INDEPENDENT BUSINESS PLAN

Elk Grove High School DECA

Elk Grove High School
500 W Elk Grove Blvd, Elk Grove Village, IL, 60007
Kashyap Patel Ivan Smilkov Ayush Vora
11 | 28 | 2016
I. EXECUTIVE SUMMARY....1

II. PROBLEM........4

III. CUSTOMER SEGMENTS.........6

IV. UNIQUE VALUE PROPOSITION........8

V. SOLUTION........9

VI. CHANNELS.......10

VII. REVENUE STREAMS........12

VIII. COST STRUCTURE.....14

IX. DETAILED FINANCIALS.......22

X. KEY METRICS..........26

XI. COMPETITIVE ADVANTAGE......27

XII. CONCLUSION........27

XIII. BIBLIOGRAPHY......29

XIV. APPENDIX..30

I. EXECUTIVE SUMMARY:

Stay is a location-based, reverse-bidding mobile application that aims to usher

affordability into the hospitality industry and aid travellers in their quest for pressing lodging
needs, but also efficiently book hotel rooms for increased revenue for hotels. Hotel clients will be

able to bid for their customers through a website application This will shift the paradigm of the

hotel and lodging industry where the hotel actually bids for guests instead of guests searching

multiple booking engines for their next hotel stay.

Problem

Stay hopes to provide value to both hotel guests and hotels by sourcing quality, affordable

rooms for guests while still increasing the revenue for the hotel. Through our research, we have

discovered that the average hotel occupancy rate hovers around 60%. By assisting in filling this

gap, we are providing a service to the hotel industry as well as getting the rooms filled at an

economical rate for the consumer.

Target Market

The average consumer for this product will be middle to low class as well as those who

either travel frequently on short notice, or are travelling without regard to their nightly stay. This

will allow them to find the best value option while still providing suitable amenities. Examples

of the market include last minute business travelers, general tourists, unplanned travellers, or

those who know their destination, but would like the most economical option, such as truck

operators.

Unique Value Proposition

Simply put, there is no other reverse-bidding platform for the hotel industry where the

hotel lowers prices to attract more guests. We aim to provide value for both sides of the market

we operate in and thus become a key factor in the hotel booking industry.
 Solution

Thus, Stay enhances a hotels bottom line due to their increased occupancy rate and

overall revenue. In addition, we provide the weary traveller a comfortable place to reside at a

discounted, economical rate. Our unique solution is a great way for the industry to move forward

financially while remaining affordable to a broad market.

Channels

Stay intends to maintain both a website and mobile application for the industry and

consumer to use. This is due to the prevalence of online booking and same day booking in the

industry as well as the ability for the front desk of a hotel to manage its bids on Stay online.

Revenue Model

Stay earns all of its first year revenue through commissions paid after each successful

auction of a hotel room. We charge a 10% commission on limited-service hotels, while only 5%

to independents due to their smaller margins. We have made a conservative first year model that

only captures 0.06% of our target hotel markets rooms. Through that model, our projected first

years revenue is $2,053,125.

Cost Structure

Stay may have a higher than average cost of startup, but due to the market potential we

possess; we will be to cover all of our operating costs. Stay has a marketing budget of $384,000

to capture the market. Our distribution costs include the server that hosts our service, amounts to

$10,334. Furthermore, our human resource costs are necessary for the function and safety of our

service; and also include the founders who will initially perform daily functions until others are
hired, human resources amounts to $276,357 of the total. Finally, the headquarters will be leased

at a yearly cost of $16,500. In conclusion, the total year one cost amounts to $687,191.

Competitive Advantage

Due to the size of the hospitality industry, Stay will not require a massive chunk of the

market. Furthermore, should competition arise, Stay will possess the ability to adjust commission

rates -- providing hotels with greater revenue and thus ensuring their loyalty. Finally, once Stay

has been established, we will have significant customer loyalty due to Stays credibility and

affordability.

Conclusion:

The management team; Kashyap Patel CEO, Ayush Vora CTO, and Ivan Smilkov CFO,

and their families will equally split the total down payment of $137,438 to a cost of $45,812 per

executive. Thus, we are seeking an investor or bank to provide a loan for the rest of the $549,753

to run the business for one year. The loan will be a typical five year 8% bank loan. This will

provide the bank with an 17.8% ROI. Or $119,067.52 over the five years.

