Hotel De Flexible

Spring 2017

Hotel De Flexible
Execu ve Summary
Bending t o y our n
eeds
Company B ackground Contact Informa on
Business D escrip on : Crystal Fok and Jessica Tran

Our b usiness i s c alled H otel D e F lexible. O ur b usiness g ives l odging
Email:
and c ustomized t ours w here e ach o f t he a c vi es i n t he t our i s crystal.x.fok@gmail.com
geared t owards t he t ourists i nterest. F urthermore, w e w ould b e
providing a s ocial n orm a c vity w here w e p lan o ut d
ierent a c on Year Founded
scenarios t hat i s a ppropriate a nd n ot a ppropriate s o o ur c ustomers 2017
will k now w hat i s c ulturally a cceptable a nd n ot a cceptable. H otel
_____________
De F lexible i s a s ervice b usiness a nd a p artner o wnership.
Business M odel : Investment Opportunity
Our o ne u nit o f p
roduc on i s p er n
ight p lus s ervice f or o ne p erson. $10,922.10
The p rocess p roduc on i s t hat w e c lean t he h ouse, m ake t he b ed,
lay o
ut a w elcome b asket f or o ur g uests, p lan o ut t he s ocial n orm Annual Opera ng Costs *
$6,586
ac vity, a nd t ouring s chedule f or o ur c ustomer. N ext, w e b uy a ll
the ckets n eeded f or t he a c vity, d o t he s ocial n orm a c vity w ith Annual Sales *
the c ustomer, a nd t he r est o f t he d
ay i s t raveling w ith o ur $42,300
customer.
Mission S tatement : Annual Prot *
$3,281.08
We w ant o ur c ustomers t o l earn S an F ranciscos c ulture a nd

lifestyle t hrough o ur g uests i nterest b ecause S an F rancisco i s s o Return on Sales*
unique t hat t here i s n o o ne w ay t o e xperience i t. W e a re t he b est 7.75 %= 8%
company b ecause w e a re a c ompany t hat t ruly p rovides f or b oth
our c lients a nd t he p eople w ho a re n a ve t o t he t ourist a rea. Return on Investment *
Market O pportunity 17 %

Opportunity : T ourist m ight n ot k now w hat t o d o i n S an F rancisco, Breakeven Units/Month *
and j oin t ours t hat a re b oring t o t hem. T hey m ight a lso o end t he 3 units
locals d ue t o d
ierent s ocial n orms.
Target M arket : P eople i n t heir 2 0s a nd 3 0s *Projected
Industry O verview : I ndustry s ize i s n early $ 1.6 t rillion ( of 2 015).
Trends i nclude s ocial m edia t rends i n m y t arget g roup.
Market R esearch :
h ps://www.selectusa.gov/travel-tourism-and-hospitality-industr
y-united-states
Leadership
Qualica ons :
We w ere r aised i n S an F rancisco a nd a re i n t he A cademy o f
Finance. C rystal i nterned a t t he S F V isitor I nforma on C enter.
 Hotel De Flexible
Spring 2017

Hotel De Flexible
Business P
lan
Bending to your needs.
1. OPPORTUNITY RECOGNITION & BUSINESS STRUCTURE
1.1 Business Opportunity

Business opportunity:
According to the San Francisco Travel Associations, San Francisco had a total of 25.1
million visitors, averaging to 68,998 visitors per day in 2016 alone. Just in the year of
2016, visitors brought $9.69 billion in spending to SF. In a day itself, visitors spend up to
$24.5 million. We want to be a part of the traveling industry thats so big in San
Francisco. We understand that travelers like to explore as locals instead of sticking out
like a sore thumb as a tourist finding local areas that not many tourists know about
(the secret spots of SF). We want to provide an opportunity where tourist could stay with
us, and they could travel as locals as well as learn the culture of San Francisco.

Problem/unmet need:
To know the culture they are traveling to and to be more aware about how to act
appropriately so they could blend in with the locals and experience whats it like to live
as locals. Sometimes as tourists, you want to blend in with locals and live like them and
my business help tourist give a taste of what a local lives like in San Francisco. In
addition, a lot of tourist come not knowing what to do, and when they do join a tour, the
tours gives attractions that might not fit the tourists taste. A tour might give tourist a trip
to the De Young Museum, but the tourist might not like the De Young Museum.

