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Develop and describe the business model of your venture? Use ‘The Business Model Canvas’ for this purpose.

Goals and objectives

The tourism industry of New Zealand in recent times have accelerated to a great extent and has become the largest export industry of the nation. This has put a positive influence on the functioning of hotel industry that plays a significant part in travel and tourism (Luo & Milne 2014, pp.81-100). In the following report, the Riverdale Houseboat Accommodation’s business plan is constructed. This houseboat rental business will be situated in Auckland, New Zealand. The country efficiently utilises the scenic landscapes of the nation and provides luxurious and adventurous holiday plans for tourists. Similarly, the Riverdale Houseboat Accommodations shall utilise the scenic beauties of its surrounding area where it is planned to be situated. Riverdale Houseboat Accommodations shall be situated in the banks of New Zealand’s longest river named Waikato River in Auckland. This houseboat rental accommodation will offer its visitors with the option of renting the small houseboats on loan from existing owners instead of purchasing them. The houseboats shall be available to families and young couples at low rates in the lean season and shall also stick with affordable price range all throughout the season.

A total number of twenty houseboats shall be rented for the purpose of visitors accommodations. However, the company shall try to increase the number of accommodations in the coming year depending on the rate of customers visiting the houseboat rentals. Since the location of the houseboat accommodations have been decided to be situated in the river land area of Auckland, New Zealand. Therefore, the business may have a lot of scope to attract customers with the range of facilities that it shall offer. The business will require loans in order to launch in the tourism industry. Apart from this, the business will have to survive among the other competitors that are present in the market. Therefore, a well-constructed business plan is set up in the below discussions where the goals and objectives of the business are discussed. In addition to this, an industry and market analysis is conducted in order to understand the market. Furthermore, operational plan and organisational plan is constructed for establishing and gaining success over the period of time.

The Riverdale Houseboat Accommodations have set up the following objectives in order to achieve success in the competitive market. Over the first three years, the business shall have the following objectives.

  1. Rent land for the purpose of marina and marina facilities.
  2. Organise a pool of twenty houseboat owners that are willing to rent them out.
  • Gradual increase of the annual revenue each year.
  1. Achieving 50% of customer retention rate from the 2ndyear to the consecutive years.
  2. Promote the business across the local regions of Auckland and in New Zealand as well.
  3. To deliver quality services to the customers and maintain a good customer relationship.
  • To build a reputable image in the market as a whole.

The Riverdale Houseboat Accommodations mission is to offer the customers with quality houseboat accommodations at affordable price range at rentals. The business shall focus in providing its customers with the perfect balance of adventure and relaxation suitable to their needs. The range of activities along with quality houseboat accommodations shall be the highlighting dimension of the business.

Mission and Vision

The vision of the business is to offer the customers or visitors with relaxing experience through houseboat accommodations and range of activities that it will offer without exploiting the river land area of Auckland, New Zealand. 

In order to understand and identify the key target market and business competitors, the Riverdale Houseboat Accommodations shall run an industry analysis that will help the business to detect the key competitors and the target market upon which it shall implement its strategies. This shall help the business to grow and achieve the goals and objectives that it has set for itself (Dobbs 2014, pp.32-45).

Firstly, Porter’s Five force model shall be taken into consideration for the purpose of analysing the industry. The Porter’s five Force model helps in providing an accurate apprehension that will make the analysis much easier (Porter & Heppelmann 2014, pp.64-88). The Porter’s Five Force model analysis is discussed below –

In order to analyse the intensity of industry rivalry the number of competitors are identified. It has been observed that the number of houseboat businesses in New Zealand is comparatively high therefore, the intensity of competitive rivalry is high (Sanders & Galloway 2013, pp.788-806). This puts an ample amount of pressure upon the business as it has to surpass the sales and popularity of existing competitors. However, the Riverdale Houseboat Accommodations shall be situated near the Waikato River of Auckland and there are no major competitors located in that region except the Houseboat Holidays that provides a similar service to that of Riverdale Houseboat. Henceforth, the business have to come up with an innovative plan that could attract customers towards itself and also make an identity of its own.