. II. PROBLEM:

A. Rationale: Stay aims to solve a travelers

woes

when finding a hotel room. We believe that it should be as

easy and affordable as possible. Thus, the problems we

hope to address are; efficiently filling hotel rooms for

hotel owners, sourcing affordable, quality hotel rooms for

guests, and finding hotel rooms for business travelers and tourists. Put simply, a hotel is in the

business of filling as many rooms as possible. However, sometimes hotels have several vacancies

that they wish to book even if it must be at a lower rate to attract the guests. An occupied room,

bringing in some revenue, is better than an empty room only subtracting from your profits.

Therefore, Stay will allow hotels to fill in those additional rooms and increase their overall

revenue from an untapped market. In addition, the guests will be happy to find an affordable,

quality room in their designated area. Generally speaking, using Stay, guests will be able to find

a superior room for an inferior price point. The application is the perfect place to find lodging for

a number of guests. Furthermore, Stay is able to solve the problem of both tourists and business

travelers. Specifically, fleet operators, such as truck drivers, will be able to utilize this application

very well. They know where they are gonna stop, but not the hotel theyre gonna stay at.

Therefore, they can choose the area they wish to stay in. Similarly, event tailgaters know where

to be in the night, but not the exact hotel. Furthermore, unplanned travelers or unplanned

business travelers will be able to utilize the app for a discounted hotel room. All groups will be

able to benefit from utilizing this application on their travels for the purpose of finding better

lodging.

B. Research: From our extensive market research and due diligence, we have found a

considerable need for a service such as Stay. Our research found that 60 percent of mobile

bookings from the first half of 2013 were made for same-day check-in. Through the Global

Business Travel Association, we discovered that 39% of business travellers have used a mobile

application in order to place a reservation. According to Statista, average hotel revenue has been

increasing for at least the past fifteen years. Also, according to Hotel News Resource, 74% of
hotel bookings are made for same day check-in.

C. Opportunities: We believe that there is a significant void in the business market that

Stay can fill. With the significant number of revenue and same-day mobile reservations made by

users we can provide value for the consumer and produce a profit for ourselves. This is the key to

starting Stay. We are operating in a two sided market and can provide a benefit for all parties

involved. We help a consumer find a discounted, quality hotel room. The hotel gains another
occupant to increase revenue and occupancy rate. Finally, we act as middlemen and take a

commission out of every deal we help finish. Thus, the potential is massive due to the scale of

the hotel industry as well as its global reach.

III. CUSTOMER SEGMENTS:

A. Target Market: Stay has an extremely large potential market that can be split

into many

smaller segments. In general, we will be targeting members of the middle class who are aged

between 20 and 45, male and female, and live anywhere in the nation. This is because the middle

class largely has disposable income that can be used on trips around the nation. In addition, this

age group will have a strong grasp with technology and mobile phones which will only benefit

their usage of our application. Furthermore, hotels are spread nationwide and once our network

grows anyone who travels the country can use it to find an affordable, quality hotel room.

However, the various segments include business travelers, tourists, and last minute travelers.

Also, we must target hotels to join the other side of our marketplace so that consumers have a

place to stay in. Refer to the Consumer Marketing and Appendix sections for charts with market

information.

1. Last minute business travelers will be used to utilize our application very

efficiently. Whether by car or by airplane, a business traveler can set up an auction for the area

they plan to do business in. In addition, many businesses will incentivize the use of our app to

decrease the amount they must spend on their employees lodging. On the flip side, the employee

will be staying at a higher quality hotel at a lower rate. Thus, we will be providing a service to
both the employer and employee. In addition, according to the United States Travel Association,

Americans took over 459 million trips for business purposes in the last fiscal year. Obviously,

this is a great market to break into with a lot of potential for revenue. However, only some of this

market will be utilized since most of the market does include planned visits which are

prebooked.
2. In addition, general tourists will also find value in Stay. Individuals or groups that

do not wish to reside in a resort or are travelling, for example on a road trip, will be able to find a

suitable hotel room for themselves. Tourists will be attracted to this application due to the lower

cost for lodging, thus allowing more of their budget to be used on other adventures. Furthermore,

The United States Travel Association states, U.S Residents logged 1.7 billion trips for leisure

purposes in 2015.
3. For better or for worse, many people have to make last minute travel plans. Stay

will allow travelers to select a city, or area, that they will be spending the night and have a hotel

room bid for and ready by the time of their arrival. This allows them to spend the least amount of

money on any possible emergency situations that may arise. These unplanned trips are perfect for

the application due to its primary purpose of filling empty hotel rooms in near-full hotels.