Solution:
Our business tells customers about what is not culturally inappropriate so they could
avoid offending anyone, and we could teach customers about what is our culture and
what is considered an appropriate act. Our business also offer tours to people and tell
them local secrets to make them feel less as an outsider when traveling. In addition, our
business gives customized tours with each activity related to the tourist's interest.

1.2 Type of Business

Our business is a service business type. We are serving our customers by hosting,
planning out their travel schedule, and giving them tours. We choose a service business
type because we wanted to give back to our customers by providing them a service they
would truly enjoy the city. We love San Francisco and we want to share San Franciscos
beauty and culture with the rest of the world. Only a service could show people how
great San Francisco is; a product can not do that.
 Hotel De Flexible
Spring 2017

1.3 Type of Business Ownership

Business ownership type:

Our business is a partnership.

Why Partnership?
Partnership will allow me and my partner to share ideas and we would have less burden
on our shoulders with a partnership business ownership. In addition, partnership would
allow us to have less liability. If we lose profit from our business, we dont have to lose
as much with partnership compared to sole ownership. There is more ideas generating
with two people and each individual in the partnership will have less liability compared
to a sole ownership.

Why does it make the most sense for your business:

1. More ideas generating within the business with two people
2. Different perspectives of traveling could make hospitality for our business much
better.
3. With two people there are different experiences and we know more about each of
our own cultures

1.4 Mission Statement

We want our customers to learn San Franciscos culture and lifestyle through our
guests interest because San Francisco is so unique that there is no one way to
experience it. We are the best company because we are a company that truly provides
for both our clients and the people who are native to the tourist area.

1.5 Social Responsibility

Our business social responsibility:

Bringing more awareness about the cultures in San Francisco will help tourists further
understand San Francisco and would help tourists avoid offending locals and prevent
locals from getting mad at tourists because they are behaving inappropriately. In
addition, we could also bring more awareness to the issue of homelessness in SF to our
customers because it is so prominent in SF. To solve this issue of homeless, we
encourage our workers to help out in homeless shelters.

Plans to Social Cause (time and/or money):

We plan to give back to a social cause with our time because we like hands on
experiences when helping out. We will make it a requirement for employees to donate
their time to Diamond Youth Shelter- Larkin Street Youth Services. Whoever volunteers
the most, will get a gift card. We wanted to help with this issue of homelessness
because homelessness is a big problem within SF, but we specifically chose the
Diamond Youth Shelter- Larkin Street Youth Services because we are youths and we
want to help other youths.
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Spring 2017

1.6 Qualifications

Qualifications:
We love traveling, so creating a business that helps travelers enjoy their time traveling
aligns with our interest. In addition, Crystal interned at the SF Visitors Information
Center last summer, so she know what most visitors like to see in San Francisco or
traveling in general. We have been lost before, and are familiar with a few social norms,
so we could help out our customers.We have learned about business and
entrepreneurship in our high school academy class, so we know what we are doing. We
were both born and raised in SF, so we know the city really well. There are some
opportunities that are threats to our business however, not everyone will utilize those
opportunities and those opportunities are very minor. The weakness is the pricing since
our service does cost more than other services similar to us. However, we provide both
a personalized tour as well as lodging where as other tours only offer hotels and a non
customizable tour, or a tour with no lodging included.

Team Qualifications:
My team needs to have good communication skills, be organized, and know their city so
they could lead visitors and advise them places to go.

2. MARKET RESEARCH
2.1 Market Research

Business Industry:
Our business belongs to the tourism and hospitality industry. Our business fits within
this industry because our business provides traveling services to customers. Our
customers will all be tourists and we would need to have good hospitality to comply with
the customers needs/ request so they could keep coming back to our business.
Industry Size:
1997 2002 2007 2012 07-12
% Chg
Number of establishments 29,332 21,705 15,804 13,458 -14.8%
Receipts ($ Millions) 9,977 9,387 17,289 13,732 -20.6%
Annual payroll ($ Millions) 4,464 4,281 6,377 3,933 -38.3%
Total employment 183,178 147,948 121,694 94,611 -22.3%
Receipts per establishment ($1,000) 340 432 1,094 1,020 -6.7%
Receipts per employee ($1,000) 54 63 142 145 2.2%
Receipts per $ of payroll ($) 2.24 2.19 2.71 3.49 28.8%
Payroll per employee ($) 24,369 28,939 52,404 41,573 -20.7%
Employees per establishment 6.24 6.82 7.70 7.03 -8.7%
Receipts per capita ($) 37 33 57 44 -23.8%
Population per establishment 9,295 13,252 19,060 23,325 22.4%
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Spring 2017

The industry also generated nearly $1.6 trillion as of 2015.