Since the company shall start up the business by renting the houseboats from the owners therefore, they play one of the significant supplier for the company. However, the number of houseboat owners in Auckland region are comparatively less therefore the power of negotiation among the houseboat suppliers are comparatively high (Maritimenz.govt.nz, 2018, pp.1). In addition to this, these suppliers hold the control over setting the rental prices for houseboats and this may make a significant impact over the business’s profitability.

Apart from this, the other facilities that the business shall offer ranges from wine and dine restaurant in the premises and in premium houseboats as well. A total number of five houseboats shall be allotted for this premium services. Therefore, the wine companies spread across the nation are another essential suppliers for the business. However, the availability of them are high in number as a result of which the power of negotiation is comparatively less and the business shall have an advantage of choosing from a variety of suppliers.

Industry Analysis

However, houseboat being the significant supply of the business and the power of negotiation among the houseboat suppliers being high, the business may suffer some struggle.

The tourists and visitors are the main customers for this business. Since the availability of houseboat accommodations is high and hence the customers have plenty of options to choose from for their stay in houseboat accommodations. However, the affordable price range and the renting facility of houseboats offered by Riverdale Houseboat Accommodations can significantly attract a wide range of customers. The business have a lot of scope of being popular as a result of its cheap price range and renting facility. However, the customers still have the power of negotiation and can moderately affect the business.

The company can face major obstacles from potential new competitors in the market. Since New Zealand have a highly favourable location for the establishment of houseboat accommodations as such, therefore, there may be a possibility of introduction of businesses related to this sector. This may be a major threat for the Riverdale houseboat Accommodations since it shall have to compete with new along with existing competitors in the market. Henceforth, the intensity of threats from new entrants in the market is significantly high.

Riverdale Houseboat Accommodations shall deal with customers that seek an exciting along with comfortable stay in New Zealand. However, there are huge number of other hotels and accommodations as well that offers similar services to its customers. In fact some of the competitors in the market have been offering combo deals that may attract hefty amount of consumers towards itself. On the other hand, the Riverdale Houseboat Accommodations have not yet launched in the market therefore it might take some time for the business to establish its identity in the highly competitive market. Therefore, it can be said that the intensity of threats from substituting services is comparatively high and can majorly impact upon the growth of the Riverdale houseboat Accommodations.

From the above discussion it can be the following outcomes can be enumerated and those are –

  • The number of competitors in the market is significantly high and as a result of which the business shall suffer from tough competition in the market.
  • The key suppliers for this business are the owners of the houseboats that shall rent the houseboats to the company and therefore they hold great power to negotiate the price resulting in major changes in the expenditures of the company.
  • The customers even though have a lot of options to choose from a huge availability of accommodations in New Zealand, they may get attracted towards the Riverdale Houseboat Accommodations for its cheap price range and the facility of giving out houseboat accommodations on rent.
  • The potential of new entrants in the market is high and as a result of which the company may have to face major threats from the new entrants in the market along with the existing competitors.
  • Lastly, the intensity of substituting services in the market is high and therefore, the company may face another significant competition from these substituting services. However, the company have the scope of attracting its target customers who seek exciting and comfortable accommodations.

For the purpose of analysing a much dynamic business environment, the PEST analysis is conducted. PEST analysis determines the various factors that may influence the business and other businesses of the same industry as a whole (Gupta 2013, pp.34-43). These factors have the tendency to change and evolve time in time and does not remain constant. Therefore, a thorough PEST analysis is conducted for Riverdale Houseboat Accommodations that will help the business to evaluate the possible factors that may influence the business.

Porter’s Five Forces

New Zealand have been enjoying a politically stable environment for over a long time. Since the abolishment of National party in 1999, the Labour party have been ruling the nation till now (Encyclopedia Britannica 2018, pp.1). The nature of political environment in New Zealand have been stable and have no major economic manipulations from the government.

