I

INDEX

1. Executive Summary………………………………………………………………………………………………………….1

1.1. Highlights on the Opportunity……………………………………………………………………………………….1

1.2. Business Idea and Concept…………………………………………………………………………………………….1

2. Market Research and Analysis………………………………………………………………………………………….1

2.1. Overview: Southeast Asia and the Travel and Tourism Industry……………………………………..1

2.2. Drivers for Growth…………………………………………………………………………………………………………2

2.3. Travel and Tourism Industry SWOT Analysis…………………………………………………………………..3

2.4. Market and Growth Forecast…………………………………………………………………………………………4

2.5. Industry Life Cycle…………………………………………………………………………………………………………4

2.6. Porter’s Five Forces……………………………………………………………………………………………………….5

2.7. Target Audience……………………………………………………………………………………………………………6

2.8. Competitors………………………………………………………………………………………………………………….6

3. Strategic Plan……………………………………………………………………………………………………………………9

3.1. Customer Value Creation: Mission and Vision………………………………………………………………..9

3.2. Product Description…………………………………………………………………………………………………….10

3.3. User Experience and Interface…………………………………………………………………………………….11

3.4. SWOT Analysis for the Company………………………………………………………………………………….13

3.5. Competitive Advantage and Differentiation Strategy…………………………………………………..13

3.6. Strategic Objectives…………………………………………………………………………………………………….14

3.7. Financial Ambition………………………………………………………………………………………………………14

4. Marketing Plan……………………………………………………………………………………………………………….14

4.1. Product Distribution - App and Website………………………………………………………………………14

4.2. Pricing Strategy……………………………………………………………………………………………………………14

4.3. Sales Strategy………………………………………………………………………………………………………………15

4.4. Advertising and Promotions………………………………………………………………………………………..15

4.5. Marketing Key Performance Indicators……………………………………………………………………….16

5. Business and Operational Plan………………………………………………………………………………………..16

5.1. Process……………………………………………………………………………………………………………………….16

5.2. Locations…………………………………………………………………………………………………………………….16

5.3. Legal Framework…………………………………………………………………………………………………………17

5.4. Management and Administration………………………………………………………………………………..17

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6. Financial Plan…………………………………………………………………………………………………………………17

6.1. Cash Flow Statement………………………………………………………………………………………………….17

6.2. Balance Sheet……………………………………………………………………………………………………………..20

6.3. Break Even Analysis…………………………………………………………………………………………………….21

6.4. Exit Strategy………………………………………………………………………………………………………………..21

7. Risk Management…………………………………………………………………………………………………………..22

BIBLIOGRAPHY…………………………………………………………………………………………………………………….23

TABLES, CHARTS, AND FIGURES INDEX

ILLUSTRATION 1: Southeast Asia GDP Contribution of Travel and Tourism………………………………..2

ILLUSTRATION 2: Tourism Industry SWOT Analysis……………………..……………………………………………..3

ILLUSTRATION 3: International Visitor Arrivals to Southeast Asia, 2012-2018…………………………….4

ILLUSTRATION 4: Industry Life Cycle…………………………………………………………………………………………..5

ILLUSTRATION 5: Porter’s Five Forces…………………………………………………………………………………………5

ILLUSTRATION 6: Key Competitor Products………………………………………………………………………………..6

ILLUSTRATION 7: User Experience of Traveler…………………………………………………………………………..11

ILLUSTRATION 8: User Experience of Host………………………………………………….……………………………12

ILLUSTRATION 9: Platform Sitemap…………………………………..…………………………………………………….12

ILLUSTRATION 10: Company SWOT Analysis…………………………………………………………………………….13

ILLUSTRATION 11: Organizational Chart………………………………………………..…………………………………17

ILLUSTRATION 12: Financial Statement…………………………………………………………………………………….17

ILLUSTRATION 13: Balance Sheet……………………………………………………………………………………………..20

ILLUSTRATION 14: Break Even Analysis…………………………………………………………………………………….21

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1. EXECUTIVE SUMMARY

1.1 Highlights on the Opportunity

Southeast Asia is considered to be the region with the highest travel and tourism potential in the world,

with its tourism sector playing a vital role in its total GDP. The ASEAN nations particularly are

increasingly becoming the traveling hotspots of the world, and with good reason – there are beautiful

islands and white sand beaches, lush mountain landscapes, delicious cuisine, fascinating culture, and

among the most welcoming and hospitable people.