Size of Potential Target:

The size of our potential target are about 13,458 establishments and 23,325 population
per establishment as of 2012.

Data that supports our business opportunity:

The population per establishment has increased 22.4% from 1997 to 2012 and receipts
per payroll has increased 28.8% from 1997 to 2012.
http://www.sftravel.com/sites/sftraveldev.prod.acquia-sites.com/files/San%20Fran
cisco%20Fact%20Sheet%202017.pdf

2.2 Target Market

Target Market:
Demographics:
Tend to be well educated with at least a bachelors degree
Single and couples in the pre and post stage of family cycle (having children)
People in their 20s and 30s
Come to San Francisco for the atmosphere and ambiance
San Francisco average visitor statistics (in general)
Average age:40.1
Average Annual income: $94,637
Average Length of Stay in SF: 2.5 Nights
First time visitors: 24.4%
Gender:
Female:51.2%
Male: 45%
Prefer not to answer: 3.7%
Geographics:
Customers are from both international and domestic location
Domestic
Mostly come from other urban places
New York
Los Angeles
Dallas
Washington DC
San Diego
Atlanta

Top five producing international market

Mexico
China
United Kingdom
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Spring 2017

Canada
Germany

Psychographics:
My customers would love traveling, exploring, and trying new things.

Buying patterns:
They love tourist items
Picture of the golden gate bridge, painted ladies, cable cars on items (ie.
mugs, postcards)
Cameras to take pictures of their trip
Relaxation
Map of San Francisco

2.3 Competitors

Direct competitors:
We only have a few direct competitor: travel agencies and customized tour guides

EXtraordinary Tour Services

Has customized tour (price varies, so we couldnt find a sit price)
Similar to my service because my business also has customized
tours, but customized tour is by request; There is a set tour that
people could buy
Offers combination tours of San Francisco and Muir woods, or the wine
region
Tours includes snack and cold water
Lunch will be arrange by request, but will be by the cost of the passenger
Have San Francisco tour, Napa & Sonoma Valley wine tour, and
Livermore Valley wine tour
My service only has tours within San Francisco
Pricing
2-5 Passengers: have to call for customized tour inquiries
6 Passengers: $85/hr
7 -14 Passengers: 125/hr
15-27 Passengers:$199/hr
They could offer more customers into their service(27 the most)
compared to our business
Our service could only have a smaller group: 3-4 visitors in a group
the most
Take Tours
Have packaged tours that includes San Francisco as well as other cities such as
Monterey, Los Angeles, Santa Barbara, and Yosemite.
My tours only include San Francisco
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Spring 2017

1 Day San Francisco Tour

Hotel included, but most are 2 star hotels
We offer them a house to stay
Tour only the popular tourist attraction in SF
Civic Center
Twin Peaks
Golden Gate Bridge
Golden Gate Park
Fishermans Wharf
San Francisco Bay Cruise (added price of $28 for adult, $20 for
ages 5-17 year olds
Lombard Street
Not customizable
Our service is customizable
Meals not included in the package
Price: $58

Blue Heron Tours

3.5 hour tour of San Francisco
Could add and subtract destinations depending on interest and schedule
Price:
San Francisco highlights (3.5 hours; popular attractions and places to go
to)
$280 for group of 1,2, and 3 people
$295 for 4,5, and 6 people
San Francisco highlights with more of San Francisco for full day
$595 for group of 1,2, and 3 people
$640 for 4,5, and 6 people
Both does not include entry fees, meals, or driver gratuity
Our service includes entrance fees, and a driver gratuity is not
necessary