The international relations of New Zealand with Australia and South Pacific Region is well developed. In fact due to the signing of the agreement “Closer Economic Relations” in the year 1983 between Australia and New Zealand, it has been able to extend mutual trade and services relation along with free movement of labour (Teara.govt.nz, 2018, pp.1). Therefore the company have high scope of attracting tourists and visitors from Australia and can thrive well in a politically stable environment.

Economic factors

The scope of hospitality industry in New Zealand is ever expanding, in fact the hospitality industry in New Zealand is considered to be one of the major exporting market. It has been observed that Australia along with European countries such as United Kingdom provide huge number of visitors to the New Zealand’s tourism market (TNZ Media, 2018, pp.1). Henceforth, opening up a great opportunity for the Riverdale Houseboat Accommodations as it could attract the visitors towards itself. The visitors’ growth have been consistently strong since the year 2014 (TNZ Media, 2018, pp.1). The rich economic growth of the nation shall be one of the advantages for the business to flourish and expand over the period.

In contemporary time, consumers are more inclined towards following the trending luxurious and adventurous lifestyle. Consumers tend to be more interested in accommodations that have a lot more to offer its customers that just a comfortable stay at a hotel (Zhou, Pearce & Wu 2014, pp.1-10). The Riverdale Houseboat Accommodations offering its customers with a combination of exciting and comfortable accommodation options have an advantage of attracting such consumers that seek for trending living lifestyle.

It has been also observed that majority of population in New Zealand are urbanised and live in urban centres (Dia.govt.nz, 2018, pp. 1). In fact, Auckland is considered to be one of the highly urbanised city of New Zealand (Dia.govt.nz, 2018, pp.1). Henceforth, the business located in the same city have the advantage of attracting the local residents as well for a getaway and does not have to rely solely upon the international tourists. These social status of the nation will act favourably for the business to function profitably over the period.

Technological factors

Competitive Rivalry

The technological factors significantly influence the hotel and accommodations industry o a great extent. It has been observed that the amount of technological upgrades are adopted by hotel and accommodations industry in regard with the amount of money the consumers are willing to pay (Leonidou et al. 2013, pp.94-110). In hospitality industry the advancement in technology enables the hotels and accommodations to upgrade their booking system and storing of relevant data of customers. Auckland being one of the popular destination for international tourists, the hotels and accommodation houses are in constant pressure to update and upgrade the automated system for booking s and reservations and also introducing facilities that are highly technically advanced. Henceforth, the Riverdale Houseboat Accommodations shall also be deeply influenced by the technologically advanced factors.

New Zealand’s houseboat vacation market have been in demand among both the local and foreign customers predominantly from countries such as Australia, United Kingdom and others. It has been observed that customers are more attracted towards houseboat accommodations that provide the services for rent for a specific rental period (Lu & Kandampully 2016, pp.119-126). In this particular market analysis for Riverdale Houseboat Accommodations a market segmentation along with marketing mix shall be discussed. The market shall be predominantly segmented by the age group and family status of the customers. Since it has been observed that these distinctive groups have distinctive preferences while selecting for a vacation houseboat accommodations (Chen, Schürhoff & Seppi 2014, pp.162-205.). These groups are further fragmented into older couples, younger couples and families. Whereas the 4 P’s of marketing mix shall be discussed distinctively for the purpose of influencing consumers towards purchasing the services and products offered by the Riverdale Houseboat Accommodations.

The key market segments for houseboat accommodations are discussed in details as follows –

Older couples

The couples ranging from the age group of 40 and above belong to this segment. Although the number of customers in this category are comparatively less, there are decent number of consumers that belong to this segment and seek for quieter activities ranging from fishing, light trekking, and others. For this, segment of consumers the Riverdale Houseboat Accommodations have activities and houseboat facilities that would satiate the consumers’ needs.

