Web Reservations
International
2006
Case Study
1
11
® 2008,Takefumi Kawahara, Matt Bouchard,
Darius
Parker,
Danielle
Takifumi Kawahara, Matt
Bouchard
Darius
Parker, Boucher
Danielle Boucher
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
2
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Ray Nolan – Founder and CEO of WRI
Employment History
•
Chief Executive Officer and Co-Founder
o Web Reservations International Limited
•
Chief Executive Officer and Founder
o Hostelworld.com
•
Chief Executive Officer
o WRI Group
•
Chief Executive Officer
o Boo
•
Chief Executive Officer and Founder
o Coretime
Board Membership and Affiliations
•
Board Member
o Web Reservations International Limited
•
Founder
o WRI Group
•
Founder
o Raven Computing
3
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
www.hostelworld.com
Hostelworld.com 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. Hostelworld.com is
headquartered in Dublin and is fully owned and operated by Web
Reservations International Ltd (WRI).
Headquarters: Sydney, Australia
4
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
www.boo.com
We provide your information to necessary third party service
providers when you reserve or purchase travel services through the
boo.com website. We also use your details to operate boo.com and,
occasionally, to inform you of new features, services and products
from boo.com.
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 boo.com 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.
5
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
www.worldres.com
WorldRes.com, 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
6
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
www.hostels.com
The premier site for hostelling information.
Online listings for over 10,000 hostels
worldwide.
7
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
www.trav.com
Confirmed online bookings for cheap accommodation
worldwide. Trav.com features hostels, cheap hotels, holiday
apartments, campsites, bed and breakfasts and guesthouses
online. Low rates guaranteed.
8
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
www.discounthotels-world.com
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.
9
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
9
A few of WRI’s 2,500 International Affiliates
www.ebookers.com
• European online travel agency specializing in worldwide travel
www.flybe.com
• Low-fare European airline
www.kasbah.com
• globally trusted and respected source of world travel and destination information
and booking
www.letsgo.com
• travel guide series that accompanies the free-spirited on treks across the globe
www.lonelyplanet.com
• Lonely Planet's is one of the best places to seek out advice on a wide range of
travelling issues’
www.raileurope.com
• Our Vision is that every North American traveler will choose us to experience the real
Europe by train
www.ryanair.com
• Cheap Flights - Lowest European Fares, Low Cost Airline
www.studentuniverse.com
• online travel service that enables students to travel for less.
10
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
10
History of Web Reservations International (WRI)
1999 - Founded by Ray Nolan, is privately held and headquartered in
Dublin, Ireland, with offices in Sydney, Australia, San Mateo,
California and Shanghai, China
2001 - Online travel growth triples
2002 -Expansion plans:
•The recruitment of over 200 hostels and budget hotels each month to the
hostelworld.com 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 www.hostelworld.com and new websites.
•Sponsorship of a US College tour to promote its online booking sites for
students.
•Development of myhostelworld.com system, which provides travelers
with full itinerary booking and management.
- Best E-Commerce and Best Overall website Spider award
11
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
History of WRI Continued
2003 - Hostelworld.com 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
- Hostelworld.com have won the Emerging Entrepreneur of the Year Award at
the 2003 Ernst & Young Entrepreneur Awards in Ireland
- WRI acquires Hostels.com
2004 - Receives investment from Summit Partners, a leading international private
equity and venture capital firm
-acquired Belgian based Hostels of Europe (450 Hostels)
2005 - 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, Hostelworld.com, and it’s hotel
reservations site, WorldRes.com, available to travelers via mobile phones.
- Launched www.hostelgroupbookings.com, a brand new website which
specializes in group bookings for hostels all over the world
- www.WorldRes.com is acquired
12
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
12
History of WRI Continued
2006 - Hostelworld.com 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
13
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
13
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”
14
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
2006 Strategies and Objectives
Technological development
• To cater to the traveling youth demographic
whom are technologically advanced
o 80 percent of youth travelers carry with a mobile phone
o 86 percent travel with a digital camera and a surprising
o 21 percent even take a laptop computer on their trips
Expand and dominate all forms of European
travel
15
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
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
16
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
A New Vision
To be the paramount
company for any and all
travel desires.