Indirect competitors:
Tour guides (not customized ones)
tell tourists where to go and shows only the popular attractions in SF
Typically around $58
Lodging is not included
Meals not included
Airbnb
provide housing and customers could choose the types of place they are staying
at
Hosts at airbnb could guide their customers into the local secrets, but its not
required
Lodging is around $80 per night
 Hotel De Flexible
Spring 2017

Hilton Hotels
Is in the heart of downtown
$315/ night
Room service
Suites could be included
Offers a variety of different room
More privacy
Outdoor pool
Hot tub
Fitness Center
37 inch flat screen TV
Gastropub

St. Francis Hotel

$381 per night
24 hour room service
Bath Amenities
TV
Pay per view movies
Dog bed available
Sleep well lavender balm
Wake up service
Iron and iron board
Serene and Wellness spa (price seperate, but its in the hotel)
Fitness studio
Restaurants in the hotel

2.4 Competitive Advantage

Your Business Blue Heron Tour (Direct) Hotels (Indirect)
Factor 1: WiFi Tour of San Francisco Cleaning services
Services T.V (does not include Tip: $3
Personalized traveling entrance fee)
schedule $595
Teaches culture
appropriateness
$220
Factor 2: In a house No lodging More private; depending on
Staying Cheap and convenient the customer, it could feel
$80 less awkward because there
are more people in the
building
$100
Factor 3: 1-1 tours Personalized tour None or maybe packages
Tours Tours geared towards offered from the hotel
the customers interest
 Hotel De Flexible
Spring 2017

Adavantages:
Our services are more personalized offer tours geared toward the customers
interest. Example: if an individual hates museums and likes scenic places, we
would avoid bringing them to the DeYoung Museum and instead bring them to
the Golden Gate Bridge and the beach.
Provide both lodging and tour of San Francisco
Lodging from our own home to make it a more personal relationship with
guests
Teaches visitors about the culture of San Francisco and could avoid offending
locals
Get to actually know the customers because we would interact with them a lot
and ask them about their interest

2.5 Business Growth

Trends in our industry:

Social media because social media is a big part of of my target audience's life,
especially the usage of social media
We will create a social media account for our business
do promotions
Create partnership with our customers
Customers could tweet about our service, or instagram a
photo of their trip and tag our account

Next Steps to Grow:

Putting more emphasis on social media to attract customers
Once we become more popular booking 20 sales per month and theres a
waitlist for people to book their tours, we expand
Other people could host their homes and tour visitors around in within the
bay area
If even more popular, we will expand to the U.S and then worldwide
Get sponsors and endorsements
If our business grows, we will put out multiple packages with basic, premium, and
luxury, weekend getaway(full on weekend) in about 2-3 years

2.6 Challenges

Trend that provides challenges:

Tourism affected by political climate
War (if theres a war going on in SF, people will less likely to come)
Having only one home could only house so many people
Bad economy; when people cant find jobs in which they wont have money to go
on vacation
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Spring 2017

Barrieres:
Getting people to buy our business and promote it
Getting the funds to start this business

Additional Education or Training

Class on hospitality and tourism to know how to create a good business
Need to do research on tourists behaviors, buying patterns, and general interests
Training on how to best approach customers
Tips on giving good a 5 star service vs 4 stars vs 3 stars

3. FINANCIAL INFORMATION & OPERATIONS

3.1 Definition of One Unit

One Unit of Sale

One unit of sale is per night plus day of service for one person.
3.2 Delivery of Service
Description of Process Steps
1. Bring out clean sheets, pillow covers, bed sheets, blanket

2. Make the bed

3. Clean house

4. Lay out the welcome basket

5. Plan out social norm activities

6. Plan out activities with customer

7. Buy Muni tickets

8. Greet customer

9. Buy attraction tickets via online

10. Do the social norm activities with customer

11. Spend the day with visitors

12. Sleep
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Spring 2017

3.3 Variable Expenses

Materials
Bulk Quantity Cost per
Material Description Bulk Price
Quantity per Unit Unit
Cost of stay (for the house) None None 1 $80
Entrance fee for places $189 10 1 $18.9
Transportation Fee $200 10 1 $20
Social Norm Activities Fee None none 1 $3
Total Material Costs per Unit $121.90