B. Hotel Market: In addition to targeting consumers, we will also be recruiting hotel

chains and managers to use our application. We will mostly target limited-service and

independent hotels due to their middle-lower income customer base. In the future, we may be

able to incentivise the higher income hotels, however they would be a much lower source of our

own revenue. In order to create the two sided marketplace necessary for this application, we

must reach a critical mass of hotels so that our application spreads across a variety of cities and

locations. Thus, we will have to market to hotel owners to attract them to the online Stay
application. Hotels will benefit from an increased occupancy rate created by the application

because an occupied room increasing revenue is better than an empty room creating no

additional revenue.

IV. UNIQUE VALUE PROPOSITION:

A. Mission Statement: Stay aims to provide an affordable, quality

lodging

experience for consumers in addition to increasing revenue to hotels.

B. Rationale: Stay goes beyond conventional hotel booking services

through its

unique reverse bidding platform where hotel owners bid for increased traffic rather than guests

searching for the lowest deal. This unprecedented system benefits both sides of the market.

Consumers will save on a quality hotel room and hotel owners will be able to fill more of their

rooms. This simple feature sets Stay apart from the competition as well as attracting customers

from both sides of the market. Furthermore, this application is following the new digital trend of

using smartphones for booking travel. Thus, the market is there and growing so a innovative,

simple idea will be able to break through the market quickly and efficiently. This will also be a

new experience for consumers. Usually consumers are stuck searching multiple booking engines

at once in order to determine the best available deal. However, using Stay hotels will be vying

for the guests business. This is a unique solution in the Hotel and Lodging industry has not been

seen before.
V. SOLUTION:

A. Increasing Hotel Occupancy Rate: A hotel is in the business of

filling as many

rooms as possible. Stay creates an online, two-sided marketplace that utilizes the prevalence of

smartphone technology in order to increase occupancy rate. Hotels will be able to rooms to

travelers who are willing albeit at a lower price. Even still, earning a smaller amount of revenue

on an occupied room is better business than operating an empty room at cost to the business.

B. Sourcing Economical, Quality Rooms: Thanks to Stay, guests

will be able to

stay in a higher quality room for a lower price. This allows the guest to spend a higher portion of

their budget on other activities rather than their lodging. Guests use this app on the very day that

they need the room and thus will have the peace of mind of a quality room ready for them after

their adventures throughout the day. Our application can be the first place guests check because

hotels will be auctioning for the lowest price rather than the guest searching for the lowest price

using other booking engines.

C. Finding Rooms For a Broad Market: Furthermore, Stay covers a

broad market.

This application can be used by business travelers and tourists alike to save costs. The benefits

from this are obvious. Both hotels and guests will be reaching a fair price that covers both of

their individual needs. Thus, it will be easier for consumers to adopt this application because it
will easily bring prosperity to both sides of the market. Hotel chains will push the adoption of the

application in order to increase overall revenue. Business owners will encourage usage in order

to decrease lodging costs for their employees. Finally, tourists will use the application to reduce

the cost of their room to be able to allocate more of their travel budget for their adventures.

Therefore, Stay will attract a great variety of people and lead to its successful adoption around

society.

VI. CHANNELS:

A. Website: Hotels will be able to connect to a web application that allows them to

view

travelers in the area, select the specific users that meet their criteria, and bid on the prices of the

room against their competitors. Specifically, the front desk at the hotel will view a list of

potential guests and bid the price they are able to book a room for based on the duration of stay,

the occupancy rate of the hotel, and the mean booking rate of the hotel. The view will be in

realtime conjunction with other hotels in the area as each hotel competes for the potential guest

until the user specified timer runs out. Therefore, Stay will be another portal for a hotel or

increase their bookings and revenue.