17
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
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)
18
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
WRI’s New Mission
The new mission answers the following questions
1.
Customers: Who are the firm’s customers?
2.
Products or services: What are the firm’s major products?
3.
Markets: Geographically, where does the firm compete?
4.
Technology: Is the firm technologically current?
5.
Concern for survival, growth, and profitability: Is the firm committed to
growth and financial soundness?
6.
Philosophy: What are the basic beliefs, values, aspirations, and ethical
priorities of the firm?
7.
Self-concept: What is the firm’s distinctive competence or major
competitive advantage?
8.
Concern for public image: Is the firm responsive to social, community,
and environmental concerns?
9.
Concern for employees: Are employees a valuable asset of the firm?
19
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
External Audit: Opportunities
1)
2)
3)
4)
5)
6)
BYIT (Budget, Youth, and Independent
Travelers) market growing
Go public
Growing online travel market
Rebounding travel industry
Worldwide industry
Baby Boom market
20
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
External Audit: Threats
1)
2)
3)
4)
5)
Oil Prices
Inflation
Exchange rate volatility
Geopolitical uncertainty
Competitors
21
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Competitive Profile Matrix
WRI
Expedia
Weights
Rating
0.0 to 1.0
1 to 4
Global Market Share
0.15
3
0.45
3
0.45
2
0.3
Global Name Recognition
0.15
3
0.45
4
0.6
4
0.6
Technology
0.12
3
0.36
4
0.48
3
0.36
Customer Experience
0.07
3
0.21
4
0.28
3
0.21
Customer Loyalty
0.11
4
0.44
3
0.33
3
0.33
U.S. Market Share
0.05
1
0.05
4
0.2
3
0.15
Social Networking
0.12
4
0.48
3
0.36
3
0.36
Available Financing
0.07
2
0.14
3
0.21
3
0.21
Business Services / Business Travelers
0.09
3
0.27
3
0.27
2
0.18
Accommodations Offered
0.07
4
0.28
3
0.21
2
0.14
Critical Success factors
Totals
1
Weighted Score
Rating
Priceline
Weighted
Score
1 to 4
3.13
22
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Rating
Weighted
Score
1 to 4
3.39
2.84
External Factor Evaluation Matrix
Weights
Rating
Key External Factors
Weighted Score
0.0 to 1.0
1 to 4
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
2
0.16
Worldwide industry
0.05
3
0.15
Baby boom market
0.11
4
0.44
Oil Prices
0.10
1
0.10
Inflation
0.11
2
0.22
Exchange rate volatility
0.08
3
0.24
Geopolitical uncertainty
0.05
2
0.10
Competitors
0.10
2
0.20
Opportunities
Threats
Totals
1
23
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
2.60
Profit and Loss Account
(December 31, 2006, in U.S. Dollars)
FY 2006
Turnover (Sales)
FY 2005
Result
35,946,905
28,713,681
Increased 7.2M
(12,049,219)
(8,607,230)
Increased 3.4M
23,897,687
20,106,451
Increased 3.8M
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)
Increased 240T
Retained Earnings
19,226,192
14,444,627
Increased 4.8M
Administrative Expenses
Operating Profit
Interest Receivable and Similar Income
*The currency is converted from EUR to USD (1€ = $1.32) as at
December 31, 2006
24
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Turnover (Sales)
(in U.S. Dollars)
FY 2006
FY 2005
Ireland
1,425,343
1,355,171
Europe
21,071,173
19,825,311
Rest of the World
13,450,389
7,533,199
35,946,905
28,713,681
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
25
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Employees and Remuneration
2006
2005
Number
Number
Admisnistration & sales
35
30
Website & software developers
10
5
45
35
$
$
Wages and salaries
2,617,530
1,953,923
Social welfare costs
251,584
199,057
Other benefits
80,455
-
Share based payments
93,712
-
3,043,281
2,152,981
The staff costs (inclusive of directors' salaries) comprise:
Total staff costs increased $900,000
Cost per employee increased $6,000 due to the increases in other benefits and share
based payments
26
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Balance Sheet (in U.S. Dollars)
FY 2006
FY 2005
Result
Tangible assets
1,008,421
976,391
Increased 32T
Intangible assets (Domain name)
4,304,612
4,668,278
Decreased 360T
265
265
Same
5,313,298
5,644,934
Decreased 330T
13,874,586
12,012,814
Increased 1.9M
913,857
17,812,007
Decreased 17M
Fixed Assets
Financial assets (Investment in subsidiary)
Total Fixed Assets
Current Assets
Debtors (Accounts Receivable)
Cash at bank and in hand
14,788,443
29,824,822
(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
-
(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
Current Liability
Long-term liability
*The currency is converted from EUR to USD (1€ = $1.32) as at December 31, 2006
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.