Labor
Cost of Labor per Hour Time (in hrs) to make one Total Labor Costs per
unit Unit
$13 8 hours $104

COGS/COSS
Material Costs Labor Costs TOTAL COGS/COSS
$121.90 $104 $225.90

3.4 Economics of One Unit

Selling Price per Unit $300

Variable Expenses per Unit
Costs of Goods Sold
Materials $121.90
Labor $104
Total Cost of Goods Sold $225.90
Other Variable Expenses
Commission $0
Packaging $0
Other
Total Other Variable Expenses $0
Total Variable Expenses $225.90
Contribution Margin per Unit $74.1
 Hotel De Flexible
Spring 2017

3.5 Fixed Expenses for One Month

Expense Type Monthly Explanation

Cost
Insurance $12 Money safety in case any accidents occurs

Salary $0 There isnt a team of people working and its

just the two people working.

Advertising $50 Some could be advertisment based, so we

dont need to buy a whole ton of advertisement

Interest $0 None

Depreciation $0 None

Utilities $125 Internet, electricity, and phone bills

Rent $0 Housing to provide guests a place to live.

We are using a familys home (downstair
apartment) as a space for guests to stay at

Other Fixed $129.20 Labor fee, occupancy fee, and a welcome

Expenses basket
Total Fixed $316.20
Expenses
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Spring 2017

3.6 Income Statement for First Year of Operations

A REVENUE selling price units sold $42,300

B G ross S ales selling price units sold $42,300
C S ales R eturns selling price x units returned 0
D N et S ales B C $42,300
VARIABLE E XPENSES
C osts o f G
oods S old
E M aterials cost of materials units sold $17,189.90
F L abor cost of labor units sold $14,664
G T otal C ost o f G
oods S old E + F $31,853.90
O ther V ariable E xpenses
H C ommission cost of commission units sold $0
I P ackaging cost of packaging units sold 0
J O ther cost of other costs units sold $0
T otal O ther V ariable
K H + I + J $0
Expenses
L T otal V ariable E xpenses G + L $31,853.90

M CONTRIBUTION M ARGIN D L $10,446.10

FIXED O PERATING E XPENSES
N I nsurance cost of insurance 12 months $144
O S alaries cost of salaries 12 months $0
P A dver sing cost of adver sing 12 months $600
Q I nterest cost of interest 12 months 0
R D eprecia on cost of deprecia on 12 months 0
S U li es cost of u li es 12 months $3,250
T R ent cost of rent 12 months $0
U O ther xed e xpenses cost of other 12 months $2,592
V T otal E xpenses N + O + P + Q + R + S + T + U $6,586

W PRE-TAX P ROFIT M V $3,860.10
X T axes ( 15%) W 0.15 579.02

Y NET P ROFIT W X $3,281.08




 Hotel De Flexible
Spring 2017

3.7 Start-up Investment

Item Why Needed Vendor Cost

Laptop Make online orders Apple website $1299

Desk Office Amazon or Ikea $100

Office supplies Organization Office Depot or $100

Amazon
Entrance Tickets To get tickets to places Online $2000
ahead of time to avoid
line
Transportation Tickets Public transportation to Online or SF Visitor $1500
go to the attractions Info Center

Promotions For people to know the Online $1500

business exist
Total Start-up Expenditures $6,499
Emergency Fund (1/2 of startup expenditures) $3,249.5
Reserve for Fixed Expenses (covers 3 months of fixed expenses) $1,173.60
Total Start-up Investment $10,922.10

How much of this start-up investment can you afford to pay yourself? $8,000

How much of the start-up investment will you need to finance? (Total Start-up
Investment- What you can afford to pay) $2,922,10

3.8 Financial Ratios

Return on Sales (ROS):

Annual Net Profit $3,281.08

7.75% $0.08
Total Annual Sales $42,300 =

Return on Investment (ROI):

Annual Net Profit $3,281.08

Total Startup $19,922.10 16.5% $0.17
=
Investment

Breakeven Units (Monthly):

Fixed Monthly $242.20

Expenses 3.4 3 units
=
Contribution Margin $74.10
 Hotel De Flexible
Spring 2017

4. MARKETING & SALES

4.1 Marketing Plan

Target Customers(People):
Target customers are people who are in their 20s and 30s, whom a majority come from
urban and suburban areas. We will use people to market our business to them by giving
a good overall service and a fantastic customer service so they could come back again
and recommend their friends and family to come. In addition, we could use social media
to market our business to our target market. We could ask our clients to tweet about us
or tag us on their instagram post, so other people could be aware about our business
too.

