Pains
One customer market pain is the limited cultural immersion when traveling abroad. When staying in a hotel or Airbnb, a customer may lack unique experiences. Additionally, customers have complained that homestays are expensive, untrustworthy, and scarce. The homestays also pose complex application processes for clients.
3.3 Tip of the Spear Customers and Customer Archetypes
The business’ tip of the spear customer is aged 18-24 years old. The customer is a solo traveler who has a low to medium income. Further, the customer is enthusiastic about cultural experiences, traveling, and meeting new people. The market is appropriate for such customers because of their passion. Such customers are familiar with homestays and may be receptive to staying with us.
3.4 Channels of Distribution and Target Distributors
The business can reach each of the target segments via the business’ website and app which provide customers with a wide variety of options. The business can also partner with online travel agencies such as Expedia and Booking.com. Social media platforms can also be integrated to reach the target audiences. The channels can be integrated by creating a seamless in-app experience for customers. The app and website can be integrated to be accessed via any digital device. Online travel agents can be disintegrated to provide the business with exposure to attract more clients. The existing channels can be leveraged to establish new networks. Airbnb is a well-known platform that offers short-term rentals and Expedia is an agency that provides vacation rental and hotel booking options. The companies have a wide reach because they attract clients from diverse segments. There are several costs associated with dealing with distributors. Such costs include commissions, customer acquisition, marketing, and listing fees.
3.5 Problem Space & Alternative Solutions
Alternative solutions in our problem space that offer similar accommodation create opportunities for our business. Couchsurfing is one solution that can provide a unique solution to host customers via a subscription model. In addition, Au Pair World facilities provide clients with a distinctive experience. The customers and the hosts can work together to provide each other with mutual benefits. Guests are provided with accommodation after completing some chores. Another solution is traditional platforms for students. College-affiliated and study-abroad integrated homestays offer immense cultural and academic experiences. The business can also provide solutions via Booking.com and Airbnb where customers can find a wide array of lodging choices.
The evaluation of such services enabled the business to focus on several criteria pointed out by the target audience as the most important via the comprehensive survey feedback. Such criteria include suitability for short-term stays, cultural incorporation, trustworthiness, high-quality customer services, and cost considerations. The survey aimed to establish the ability of each service to provide customers with valuable data to make viable decisions via meeting their preferences and needs. The comparison is depicted on the axes of comparison to reflect the values and priorities provided by the survey respondents. The comparison ensures that the analysis reflects the real-world preferences of customers seeking viable accommodation solutions. See appendix 8.1.
IV) MANAGEMENT TEAM & COMPANY STRUCTURE
4.1 Management Team
Meet Elizabeth Hertzog, the leader, she’s a travel enthusiast driven by her transformative homestay experience in Bulgaria, pioneering the mission to make homestays accessible to everyone. With her extensive background in travel, and imminent entrepreneurship degree, Elizabeth brings a wealth of experience and a unique perspective to the table. Having lived, worked, and explored nine states and nine countries in the past two years, she has built extensive networks in both business and travel circles.
Anna Seppala serves as the organizational lead with previous project management experience under her belt. Her expertise allows her to seamlessly coordinate and facilitate meetings, ensuring that every team member is aligned and that we stay on track with our timeline objectives. Beyond her professional prowess, Anna possesses a deep passion for exploration and cultural immersion. Most recently, Anna embarked on an unforgettable journey to Japan, where she immersed herself in the country’s vibrant traditions, exquisite cuisine, and awe-inspiring landscapes. The experience left an indelible mark on her, further fueling her curiosity and appreciation for the world around her.
4.2 Board of Advisors
Rebecca Hertzog. As a career businesswoman, she is a Regional Sales Manager for Atkore. Rebecca has a wealth of knowledge in business and financials and will help guide our team with her expertise.
4.3 Human Resource Plan
App development team,
V) PRODUCT DEVELOPMENT, GROWTH, & EXIT STRATEGY
5.1 Growth Plan, Major Milestones, and Timeline
Our journey commenced in early February 2024 with the development of a minimum viable produce. The MVP was put to the test through a survey involving 163 travelers, who were invited to explore our app prototype and provide feedback. Questions ranged from suggestions for improvement to pricing preferences and safety concerns regarding homestay bookings. Incorporating invaluable insights from our respondents, we refined our concept into a second MVP.
Our scalable model empowers hosts to manage their properties while we sustainably generate revenue through a percentage of hosts’ and guests’ fees. This ensures a fair exchange where all parties benefit. A key milestone we are currently aiming to achieve is reaching $100,000 in revenue in our first year, which will allow us to grow rapidly in the following years. We will start our platforms’ services in one country specifically, but our overall goal is to be a platform with homestays worldwide much like Airbnb.
5.2 Future Product Extensions
Looking ahead, we envision expanding our offerings to include curated excursions and comprehensive, locally led all-inclusive packages that can be added to a guest’s stay. Initially targeting the 18-24 age group, we aspire to broaden our reach to cater to older adventurers aged 55-65+ who have also expressed interest in our service, as we evolve and grow.
By continuously adapting and innovating, we are poised to carve a niche in the travel market and deliver enriching expereinces to travelers of all ages.