27
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Balance Sheet (in U.S. Dollars)
Financed By:
FY 2006
FY 2005
Result
Called-up share capital
30,444
32,325
Almost Same
Share premium account
1,882,709
1,789,502
Increased 93T
337
337
Same
6,403,097
(12,821,086)
Increased 19M
2,009
-
Almost Same
8,318,596
(10,998,922)
Increased 19M
Capital and Reserves
Capital conversion reservfe fund
Profit and loss account
Capital redemption reserve
Shareholders' Fund/(Deficit)
*The currency is converted from EUR to USD (1€ = $1.32) as at December 31, 2006
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
28
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Internal Audit: Strengths
1)
2)
3)
4)
5)
6)
Privately held
Credible CEO (Ray Nolan)
Knowledgeable personnel (multicultural
staff)
Large scale of operation
Distribution network
Profitable business model
29
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Internal Audit: Weaknesses
1)
2)
3)
4)
5)
Lack of public funding
Lack of public information
Minimal presence in North America
Low profit margin
Customer Loyalty
30
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Internal Factor Evaluation Matrix
Key Internal Factors
Weights
Rating
0.0 to 1.0
1, 2, 3 or 4
Internal Strengths
Weighted Score
3 or 4
Privately held
0.10
4
0.40
Credible CEO (Ray Nolan)
0.10
4
0.40
Knowledgeable personnel (multicultural staff)
0.08
4
0.32
Large scale of operation
0.10
4
0.40
Distribution network
0.10
3
0.30
Profitable business model
0.12
3
0.36
Internal Weaknesses
1 or 2
Lack of public funding
0.10
2
0.20
Lack of public information
0.08
2
0.16
Minimal presence in North America
0.12
1
0.12
Low profit margin
0.06
2
0.12
Customer loyalty
0.04
2
0.08
Totals
1
31
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
2.86
Financial Ratio Analysis
(Time Comparison)
FINANCIAL RATIOS
FY 2006
FY 2005
1.3 times
1.3 times
15.0 times
15.0 times
57.6%
10.2 times
131.4%
6.0 times
#DIV/0!
140.9 days
7.4 times
1.8 times
#DIV/0!
152.7 days
5.6 times
0.8 times
53.5%
98.0%
231.1%
50.3%
41.3%
-131.3%
LIQUIDITY RATIOS
Current Ratio
Quick Ratio
LEVERAGE RATIOS
Debt to Total Assets
Times Interest Earned
ACTIVITY RATIOS
Inventory Turnover
Ave. Collection Period
Fixed Assets Turnover
Total Assets Turnover
PROFITABILITY RATIOS
Profit Margin on Sales
Return on Total Assets
Return on Net Worth
32
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Financial Ratio Analysis
(Competitor Comparison 2006)
FINANCIAL RATIOS
WRI
Expedia
Priceline
1.3 times
1.3 times
0.8 times
0.8 times
5.0 times
5.0 times
57.6%
10.2 times
28.6%
23.3 times
67.3%
11.5 times
#DIV/0!
140.9 days
7.4 times
1.8 times
#DIV/0!
34.5 days
0.3 times
0.3 times
#DIV/0!
15.8 days
1.9 times
1.0 times
53.5%
98.0%
231.1%
10.9%
3.0%
4.1%
6.6%
6.7%
20.6%
LIQUIDITY RATIOS
Current Ratio
Quick Ratio
LEVERAGE RATIOS
Debt to Total Assets
Times Interest Earned
ACTIVITY RATIOS
Inventory Turnover
Ave. Collection Period
Fixed Assets Turnover
Total Assets Turnover
PROFITABILITY RATIOS
Profit Margin on Sales
Return on Total Assets
Return on Net Worth
33
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Financial Ratio Analysis
(Industry Comparison 2006)
FINANCIAL RATIOS
WRI
Travel Agency
Industry (U.S.)