International tourism to the region continues to grow year-on-year, with 16.5% of travelers coming from

Europe, USA and Australia. A mecca for backpackers, Southeast Asian countries are appealing to

Western travelers for a number of reasons including: relatively inexpensive cost of food and daily

expenses; a wide variety of activities for travelers to do, with focus on outdoor excursions and nature-

related adventures; and generally favorable and warm weather throughout the year.

1.2 Business Idea and Concept

Trocal (Travel + Local) rides on the current wave of the “sharing economy” concept: the idea of

collaborative consumption where consumer values shift from ownership to access. The sharing economy

is built around a sustainable economic ecosystem which includes the shared creation, distribution, and

consumption of goods and services by different people. 1

Trocal seeks to answer a universal challenge of travelers everywhere around the world: when traveling

to a destination, specifically a never-before-visited destination, where should one go? What should one

do? Who can one meet? Rather than booking commercial and guided tours, which often turn out to be

tourist traps or scams, travelers are more and more looking for unique and authentic experiences that

allow them to truly immerse themselves in the culture and “soul” of a city.

Therefore, Trocal will be launched as a travel guide app and website, an online platform where travelers

can connect with local hosts in their chosen travel destinations throughout Southeast Asia. With the

app, local hosts offer unique travel experiences for the travelers, far from the typical commercial tours

sold by tour companies or travel agencies; rather than being accompanied by professional guides,

travelers can plan their itineraries around cultural and experiential activities as seen from the eyes of a

local: outdoor excursions, historical walks, art and cultural immersions, home-cooked meals, local dining

experiences, and more.

2. MARKET RESEARCH AND ANALYSIS

2.1. Overview: Southeast Asia and the Travel and Tourism Industry The Travel and Tourism (T&T) industry in Southeast Asia has been experiencing a boom in recent years and is considered one of the major drivers of economic growth in the region. The T&T industry within ASEAN (Association of Southeast Asian Nations) has the following vital features:

1 MATOFSKA, Benita. What is the sharing economy? The People Who Share, 3 March 2014 [online]. Available on: http://www.thepeoplewhoshare.com/blog/what-is-the-sharing-economy/

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Direct contribution to ASEAN GDP amounted to USD 117.9bn (4.8% of total ASEAN GDP) in

2014 2 (See Figure 1)

Direct contribution to ASEAN GDP is forecast to rise by 5.0% by end of 2015, and to rise by 5.4%

per annum from 20115-2025, to USD 209.4bn (4.9% of total GDP) in 2025

9.8% increase in total tourist arrivals in ASEAN from 89.2 million to 98 million, comparing data

from 2012 to 2013

ILLUSTRATION 1: Southeast Asia GDP Contribution of Travel and Tourism

Source: Travel and Tourism Economic Impact 2015 by World Travel and Tourism Council (WTTC)

2.2. Drivers for Growth

Abundance of Natural Resources - Southeast Asia is a vast region containing some of Earth’s

most beautiful, varied and exotic topography, land formations, and water.

Culture and History – The region holds a rich culture which is reflected in its wealth of ancient

temples and churches, colonial houses, historic landmarks, UNESCO World Heritage Sites and

world-famous cuisines.

Rising Phenomenon of Budget Airlines - Travel within the region has become cheaper with the

number of budget airlines that ply the routes between ASEAN nations. Air Asia alone has

reported a 7% growth in its passenger volume comparing 2011 and 2012 year end data.