B. Mobile Application: Travelers will have a mobile application in which they can

select

their current location or the location they plan on being in at the end of the day. For example, a

user is able to start the bidding while filling up their gas station on their road trip. They will be
able to specify their future location, their desired rate, desired hotel rating, and the amount of

nights they will be spending. The consumer will also be able to specify a range and have a

projected price that will help them better understand the rate they should expect to pay. In

addition, Stay will host user reviews of potential hotels in the area for the consumer to make a

more informed decision. Finally, the user can select the amount of time the auction will run so

that a room will be chosen for them by the time they reach their desired location. The application

will be available for the IOS, and Android marketplaces due to their massive influence over the

United States and global markets.

VII. REVENUE STREAMS:

 A. Per Bid Commission: A 10% commision will be charged on each successful

auction that will be payed by the hotel and will be automatically calculated into the bid

displayed by the application. This will be the primary source of revenue for our company.

However, one the service grows we will be able to offer lower commision rates to

incentivize loyalty and more hotels to join our network. In addition, due to the lower

revenue of independent hotels, they will be offered a lower commission rate of 5% due to

our acknowledgement of their tighter margins. This commission will cover our customer

acquisition costs, distribution costs, and our human resources costs.

B. First Year Model: The following model was made using the industry average of

a 30% adoption rate. The total number of limited-service hotels in the United States were

used; however only half of the total independent hotels were used because some may not

be suitable for our model. We also offer a lowered commission rate for the independent

hotels since their margins, or bottom line, is typically smaller than branded hotels.

Additionally, to make a conservative model, we only factored in capturing 5% of hotels

in our first year, or 0.06% of total limited-service/independent rooms in the United States.

With our high cost of advertising, we hope to add more than this to our network in the

first year alone. Furthermore, this is just an average over one year rather than specifics

for each month.

Limited-Service Hotels:

Total Number of Hotels: 14,818

Reduced Room Revenue: $55

 Occupancy Rate: 60%

Commission: 10% or $5.50

Average # Of Rooms/Night: 750

Total Revenue/Night: $4,125

Total Yearly Revenue: $1,505,625

Independent Hotels:
Total Number of Hotels: 12,500

Reduced Room Revenue: $40

Occupancy Rate: 40%

Commission: 5% or $2.00

Average # Of Rooms/Night: 750

Total Revenue/Night: $1500

Total Yearly Revenue: $547,500

Total Year 1 Revenue:

Total Nightly Revenue: $5,625

Total Year 1 Revenue: $2,053,125

VIII. COST STRUCTURE:

A. Customer Acquisition:
I. Consumer Marketing: Our consumer marketing is attempting to

attract families
on vacations as well as business travelers to use our application. Stays marketing efforts will be

focused online through Social Media. Social media marketing will be the primary source for all

of our marketing efforts. We will mainly use Facebook for our ad targeting and marketing,

however Twitter will also play a significant role. As evidenced by the Facebook audience, which

mirrors the Twitter audience, we will target users who show a heavy interest in both leisure or

business travel. These users will have an income above $40,000 and have at least graduated high

school. Targeting people in this manner helps increase the conversion rate to Stay as well as the

overall interest in using the application. In addition, Twitters ads are able to target competitors

websites in order to attract their audience. In total, the total market we will reach from social

media is between 113 - 120 million people. What will this look like in terms of cost? Using the

average cost per conversion for the travel industry, which is $0.35, we will be spending

approximately $1,000 a day on social media marketing. This will attract around 6,000

conversions a day to our application for a total cost of $365,000 a year. While this is a large

budget, it is necessary to rapidly deploy across the nation and attract a loyal base of customers.

This, as well as the Google conversions, were used to calculate the market potential in the first

year of Stays operation. View appendix for Social media charts.

II. Hotel Chain Marketing:

1. Travel: The primary source of acquiring hotel chains to adopt our service will be

through personal visits to their corporate headquarters. From there, we will be able to

outline the key features of our service and why it benefits them to join our network. We

expect to take five trips to different hotel chains in the first year. The total cost for these

trips are broken apart by lodging expenses, food, plane tickets, and the cost for a rental
car. These trips will each last about a week. In addition, we will be attending the Lodging

Conference in 2017 in order to market ourselves as a innovate, key force in the market

for the upcoming years. The approximate costs are $6,000 for lodging, $3,000 for food,

$9,000 for plane tickets, and finally $1,000 for a car rental. The total travel expense for

the year will be approximately $19,000 or an average of $3,166.67 for the three key

decision makers in the company to travel.