In this segment, couples ranging from the age group of 21 to 39 belongs to this group. The individuals belonging to this group generally are interested in high energetic activities such as jet skiing, diving and others that involve more physical activities. It has been observed that individuals belonging to this age group look for services that are affordable in price range and tend to splurge less (Mundel Huddleston & Vodermeier 2017, pp.68-75). Therefore, the Riverdale Houseboat Accommodations have incorporated all various range of activities that would suffice these needs.

Families

Power of Suppliers

Couples that have children belong to this segment. The quantity for this segment of market is highest compared to others. Sometimes a group of huge families come together and demand for large houseboats that could satiate the need for every individual in the family. Facilities and activities that can be performed in a group is basically demanded for this segment of individuals. Riverdale Houseboat Accommodations have all the necessary facilities and services that can satisfy the needs and demands of this segment or group.

For the purpose of implementing the most suitable marketing strategies the significant marketing tool is used namely marketing mix. The 4 P’s of marketing is analysed in the following discussion for the implementation of most apt strategies. For Riverdale Houseboat Accommodations the following marketing mix discussed –

In case of Riverdale Houseboat Accommodations the product is rather a service that the business shall offer to the consumers that seek for an exciting and comfortable vacation. The houseboat rentals that the business shall offer along with range of other activity services such as fishing, hiking, diving, houseboat rides and others.  The range of services and facilities offered by the business shall satiate consumers that seek for exciting and comfortable vacations. The business is targeted for those individuals that seek adventurous vacation plans. From offering exciting activities such as hiking, diving, jet skiing and others.

Price 

The price range for all the products and services that the Riverdale Houseboat Accommodation shall be customer value oriented. The price range for renting a houseboat shall be segregated according to the facilities of the houseboat. A classic houseboat rent shall be $150 per night whereas the deluxe houseboats shall be $800 per night. Customers will also have the option of renting the houseboats on an hour basis. The prices set for houseboat rentals are comparatively cheap than other houseboat companies.

The Riverdale Houseboat Accommodations shall be situated in the Auckland region of New Zealand near the Waikato River. Auckland is considered to be one of the popular regions of New Zealand where thousands of tourists visit (Newzealand.com, 2018, pp.1). Henceforth, it is a highly favourable spot for the company to attract the visitors. In addition to this, the business is located near the Waikato River henceforth, it has great opportunity to explore the surrounding nature and utilise it to provide distinctive facilities to the customers.

Promotion

Since it would be a start-up business, the company shall take the help of online marketing and direct marketing in order to promote the business. Advertisements by means on online media, traditional media and electronic media shall be executed. Additionally, pamphlets shall be spread in the local bars, clubs, cafes, restaurants of Auckland.

Power of Customers

In order to achieve the above mentioned goals and objectives set up by the company the following 2 to 3 years operational plan is constructed –

Activities to be delivered

  • The land that is required for setting up marina facilities shall be acquired by negotiating the terms and conditions from the owners of the land and shall be purchased with the help of short term loan.
  • For organising a pool of twenty houseboat owners a representative of the company shall be delivering the task of organising them and negotiating the terms with them.
  • In the 2ndyear of business, the high margin products and services shall be analysed and then by reducing the price of those products and services by 7% the sales revenue shall be increased. This would eventually increase the annual revenue of the business.
  • Delivering quality services and products to all the customers shall help in increasing the customer retention rate. Providing the customers with comfortable and adventurous experience will enable to achieve this goal.
  • From two months prior to its inauguration the promotion of the business shall be started and shall continue till one year of the business. In the second year, pop up advertisements along with official pages in major social media sites shall be created in order to promote the business.