Marketing Efforts and Tourism Campaigns - Five countries in Southeast Asia declared 2015 as

their “Tourism Year”3: Malaysia, Philippines, Thailand, Vietnam, and Singapore. These countries

2 WORLD TRAVEL AND TOURISM COUNCIL. Travel and tourism. Economic impact 2015. South Asia [online]. Available: http://www.wttc.org/-/media/files/reports/economic%20impact%20research/regional%202015/ southeastasia2015.pdf 3 ABELLANOSA, Paolo. 5 Southeast Asian countries declare 2015 as tourism year. Travel Update, January 28, 2015 [online]. Available on: http://travelupdate.ph/774/5-southeast-asian-countries-declare-2015-as-tourism-year/

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have amped up their marketing efforts and tourism campaigns i.e. Malaysia’s “Year of Festivals”,

Philippines’ “It’s More Fun in the Philippines”, etc.

Furthermore, technological innovations that will expand and grow the industry have been identified as

the following4:

Increased mobile penetration due to the growth of mobile booking engines (such as: booking

flights on skyscanner.com, expedia.com; and booking hotels on booking.com, agoda.com and

hostels.com)

Social media penetration due to the growing number of travel apps and social media networking sites available to the market, which makes connectivity and engagement instantaneous

2.3. Travel and Tourism Industry SWOT Analysis ILLUSTRATION 2: Tourism Industry SWOT Analysis

4 RUSSEL, Tim. 5 Reasons Why Southeast Asia is the future of the Travel Industry. Represent Asian News, August 4, 2015 [online]. Available on: http://representasianews.com/5-reasons-why-southeast-asia-is-the-future-of-the-travel-industry/

WEAKNESSES

- Poor infrastructure in some countries (i.e. airports, public transportation, telecommunications, etc.)

-Widespread poverty

-Language barrier (English language capability not very developed in some countries)

-Safety may be a concern (i.e. protests, political unrest, kidnapping, theft etc.)

STRENGTHS

-Well-developed entertainment options (shopping, nightlife, etc.)

-Resources within the region: nature, culture, etc.

-Short distance travel between countries (easy to make travel itineraries within the region)

-Similar seasonality patterns makes multi-country touring more likely

OPPORTUNITIES

- Visa “liberalization” to ease travel between ASEAN countries

-Business tourism and attraction to MICE market (meetings, incentives, conventions and exhibitions)

-Special interest tours (i.e. historical, art-themed, outdoor excursions, etc.)

-Use of social media and technology to improve connectivity between travelers and locals

THREATS

- Unstable political situation

-Regional crises (spread of disease, terrorism, economic recession, etc.)

-Ongoing ethnic and religious conflicts

-Degradation and eventual depletion of natural resources (environmental unsustainability)

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2.4. Market and Growth Forecast

Approximately 16.5% of the total number of incoming tourists to Southeast Asian countries in 2013

belonged to Europe, USA and Australia5. This is the target market Trocal seeks to tap. The growth trends

have clearly been favorable and show that there is a sizeable existing market receptive to Trocal’s

service.

ILLUSTRATION 3: International Visitor Arrivals to Southeast Asia, 2012-2018

Source: Pacific Asia Travel Association, Asia Pacific Visitor Forecasts 2014-2018 Report

Visitor arrivals to the Asia Pacific region will continue to grow at an average annual growth rate of 6.2%

over the period 2014-2018 reaching 660 million by 2018. Moreover, according to International Air

Transport Association (IATA), air travel routes to, from and within Asia-Pacific will see an extra 1.8 billion

annual passengers by 2034, for an overall market size of 2.9 billion6. These favorable travel trends show

that we have a sizeable existing market receptive to our service.