2. Primary Targeted Hotel Chains: During our five visits to hotel corporation, we

will visit Wyndham Worldwide, Choice Hotels, InterContinental Hotel Groups, Hilton

Worldwide, and finally Motel 6. These brands were chosen because of they possess the

largest market share as well as a great level of saturation in the United States and Global

markets. They also own eleven of the top fifteen limited-service hotel brands which will

be the primary hotel market for our operations. According to Stastia, these brands own
4,108 hotels, 2,913 properties, 2,072 hotels, 1,744 properties, and 973 hotels respectively

in the limited-service market segment alone. This comes to a total of 11,810 properties.

However, many of the hotels under these names are owned by investors and franchisees.

Therefore, we will have to convince the corporate structure to commit to the service and

push it onto their partners.

B. Distribution:
I. Website Servers:
1. Server Costs: Using online resources, we have found the costs

associated with hosting the website portal that hotel chains will access in order to

bid for clients. The costs include the cost to purchase the server, which is the Dell

PowerEdge R910 Server model. The server will be responsible for all the daily

tasks required for the operation of Stay. It calculate the hotels that are in range of

bidding, calculate bids and payments, and gather statistics about the consumer. It
will store this data for later usage and analysis. Furthermore, we must may for

fast, reliable, business internet to support this massive network computer. The

costs for the Dell PowerEdge R910 Server is $4,210. The server has four 2.26

GHz eight-core Intel Xeon Processors. Furthermore, it has 6.4 terabytes of solid

state drive storage for maximum speed and 256 gigabytes of RAM memory to

ensure the machine does not face a strain. The server will also be responsible for

hosting our emails for business purposes. In addition, we will be using Cloudflare

security services to protect our online data and server. Furthermore, we will use

RAID 50, which will protect Stay in the event of a disk failure. This comes at a

cost of $6,000 over the entire year, and is much easier than initially hiring a

security specialist.

II. Application Deployment: Deploying the application will be

relatively low-cost compared to the other costs the company will need to pay.
1. IOS: Apple charges a base $99 payment for

admission into the App Store. This will allow us to deploy the Stay

application to 40% of smartphone users

2. Android: Google charges a base $25 fee for putting

an application onto the Google Play Store. These fees are minor but

crucial because of the need to be connected to these marketplaces in order

to distribute the application.

 C. Human Resources:

I. Network & Computer Systems Administrator: This member is crucial to the

day to day functioning of any online organization. The employee will be responsible for the daily

operation of all networks and servers Stay is using for its operations. The Network and Computer
Systems administrator will also be held accountable for aiding in planning, determining,

coordinating, and directing technological activities. Along with these responsibilities, the

employee will be expected to implement computer systems in order to meet the organizations

technological aspirations. According to the U.S. Bureau of Labor Statistics, the 2015 median

salary for a Network and Computer System Administrator was $64,970. A 15% raise will be

implemented due to Chicagoland inflation costs as well as increased duties compared to similar

positions in other companies. The administrator has a large salary of, $99,481.50 per year,

because of the importance of servers and overall technology to our operation.

II. Website Developer: The purpose of the website developer will be to design and

create the website. The developer will be expected to know website development languages such

as HTML, CSS, and JavaScript, and SQL. The developer will also be expected to have sufficient

knowledge in libraries and frameworks such as JQuery, Node.JS, and Bootstrap. The employee

will be responsible for creating a parallax website that also implements payment methods. Along

with design and production of the website, the employee will be responsible for collecting data

pertaining to online traffic and capacity. After analyzing the data, the developer will have to

make hardware recommendations in order to increase customer satisfaction. The average pay for

a Website Developer in 2015 was $64,970, according to the U.S. Bureau of Labor Statistics. The

website developer will be given a 15% raise due to inflation in the northern Illinois suburban

area. The final salary for the employee will be $74,715.50.