Staffing and resource requirements

  • In order to provide assistance to customers regarding various facilities related to marine activities, a total number of eleven staff members shall be recruited.
  • Five lifeguard staffs will be available at the premises in order to provide assistance to customers and ensuring safety of them.
  • For the purpose of ensuring safety of the customers, equipment such as swim vests, rescue tubes, ropes and other necessary lifeguard kits shall be available at the premises.
  • Other than these, other water sports equipment will be available for the customers to enjoy such as jet skis, kayak boats, and other facilities shall be available.

In order to successfully run the business, a well-structured organization shall be constructed for Riverdale Houseboat Accommodations. The management team shall play the significant role in organising and managing all the activities within the company. The General Manager (GM) shall be the head of the management team and will be responsible for making the final decisions regarding the company. The Executive Manager shall come next to GM who will check and manage the day to day routine and activities of all the staff members. Next to executive managers comes the Department managers of distinctive departments that will manage and organise the activities and staff members belonging in it. The five distinctive departments of the company shall be Room division, accounting, marketing and sales, purchasing and lastly, food and beverages. These five broad departments shall have further sub-divisions that will comprise the whole organizational structure. Since the business is associated in providing water sports and marine related facilities all the staff members must be qualified with the knowledge and skills related to it. Below is a representation of Riverdale Houseboat Accommodation’s organization structure –

The following marketing plan is developed for Riverdale Houseboat Accommodations –

Target customers

From the above discussed market analysis it has been observed that the main target market for the business are mostly tourists that belong to the young couple and family segment. They have a high demand for services and adventurous accommodation facility similar to the Riverdale Houseboat Accommodations.

Unique Selling Proposition (USP)

The USP of the company is that it provides its customers the convenience of renting the houseboat not on hour basis instead on a day basis at cheap affordable price range. Unlike other houseboat accommodations that charge its customers a hefty price upon houseboats on hour basis, Riverdale Houseboat Accommodations rent out houseboats to its customers on a day basis in a comparatively cheap price.

Strategies adopted

  • For promoting the business and making an identity on the market, the company shall initiate an online advertising in all the major social media platforms along with pop up advertisements.
  • Pamphlets, hoardings and advertisements on local television channels and newspapers shall be executed for advertising and promoting the services that the company shall offer.
  • An inauguration event shall be conducted where all the local visitors will be invited and a luncheon will be organised. This shall put an impact in the minds of potential customers. 

The business for Riverdale Houseboat Accommodations is predicted to grow with the help of additional relationship maintained with the houseboat owners. The business is expected to grow from twenty houseboats in the first year to 40 offered in the third year. The start-up funding of the business shall be provided from the proceeds of savings of the founders of Riverdale Houseboat Accommodations. In addition to it, a three year loan will be taken in order to support the additional required financing.

Threat from New Entrants

It is expected that the gross margins of the business shall develop in the peak season of future years that is basically in the summer months. This is because the cost of sales are comparatively low in the summer months when there is hike in the rates and prices.

The print marketing includes advertisements in local newspapers and brochure printing along with press kits that would be provided to distinctive travel agents. In addition to this, online marketing includes $1500 per month for ongoing search engine marketing, $5000 per month for social media marketing and $250 per month for website hosting and maintenance.

Payroll burden comprises of payroll taxes and insurance benefits for all the staff members of the company. The price of the cost is expected to rise during inflation. Based on the predictions, the business shall have a loss in the first year of its establishment however, it shall move towards profit in its second year, with major profit in the consecutive third year as the number of boats and customer retention rate increases. 

Monthly profit assumption of Riverdale Houseboat Accommodations  

Pro Forma Profit and Loss Assumption

The company shall continue to invest on marine equipment in the 2nd and 3rd year which would be approximately $5000 per year. The short term loan shall be repaid with a 10% interest by the end of 3rd year. Dividends shall be paid to the houseboat owners beginning in the third year of the business. The amount shall be withdrawn with the goal of keeping approximately $40,000 in order to provide funds for repair and maintenance of facilities.

The following growth plan is prepared for the purpose of organising and keeping a track of the list of actions that shall be initiated for the business plan.

