Sightseeing Bus Tours Business Plan

Double Decker Tours of Washington

Executive Summary

The Company

Double Decker Tours of Washington, LLC (DDTOW), located in the city of Washington, DC is a new sightseeing company in its formative stages. It is being organized to take advantage of a specific gap in the local sightseeing tour market. The gap exists in high quality, reasonably priced sightseeing tours in the nation's capital away from the city center, indicating that a new entrant tour company could be expected to capture a significant portion of the current sightseeing tour market.

The Company's Mission

Double Decker Tours of Washington's mission is to provide safe, reliable and fun sightseeing tours to the visitors of Washington, DC using London-style double-decker buses. Nine of the buses will be open top for sunny warm and beautiful days and three will be closed for cold and inclement weather.

Product and Services

DDTOW will provide daily sightseeing tours and charter services in Washington, DC. We will survey the White House, Capitol Building, Supreme Court, Senate Office Buildings, House Office Buildings, Museums, Library of Congress, etc., as well as Adams Morgan, the U Street Corridor, Catholic University and many other sites that make up the city.

Marketing and Sales Strategy

DDTOW will develop a message that touring with us is fun and we will project that message over the airwaves and in print. We will kick off our message using Comcast Cable System in the Washington area as well as hosting parties for certain tour association decision makers and the media. We plan a pre-opening marketing budget of $80,000. As we profit, we will spend about 1% of gross revenues on advertisement and marketing. We will also distribute survey cards to assess what we are doing right and identify what we are doing wrong.

The Competition

Our main competitors in the Washington sightseeing market are:

1. Tourmobile: Tourmobile is based at East Potomac Park and is authorized by the National Park Service to conduct sightseeing tours along the National Mall and in Arlington National Cemetary. Tourmobile uses a shuttle service employing 85-passenger trams along the Mall and 120-passenger trams in Arlington. They have been in business for over 25 years. Tourmobile was started in 1969 as a subsidiary of Universal Studios to provide interpretive services along the National Mall. In 1981 Tom Mack bought the company making Tourmobile, Inc. a locally owned Washington DC company. Tourmobile has over 42 vehicles and serves upwards of 2 million riders annually.
2. Historic Tours of America: HTA operates in Washington as the Old Town Trolley and DC Ducks. HTA is a national company with outlets across the country. HTA, like Tourmobile, uses a shuttle system for its passengers and they use 35- to 60-passenger trolleys.
3. Grayline: Grayline International is a global company with offices and tours around the world. Grayline contracts out its services to local bus lines and runs multiple tours. Grayline runs the Lil Red Trolley as its service in Washington.
4. Zohery Tours: Zohery Tours is a local company that runs 15-passenger vans and 45-passenger coach buses. Zohery tours are about 3 hours in length.

Target Market

In recent Washington Convention and Tourism Corporation figures, it showed that 17.6 million people came to visit Washington, DC, spending over $10 billion dollars; $4 billion of that on sightseeing and tourism related activities. Although overnight leisure travel increased significantly while day-trip volume was down, the good news was that average trip expenditures increased to levels of $480 per day per trip. Many of the trips that were made to the city centered around visiting historical places and museums (36%) and shopping (24%). In leisure travel, 36% of visitors were solo travelers as compared to 80% of business travelers and 23% of leisure travelers came with children as compared to 6% of business travelers. Also many of our visitors to the city have income of over $75K, were married, had no children, were in the 35-54 age group, and had an advanced degree. Visits from foreign tourists fell three years ago by 19% and by 14% two years ago, but over 1 million foreign tourists came to Washington, making it 8th in US destinations by foreign visitors.

Management

Michael Frank Coleman* will serve as member manager. He has extensive experience in the Washington sightseeing industry, working for Tourmobile and conducting walking tours around town. Mr. Coleman has a knack for recognizing opportunities and developing staff members to take advantage of those situations. Mr. Coleman will assemble a staff of experienced tour professionals to oversee operations and market our services.

Paul F. Williams* has over 30 years of entrepreneurial experience in international and private sector business development and will act as DDTOW's business development manager.

*Confidential and proprietary resume data has been omitted from this sample plan.

Operations

Tickets sales and boarding of the buses will take place at the MCI Center at 601 F Street in Northwest Washington. This site gives us great foot traffic in the heart of the entertainment district as well as ample parking and public transportation access. The buses will be stored and serviced by Peter Pan Bus Service in Tuxedo, Maryland thereby reducing staff cost and insuring top notch services for our customers. A small office located on Third Street in Northeast Washington will serve as administrative offices.

Financial

Our research and projections indicate that the demand for sightseeing tours in and around Washington is sufficient to provide Double Decker Tours of Washington, LLC with revenues of over $14 million dollars in its first full year of operations, utilizing 15 used London-style double-decker tour buses and selected routes throughout the city. These sales figures are based on capturing 453,000 customers out of a potential customer base of 22 million people. Second year revenues are expected to exceed $17 million serving over 500,000 customers with additional advertising and expanded tours. The DDTOW plan has the potential for a more rapid growth due in part to new memorial and other venues that are opening in Washington in the near future. In short, the demands for tours in DDTOW's target market during the coming year will be more than enough to support DDTOW's anticipated market share. These sales levels will produce net profits of $13 million dollars in the first operational year and $15 million in year two. Net profits in year one will be over 60% of sales and will maintain that level in year two. The company's long term plan is part of the due diligence package. The first few months of formative operation will burn cash (see the Start-up table later in this document) until revenue can commence. This is due to the organizational and regulatory obligations of a new tour operator but aggressive marketing and promotion will readily make up for the slow start.