 III. Mobile Application Developer: The Mobile Application Developer will be

responsible for having ample knowledge in programming languages such as Swift and

JavaScript. The integrated developer environments that the employee will be using will be

XCode 8 and Android Studio 2.2.3 for iOS and Android devices, respectively. The programmer

will also be expected to be able to send and receive information to and from the server and must

also be familiar with mobile location services. The U.S. Bureau of Labor Statistics announced

that the 2015 median pay for an application developer was $102,160; this salary will be the

Mobile Application Developers salary.

D. Office Costs: The location of Stays leased office space will be: 225 Arlington

Heights Road Elk Grove Village, IL 60007. The space is 1,020 square feet and will cost us

$12,900 yearly-- $1,075 monthly. The lease is type full service. Internet costs will be $2,400 per

year and phone costs will be $1,200 yearly. These rates all estimates by the landowner and may

shift slightly.

E. Total Costs: Below are graphs that break down Customer Acquisition costs,

Distribution costs, Human Resources, and Office costs by month and by year. The start up has

been made to get the most amount for the cost. This lean startup model is made to utilize the

most amount of outcome for the least amount of money put in. The consumer marketing expense

is the highest cost at $365,000. This takes up the majority of the first years budget because of

its importance in attaining our consumer base. The effectiveness of the marketing is important to

measure because of the large amount of capital being funneled into its efforts. Furthermore, we
have travel expenses to hotel conventions and hotel corporations. This comes out ot a total cost

of $19,000, bring the total consumer acquisition costs to $384,000. Also we have server hosting

and licensing on the app store which is the total distribution costs. Bundled with this cost, we

have added a security service called CloudFlare. This comes to a total of, $10,334 for the first

year. In addition, another large cost is the human resource expenses. This expense is important

because it involves the daily running of Stay as well as all the backend information. The total

cost for the first three employees totals $276,357 for the first year. Lastly, the final cost is the

office expense required to host the server and headquarters for Stay. The total yearly cost for the

headquarters lease is $16,500 which also includes a business phone and internet line. Next, you

will see charts that distributes these costs as a percentage of the whole operating and startup cost

for the first year which totals $687,191.

IX. DETAILED FINANCIALS:

A. Projected Income & Expenses:

1. Projected Income/Expense Sheets By Month: Below are the

projected income/expense sheets organized by month for the first fiscal year. The

revenue and expenses statistics used are estimates and are averages of the total

first year numbers. Furthermore, we have also added the two month free trial

period granted to encourage sign ups and utilization of Stay.

 2. Needs For Expansion: Below you will find the projected

income/expense sheets for the second and third fiscal year in Stays operation. We

have projected a 15% increase in revenue each year as well as an 15% increase in

expenses according to industry averages. No further capital must be invested due

to the revenue increasing beyond the costs. Additional requirements include:

increased marketing, more servers to improve stability and speed, additional,

specialized employees (such as marketing specialists, technical support personnel)

and a potential move to a larger office. The additional revenue comes from the

higher conversion rate we see from both consumers and hotels due to spread of

our success.
 B. Capital Funding & Repayment:
1. Capital Source: The down payment for the bank loan will be paid

for by the three executives and their families. This down payment totals $137,438,

or 20% of the necessary startup cost. This proposal is for the request of the

additional $549,753 required to startup from a bank.

2. Funding Repayment: We plan on receiving a typical 8% business

loan amortized over five years. This will provide the bank with a 17.8% return on

investment, or $119,067.52 over five years.

X. KEY METRICS:
 A. Marketing Effectiveness: Marketing data from Facebook and Twitter will be

used for A-B split testing and analyzed so Stay can pivot their marketing allocations. We

will measure the conversion rates, the success of different types of advertisements, and

different advertising platforms. This is to ensure the effectiveness of our marketing

strategy since it is 62.2% of our first years total costs. Furthermore, total marketing will

most likely remain constant or decrease depending on the adoption rate that the

application achieves.
B. Hotel Reviews: In addition, we must begin screening and reviewing all the hotels

in our network once we grow. This is to ensure the best possible customer experience.