Actions

Estimated time

Remark

Organising pool of houseboat owners

1 month

Accomplished

Setting up marine facilities and services

8 months

Accomplished

Recruitment of staff

3 to 8 months

In process

Social media marketing

3months to 1 year

In process

Print advertisements

6 months to 1 year

In process

Promotional events

6 months

In process

 Growth Plan Table

Conclusion

From the above discussed business plan it can be said that the Riverdale Houseboat Accommodations have an extensive opportunity to develop and flourish since the business offers its customers a unique selling proposition. The above estimated financial plan predicts that the company may have a slow initial year. However, in its second and third year it would pick up the pace and be able to stand as a competitive player in the market.

References

Chen, Z., Lookman, A.A., Schürhoff, N. and Seppi, D.J., 2014, ‘Rating-based investment practices and bond market segmentation’, The Review of Asset Pricing Studies, vol. 4, no. 2, pp.162-205.

Encyclopedia Britannica. 2018. New Zealand National Party | History, Policies, & Facts. viewed 20 October 2018, <https://www.britannica.com/topic/New-Zealand-National-Party>.

  1. Dobbs, M., 2014, ‘Guidelines for applying Porter's five forces framework: a set of industry analysis templates’, Competitiveness Review, vol. 24, no. 1, pp.32-45.

Dia.govt.nz. 2018. Setting the Scene - dia.govt.nz. viewed 15 October 2018, <https://www.dia.govt.nz/diawebsite.nsf/wpg_URL/Resource-material-Sustainable-Urban-Development-Setting-the-Scene?OpenDocument>.

Leonidou, L.C., Leonidou, C.N., Fotiadis, T.A. and Zeriti, A., 2013, ‘Resources and capabilities as drivers of hotel environmental marketing strategy: Implications for competitive advantage and performance’, Tourism Management, vol. 35, no.8,  pp.94-110.

Lu, C. and Kandampully, J., 2016, ‘What drives customers to use access-based sharing options in the hospitality industry?’, Research in Hospitality Management, vol. 6, no. 2, pp.119-126.

Luo, Y. and Milne, S., 2014, ‘Current human resource management practices in the New Zealand hotel sector’, Journal of Human Resources in Hospitality & Tourism, vol. 131, no. 1, pp.81-100.

Maritimenz.govt.nz. 2018. Boating research - Maritime NZ. viewed 20 October 2018, <https://www.maritimenz.govt.nz/recreational/safety-campaigns/recreational-research.asp> .

Mundel, J., Huddleston, P. and Vodermeier, M., 2017, ‘An exploratory study of consumers’ perceptions: What are affordable luxuries?’, Journal of Retailing and Consumer Services, vol. 35, no. 4, pp.68-75.

Newzealand.com. 2018. New Zealand geography & geology | Rotorua, New Zealand. viewed 20 October 2018, <https://www.newzealand.com/in/feature/new-zealand-geography-and-geology/>.

Porter, M.E. and Heppelmann, J.E., 2014, ‘How smart, connected products are transforming competition’, Harvard business review, vol. 92, no. 11, pp.64-88.

Sanders, J. and Galloway, L., 2013, ‘Rural small firms' website quality in transition and market economies’, Journal of Small Business and Enterprise Development, vol. 20, no. 4, pp.788-806.

Teara.govt.nz. 2018. Australia and New Zealand. viewed 17 October 2018, <https://teara.govt.nz/en/australia-and-new-zealand/print>.

TNZ Media. 2018. New Zealand tourism: Facts and figures. viewed 18 October 2018, <https://media.newzealand.com/en/story-ideas/new-zealand-tourism-facts-and-figures/>.

Zhou, L., Ye, S., Pearce, P.L. and Wu, M.Y., 2014, ‘Refreshing hotel satisfaction studies by reconfiguring customer review data’, International Journal of Hospitality Management, vol. 38, no. 4, pp.1-10.

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