5.3. Risk Assessment
5.4 Exit Strategy
Done as a team
VI) OPERATIONS PLAN
6.1 Operational Overview
The process for developing the HomeStay app will involve several steps aimed at delivering a seamless user experience for both guests and hosts. Our team will start by designing a simple prototype that includes important features aligning with user preferences, such as booking calendars, host background checks, and a secure payment system. To successfully bring our vision to life, we will seek additional guidance from outsource production and connect with a team of professionals who possess specialized expertise and resources in software development. Before launching the app onto the market, rigorous testing protocols will be implemented to identify potential bugs or glitches and verify that everything functions in a proper manner. Continuous improvement based on user feedback will be crucial to our approach, ensuring that the app remains responsive to the evolving needs and preferences of our growing user base. In essence, the creation of HomeStay represents a collaborative effort driven by innovation, expertise, and a commitment to providing value to users, with a goal of revolutionizing the way individuals experience cultural immersion.
6.2 Key Activities, Resources, and Partnerships
Based on our value proposition for the HomeStay app, our key activities will revolve around establishing partnerships with local hosts worldwide, curating unique lodging options, and providing exceptional customer support. This involves an extensive outreach effort to find and connect with potential hosts, which can be accomplished by sending personalized emails, making phone calls, and attending travel-related networking events. Operational success will involve continuous app improvement and the implementation of effective marketing strategies, keeping HomeStay at the forefront of the hospitality industry. To track performance and gain insight into app efficiency, our team will routinely analyze metrics such as the number of active users, booking conversion rates, customer ratings/reviews, and revenue generated from bookings. This data will help us make informed business decisions and discover different opportunities for growth. The HomeStay app will be made accessible for download and use through popular digital app stores like the Apple App Store and Google Play Store. Our key resources encompass technology infrastructure, human capital, partnerships with local hosts, and financial assets that will ideally be obtained from investors. A key company we plan to contract with is Seattle Software Developers. With an impressive 30-year legacy of software experience, they will provide a wealth of knowledge to strategically build the app. Their proven track record of working with majoring companies, like TikTok, attests to their ability to deliver results that exceed expectations. Their comprehensive services range from app development to UX/UI design, aligning with our objectives for the success of the HomeStay app.
VII) FINANCIAL ANALYSIS
7.1 Summary of Financial Projections and Financing Plan
According to our financial projections, the Homestays app is anticipated to incur net losses totaling $66,400 in the first year. However, subsequent years show a promising turnaround, with both the cash flow statement and income statement indicating a positive shift. In the inaugural year, our calculations suggest that revenues will exceed expenses by $4,200, resulting in a net profit. While this may appear modest initially, the trajectory reveals substantial growth in net profits, projected to reach $151,750 by the fifth year based on current predictions.
To secure funding for the Homestays app, our strategy involves active participation in numerous networking events. We intend to leverage the resources and networking opportunities provided by Washington State University, engaging with entrepreneurs and investors in the vicinity. Our approach includes reaching out to potential investors, starting with close contacts such as friends and family, and expanding our search to attract as many investors as possible. Investment is the cornerstone of our funding plan, as we seek support for our innovative app concept. Initially, the business is unlikely to offer shares or distribute dividends due to its novelty and the time required to establish a foundation in the market.
7.2 Explanation of Assumptions
The financial statements provided in the following tables have been meticulously crafted through critical analysis, considering the various expenditures that must be accounted for in implementing the business idea. Furthermore, meticulous calculations were employed to determine the anticipated number of travels and nights stayed at host houses, ultimately resulting in the projection of expected revenue and profit for the initial five years of the Homestays app’s existence.
As previously said, the projected revenue has been meticulously calculated by multiplying the anticipated number of 3-night stays by the minimum stay cost of $100 per night. This method yields an expected revenue of $100,000 as depicted in the financial statements. However, it’s imperative to note that insights garnered from interviews suggest a suggested price range between $100 and $200 per stay. Therefore, adjusting the price per stay towards the higher end of this spectrum could potentially result in a more favorable profit margin or mitigate potential net losses.
7.3 Summary of Sources of Capital and Start-up Expenses at time 0
Given that the business concept revolves around the inception and advancement of an application, it is anticipated to entail considerable expenses. The primary startup expenditure will be allocated to app development and creation, estimated to fall within the range of $20,000. Furthermore, there will be additional expenses incurred for marketing and sales employees, totaling around $30,000. It’s worth noting that these expenses will primarily be incurred post-app development, enabling us to leverage marketing strategies effectively to promote the app and attract hosts and guests.
7.4 Annual income statements for years 1 – 5
7.5 Annual cash flow for year 1 to 5
IIX) APPENDICES
8.1 Problem Space
8.2 Validation Surveys and Experiments Explained
Insert details on experiments / tracking of validation.
Present data/results of your surveys
Style counts! (think back to your validation presentation).
8.3 MVP
Describe or display a mock-up or sketch of your MVP.
8.4 Customer Archetypes
Update your customer archetypes. Include at minimum the tip of the spear customers, you could also include eventual customers.
8.5 Business Model Canvas
Update your business model canvas and include it here
8.6 Gantt Chart / Timeline
Include an updated copy of your company timeline / Gantt Chart.
8.7 Exit Strategy Appendix
Include an exit strategy appendix that documents recent acquisitions in your industry and/or recent IPOs in your industry.
Indicate your anticipated exit strategy
8.8-8.10 Additional Appendices
– Optional
– Insert additional graphs, tables, or figures as needed. Properly label and title of each appendix.
– Suggested (if applicable): Operations and distribution flow-chart, plant schematic, product sell sheet.
X) REFERENCES
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