Features and Benefits (Product):

The features of our service are housing, personalized tour, and a customized planned
trip in SF. Benefits is that customers could make traveling more fun, personalized, and
feel more local by having a local guide them through an unfamiliar city (to them) with all
the attractions that the customers are interested in.

Place:
We will sell our service in San Francisco, because it is our hometown and its a city that
attracts a lot of tourist.

Price:
We will look at similar services to us, and we would try to make our price not too
expensive. However, we do have to account that our services is more expensive than
airbnb or a hotel because our service includes lodging and traveling plan.

4.2 Promotion

Advertising:
Newspaper and magazines, social media, online, and word of mouth advertisement.
Social media and online advertisement would be successful for reaching my target
market because most of my target market goes online and uses social media.
Newspaper and magazines because some international travelers read local newspaper
and magazines to look at what that city offers and what it is. Online in general because
most of the people in their 20s and 30s use the internet. Word of mouth is also
important because you trust your friends or family experience, so you will have a
positive impression about that service if your friends or family says they had a good time
with the service.

Visual Merchandising:
Displays of posters and flyers. We could post flyers on social media, and this could be
effective for reaching our target market because most of our target market (people in
their 20s and 30s) have social media. In addition, social media is very much part of my
target markets lives.
 Hotel De Flexible
Spring 2017

Public Relations:
We will partner with tour centers, the San Francisco Visitor Information Center,
museums, and concert promoters such as the Outside Lands and the Bluegrass
Festival and put brochures of our business. Media coverage in our social responsibility
of helping out homeless youths could also promote and give awareness to our
business. Customers could also feel good that they are buying from a service that helps
the city of San Francisco

Sales Promotions:
We could advertise how our tour is very flexible, customizable, and its at a lower price
compared to services similar to ours. These forms of sales promotion can be effective
for reaching our target market because millennials crave freedom. When we advertise
that our tours are personalized depending on the client, we will give them freedom to
explore parts of the cities they are interested in compared to a set tour that the traveler
cant have control on the attractions they go to. In addition, we will also advertise how
we contribute to our community by volunteering at the Diamond Youth Center because
millennials want to help improve the world and they will feel good about themselves if
they buy a service thats doing good for the community of San Francisco.

4.3 Sales Methods

Personal Selling Strategy

We plan to get sales from customers in my target group by using social media to attract
peoples attention. Most people in our target market 20s and 30s have social
media, and its a big part of people in that age range life. In addition, we will use to
promote how our tours are flexible with our clients time and how it is personalized.
Furthermore, we could promote more awareness about homeless youths and what our
business is doing to combat that issue.

4.4 Sales Estimates

Maximum Capacity:
28 nights is the maximum capacity on average. The physical amount we could make is
28 units.

Break-Even Units:
3 per night plus service for each person
Market Analysis:
We could sell a maximum of 340 units based on our number of customers in our target
market segment.
 Hotel De Flexible
Spring 2017

Monthly Projected Sales Estimates

Month Units Revenue

January 6 $1,800

February 10 $ 3,000

March 13 $ 3,900

April 4 $1,200

May 10 $ 3,000

June 16 $ 4,800

July 21 $ 6,300

August 18 $ 5,400

September 8 $ 2,400

October 7 $ 2,100

November 9 $ 2,700

December 19 $ 5,700

Annual Totals # Total Units Total Estimated Annual Revenue:

$44,300
141

Seasonality:
Summer will be our best sales because thats when a lot of people have their breaks
and travel. December will also have high sales because its Christmas and people could
buy tour guides as presents for their friends and family. In addition, people could also
travel during Christmas break. September and October will be the month where we
have low sales because thats when summer vacation decreases. In addition, thats the
time when everyone is working, and they rarely take breaks during those months. April
is at the break even number, because thats the month the business is launching.