S&P 500
1.3 times
1.3 times
5.2 times
5.2 times
1.0 times
0.8 times
-
-
-
1.8 times
0.7 times
0.9 times
53.5%
98.0%
231.1%
21.9%
15.9%
19.1%
11.7%
8.2%
25.5%
LIQUIDITY RATIOS
Current Ratio
Quick Ratio
LEVERAGE RATIOS
Debt to Total Assets
Times Interest Earned
ACTIVITY RATIOS
Inventory Turnover
Ave. Collection Period
Fixed Assets Turnover
Total Assets Turnover
PROFITABILITY RATIOS
Profit Margin on Sales
Return on Total Assets
Return on Net Worth
34
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Net Worth
(December 31, 2006, in Thousands of U.S. Dollars Except Per Share
Items)
1. Stockholders’ Equity + Goodwill = $8,318,596 + 3,261,070
$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 =
N/A
Method Average
$53,855,313
*The currency is converted from EUR to USD (€1.00 = $1.32) as at December 31, 2006
35
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
SWOT Matrix
1.
WRI
SWOT Matrix
2.
3.
4.
5.
6.
1.
2.
3.
4.
5.
6.
1.
2.
3.
4.
5.
Opportunities – O
BYIT (Budget, Youth, and
Independent Travelers)
Go public
Growing online travel market
Rebounding travel industry
Worldwide Industry
Retiring baby boomers
1.
2.
3.
Threats – T
Oil Prices
1.
Inflation
Exchange rate volatility
2.
Geopolitical uncertainty
Major competitors / many
3.
competitors (Expedia,
Travelocity, Orbitz, Priceline, etc.)
Strengths – S
Privately held / easier to make
decisions
Superb CEO (Ray Nolan)
Knowledgeable Personal
(multicultural)
Large scale operation
Distribution Network
Profitable business model
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)
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)
1.
2.
3.
4.
5.
1.
2.
3.
4.
1.
2.
3.
4.
Weaknesses – W
Lack of public funding
Lack of public information
Minimal presence in North
America
Low profit margin
Customer Loyalty
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)
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)
36
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Space Matrix
Financial Strength
rating is 1 (worst) to 6 (best)
1 Fixed Assets Turnover
2 Working Capital
3 Return on Total Assets
4 Return on Net Worth
5 Profit Margin on Sales
Industry Strength
rating is 1 (worst) to 6 (best)
1 BYIT market growing (more elderly)
2 Internet travel booking increasing
3 Rebounding travel industry
4 Financial stability
5 Increasing merger and acquisition
Environmental Stability rating is -1 (best) to -6 (worst)
1 Competitive pressure
2 Increase in fuel prices (airline and cruise)
3 Rate of inflation
4 Exchange rates
5 Geopolitical uncertainty
Competitive advantage rating is -1 (best) to -6 (worst)
1 Privately held
2 Credible CEO (Ray Nolan)
3 Knowledgeable personnel (multicultural staff)
4 Distribution network
5 Efficient Business Modle
Rating
s
5.0
4.0
6.0
6.0
5.0
FS Total 26.0
6.0
5.0
4.0
2.0
3.0
IS Total 20.0
-5.0
-4.0
-3.0
-3.0
-4.0
ES Total -19.0
-3.0
-4.0
-3.0
-3.0
-2.0
CA total -15.0
37
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
ES average
CA average
IS average
FS average
-3.80
-3.00
4.00
5.20
Space Matrix
FS
Conservative
Web Reservations
International is fairly in
an aggressive position
and has moderate
financial strengths in a
growing industry.