Hotels will be incentivized to have better reviews so that they may receive favorable

commission rates. Also, hotels that score poorly among consumers will be removed from

the network until they improve their customer service or quality of the rooms.
C. Location Dependent Success: Stay will analyze the amount of users that reserve

hotel rooms in a certain location. Based on the analyzed location data, we will determine

the popularity of certain markets for future expansion and potential deals with hotel-

owning corporations.
D. Hotel Conversion Rate: In addition, it is also necessary to measure the amount

of hotels converting to our service. We can use this to sign corporate contracts that benefit

both the brand of the hotel chain as well as ourselves. This will help guarantee revenue

for both parties.

XI. COMPETITIVE ADVANTAGE:

 A. Market Share: Due to the method of acquiring our clients and the nature of the

hospitality industry, a large portion of the market will be obtained by Stay. Due to the

customer database that Stay will acquire, competition will be impractical.

B. Price Competition: Stay will be able to easily adjust commission rates if

competitors arise with lesser rates, providing hotels with increased revenue. Because Stay

will already be established, we will have the ability to pivot our commission rate more

competitively than that of a start-up.

C. Customer Loyalty: Once Stay is established, we will have consumer loyalty and

increased credibility which will prevent our competitors from easily taking our market

share.

XII. CONCLUSION

A. Summary: Stay aims to provide middle to low class frequent, spontaneous

travellers with affordable rooms through a reverse-bidding mobile application; Stay also

aspires to increase revenue for the hospitality industry through a website in which hotels

are able to reverse-bid for same day travellers. Due to Stays ability to acquire the greater

portion of clients, client and consumer loyalty owed to established credibility, and the

ability to pivot commission rates, competition would be impractical.

B. Financials: The total cost for year one amounts to $687,191. Stays cost for

human resources amounts to $276,357, the headquarters will be leased at a yearly cost of

$16,500, we have a marketing budget of $384,000, and distribution costs, including the

server that hosts our service, amounts to $10,334. Stays management team will equally

split the total down payment of $137,438 between them. Stay will need $549,753 to be

provided from a bank or an investor to run the business for year one. The loan will be a
 typical ten year 3.5% bank loan. This will provide the loaner with an 15.73% ROI, or

$102,600.63, over the period of ten years. Through our 10% commission on limited-

service hotels and our 5% commission on independent hotels, our projected first years

revenue model captures 0.06% of the market, earning Stay $2,053,125 for year one.
C. Expansion Opportunities:

1. Customer Rewards: Stay intends to increase customer loyalty through a rewards

program titled Stay Rewards. Consumers rewards will be provided based on bookings through

our mobile application. Every 10 bookings through the mobile application, the customer will be

rewarded $10 off a hotel room purchase through Stay. However, the travellers will be limited to

utilizing one reward for every purchase.

2. Global Scaling: Once Stay has a strong presence in the United States, we will expand

to the rest of North America; once we have done so, the Stay team will analyze data from the

hospitality industry in other countries and expand to the countries in which we see a potential for

growth.

3. Full Service Hotels: Once Stay successfully is able to occupy a steady number of

bookings in both limited-service and select-service hotels, we will extend our reach to full-

service hotels. Including full-service hotels in Stay will increase the market size for such hotels

and increase revenue to both Stay and the hotel.

XIII. BIBLIOGRAPHY:

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Jan. 2017.
"ComScore Reports January 2016 U.S. Smartphone Subscriber Market Share." ComScore, Inc.
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Freitag, Jan. "Non-Branded Hotels Outperforming the Competition." Lodging. 11 Mar. 2016.
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"List of Chained-brand Hotels." Wikipedia. Wikimedia Foundation. Web. 22 Jan. 2017.
"Our Plans." Cloudflare. Web. 22 Jan. 2017.
"Refurbished Dell Poweredge R910 16-Port Best." ServerMonkey.com. Web. 22 Jan. 2017.
Seth. "Hotel Revenue Statistics." Statistic Brain. Statistic Brain, 23 June 2015. Web. 22 Jan.
2017.
" Website Developer Summary." U.S. Bureau of Labor Statistics. U.S. Bureau of Labor
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Labor Statistics. Web. 22 Jan. 2017.
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Web. 22 Jan. 2017.
"225 Arlington Heights Road, Elk Grove Village, IL 60007." LoopNet. Web. 22 Jan. 2017.
"U.S. Travel Answer Sheet." U.S. Travel Association. Web. 22 Jan. 2017.

XIV. APPENDIX:
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