Long-Term Development & Exit Plan

Goals

Our tours, along with the use of double-decker buses, that target new routes in the city, and aggressive media exposure will allow us to grow over the next five years into a major player in the region. Our goal is to create a reputation of quality, fun and safety that will make us the leader in the Washington area sightseeing/tour market.

Milestones

After our service starts, we will keep a close eye on sales and profit. If we are on target at the end of year two, we will look to expand into a new market.

Risk Evaluation

With any new venture, there is risk involved. The success of our project hinges on the strength of acceptance of our new tours and buses. After year one, we expect a lot of competition in the form of the established tour operators banding together against us.

Exit Plan

Ideally, DDTOW would like to expand into the Baltimore, Richmond, Atlanta and Miami markets over the next ten years. At that time, we will entertain the possibility of a buy-out by a larger Sightseeing/Tour operator or seek to sell to a new owner.

Funds Sought and Utilization

DDTOW is seeking financing of $800,000, in the form of a five-year loan. Most of the planned start-up costs are apportioned to the following areas in approximately declining value:

1. Purchasing twelve 70-passenger London-style double-decker sightseeing buses, nine of which are open top for beautiful days and nights and three closed top for cold or inclement weather.
2. Provisions of a sufficient cash reserve to assure timely payment of operating costs of the buses for the first three months.
3. Costs associated with recruiting, training, and paying operational crews.
4. Marketing, advertising, and public relations costs, including the cost of setting up a website capable of offering tour information and making online sales and reservations, and related Internet marketing, as well as conventional print and broadcast advertising, and public relations activities.
5. Administrative and legal costs incurred in setting up the business and the tour operations.
6. A reserve to cover overall operating costs, aside from bus operating costs, over at least the first three months of operations.

The following chart illustrates the highlights of our business plan over the first three years.

1.1 Objectives

Double Decker Tours of Washington will have as it primary objectives the following elements:

• To establish and operate a new tour company aiming specifically at touring the monuments, memorials, museums, and government buildings of the capital city as well as touring the historic neighborhoods away from the city center.
• To implement an organizational and marketing strategy that will, beginning in the first months of operation, achieve an average load per bus of 65-85 percent depending on season and increasing thereafter to 75-100 percent, thereby maximizing revenues and return on investment while reducing risk.
• To achieve revenues of about $14 million by our first full year of tour operations, exceeding $20 million by our third year. Also to expand into newer markets in the Baltimore-Washington corridor.
• To achieve net operating profits of 60-70 percent within the first 12 months of tour operations and steady growth enabling rational expansion of the company thereafter.
• To achieve the following results starting with twelve 70-passenger London-style doubledecker buses obtained through purchase to serve the touring public in Washington and incrementally expanding the fleet as demand grows.
• To gear operations, and present a professional, serious, growth-oriented image from the outset, that will set the stage for a reasoned, planned expansion, mirroring growth rates projected for the first years of operations.
• As an element critical to achieving DDTOW's other key objectives, to identify and develop strategic alliances through the DC Chamber of Commerce, the Greater Washington Board of Trade, the Washington Convention and Tourism Corporation and other Washington associations and tourism groups.

1.2 Keys to Success

In descending order of importance, the five critical keys to success for Double Decker Tours of Washington are:

• Employing an experienced, highly professional management team that combines vision; realism; financial ability; solid knowledge of the Washington tour/sightseeing market; familiarity with, and belief in, the utilization and benefits of the latest computer informational technologies; realization of the crucial importance of an organization personnel to its success; and a total commitment to the overall mission and goals of Double Decker Tours of Washington.
• Intelligent, progressive, and aggressive marketing that identifies the company as a different kind of player, one that is sharper and smarter, with a higher level of professionalism and operational standard than is the norm in the Washington region. Concentration on safety, with highly trained, dedicated, and professional personnel, caring for the customer and the customer's needs and straightforward, understandable fare pricing will form key pillars of the marketing strategy.
• Identification, through careful market research, of unserved or under-served routes in the city that may be of interest to our customers and enable high load factors and profitable operations.
• Use of a fleet of London-style doubledecker buses that offer an unobstructed view of the city from the top deck and offers a high level of comfort, safety, and fuel and operational efficiency.
• Use of information technology to reduce staffing and other operational cost; expand the potential market base; readily capture sales opportunities; and enhance customer convenience and satisfaction.

1.3 Mission

Double Decker Tours of Washington, LLC has a mission to provide safe, professional, reasonably priced sightseeing services to our customers. We intend to fill a niche in the Washington sightseeing market that is unmet at this time, to sites in the city that are not currently shown, as well as highlight the sites that are known to millions of visitors. We will operate and maintain the best fleet of buses available and we will never skimp on safety or customer service. We will always have and promote fun tours so that when the customer leaves us, they will remember the good time they had and recommend us to a friend or relative. We will provide friendly and courteous service from the time we meet to the time they leave.

With a combination of clean buses, friendly and informative and helpful driver guides along with outstanding customer service, DDTOW intends to lead the other companies and make our standards their ambition.