Aggressive
+6
+5
+4
+3
+2
(1.0, 1.4)
+1
CA
IS
-6
-5
-4
-3
-2
-1
+1
-1
+2 +3
+4
+5
+6
-2
-3
-4
Defensive
-5
Competitive
-6
ES
38
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
38
Grand Strategy Matrix
Rapid Market Growth
Quadrant I
1. Market development
2. Market penetration
3.Product development
4.Forward integration
5.Backward integration
6.Horizontal integration
7.Related diversification
Weak
Competitive
Position
Strong
Competitive
Position
Slow Market Growth
39
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
IE Matrix
40
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Matrix Analysis
Alternative Strategies
IE
SPACE
GRAND
COUNT
Forward Integration
X
X
2
Backward Integration
X
X
2
Horizontal Integration
X
X
2
Market Penetration
X
X
X
3
Market Development
X
X
X
3
X
x
2
Product Development
Related Diversification
0
Unrelated Diversification
Joint Venture
0
0
Retrenchment
0
Divestiture
0
Liquidation
0
41
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
QSPM
Key factors
Become a Publicly
Weight Owned Company
(IPO)
AS
Opportunities
TAS
1 to 4
North American
Expansion
AS
TAS
1 to 4
Airline Affiliations
AS
TAS
1 to 4
BYIT (Budget, Youth, and Independent Travelers) market growing
0.13
2
0.26
4
0.52
2
0.26
Go public
0.10
4
0.40
3
0.30
1
0.10
Growing online travel market
0.09
3
0.27
3
0.27
4
0.36
Rebounding travel industry
0.08
2
0.16
3
0.24
4
0.32
Worldwide industry
0.05
2
0.10
3
0.15
1
0.05
Baby boom market
0.11
2
0.22
3
0.33
2
0.22
Oil Prices
0.10
2
0.20
3
0.30
4
0.40
Inflation
0.11
3
0.33
2
0.22
2
0.22
Exchange rate volatility
0.08
3
0.24
2
0.16
1
0.08
Geopolitical uncertainty
0.05
3
0.15
2
0.10
1
0.05
Competitors
0.10
3
0.30
3
0.30
2
0.20
Subtotal
1.00
Threats
2.63
42
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
2.89
2.28
QSPM
Strengths
1 to 4
1 to 4
1 to 4
Privately held
0.10
1
0.10
3
0.30
2
0.20
Credible CEO (Ray Nolan)
0.10
4
0.40
4
0.40
2
0.20
Knowledgeable personnel (multicultural staff)
0.08
4
0.32
3
0.24
3
0.24
Large scale of operation
0.10
4
0.40
3
0.30
2
0.20
Distribution network
0.10
3
0.30
3
0.30
2
0.20
Profitable business model
0.12
4
0.48
3
0.36
2
0.24
Lack of public funding
0.10
4
0.40
3
0.30
2
0.20
Lack of public information
0.08
4
0.32
3
0.24
1
0.08
Minimal presence in North America
0.12
3
0.36
4
0.48
2
0.24
Low profit margin
0.06
4
0.24
4
0.24
3
0.18
Customer loyalty
0.04
3
0.12
4
0.16
2
0.08
Subtotal
1.00
Weaknesses
3.44
3.32
2.06
6.07
6.21
4.32
43
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
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.
44
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
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.
45
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
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 Google.com
o 30% of shares will be given to Google.com
Stock Price: $15
Number of Shares: 2,000,000
Cost: $160,000
46
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
2nd Recommendation
North American Expansion
• 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
47
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
3rd Recommendation
Airline Affiliations
• 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
48
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
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
49
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
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
50
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
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
51
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Epilogue
2007 - WorldRes.com partners with Genares worldwide reservation services to
provide global distribution system booking engine
- WRI opens New York office
- Hostelworld.com show that the summer of 2007 was their busiest yet for
backpackers
- Wayn.com partners with HostelWorld.com to offer members excellent
accommodation rates worldwide
- HostelWorld.com with Ryanair contract for 5 years
- Celebrates 1 million in revenues
2008 - PayPal is added to HostelWorld.com
- HostelWorld.com goes live on iPhone
- HostelWorld.com 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
52
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Resources
www.webresint.com
www.boo.com
www.worldres.com
www.hostels.com
www.hostelworld.com
www.letsgo.com
www.ryanair.com
www.studentuniverse.com
www.lonelyplanet.com
www.raileurope.com
www.flybe.com
http://www.oanda.com/convert/fxhistory
Web Reservations International Financial Report 2006
msn.money.com
53
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher
Questions
54
Takifumi Kawahara, Matt Bouchard Darius Parker, Danielle Boucher