2.5. Industry Life Cycle

Since the sharing economy is growing rapidly, Trocal fits right into the growth stage of the Industry Life

Cycle. However, given the niche concept of its service, competitive rivalry has not yet overtaken the

whole industry, Trocal finds itself in the introduction phase.

Sales in the industry C2C travel industry are still very low, so entering the market at this stage is very

beneficial for Trocal.

5 Top ten country/regional sources of visitors to ASEAN [online]. Available on: http://www.asean.org/images/2015/february/asean_statistic/Table%2030.pdf 6 NEWSROOM. New IATA Passenger Forecast Reveals Fast-Growing Markets of the future. 16 October, 2014 [online]. Available on: http://www.iata.org/pressroom/pr/Pages/2014-10-16-01.aspx

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ILLUSTRATION 4: Industry Life Cycle

2.6. Porter’s Five Forces

ILLUSTRATION 5:

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According to the Pacific Asia Travel Association (PATA), for year 2018, tourism in Southeast Asia will

increase to 175 million tourists. Taking into consideration that Thailand, Cambodia, Laos, Vietnam,

Indonesia and Malaysia are within the top ten visited countries in the region, Trocal will appeal to young

savvy adventurous people from around the globe that want to explore this region and get to experience

it like local citizens do.

2.7. Target Audience

A) Trocal reaches to a younger audience consisting of middle-class men and women in their 20s

and 30s and “backpackers” seeking adventure. These are the travelers who want to travel,

experience, encounter new places, and live like locals, even if it means “crashing” on someone

else’s couch. Furthermore, Trocal appeals to those who prefer to experience local culture and

cuisine, rather than classic tourist attractions. Our customers do not see themselves as

“tourists” but as adventurers who are ‘willing to live like locals do’ in cities of Southeast Asia.

Our potential customers are looking forward to discovering new places in Southeast Asia. They

are not afraid of meeting new people. In fact, this is part of the adventure itself. Backpackers are

an excellent example because their pursuit is adventure. Trocal provides affordable services,

therefore our potential customers have a wide range of prices points to choose from.

B) Trocal reaches hosts of various community-based activities in cities across Southeast Asia. These

people are typically small and medium business owners and individuals who value hospitality.

Trocal gives locals the opportunity to interact with foreigners in a more direct and

comprehensive way. Our hosts do not see themselves as service providers but in fact as

extended friends and family of the traveler. They provide a safe and enriching experience to the

traveler and pride themselves in being experts in their area. Trocal hosts are people who love

their city and want to share its richness and beauty with the world.

2.8. Competitors

The aftermath of the successive economic crises has reawakened the principle of the sharing economy.

This, coupled with the rise and the development of new technologies, has led to a new conception of

how we relate to others: the concept of collaborative lifestyle. This system is based on people with

similar needs or interests banding together to share and exchange less-tangible assets such as time,

space, skills, and money7. The way we travel has also been affected by this new tendency.

In the past years, a great number of platforms related to this topic have emerged. Some of them are

more focused on the exchange of services, while others simply focus on constructing cultural links and

inspiring local experiences. The audience, the geographical sector, the services and the prices are some

of the key points which widely vary from one platform to other.

7 OWYANG, Jeremiah. The mobile technology stack for the Collaborative Economy. VentureBeat, 17 February, 2014 [online]. Available on: http://venturebeat.com/2015/02/17/the-mobile-technology-stack-for-the-collaborative-economy/

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We have selected four of the most important companies which offer competing services in our target

market: AirBnB, Couchsurfing, Vayable, and Tripbod.

ILLUSTRATION 6: Key Competitor Products

Company Characteristics Strengths Weaknesses

Airbnb

Established in 2008, focused on connections between hosts and potential guests

Their services are offered in more than 34,000 cities and 190 countries. The listings network has a base of more than 2,000,000 worldwide

In total, more than 60,000,000 people have used the application as guests

Airbnb’s primary source of revenue comes from service fees from bookings and transactions (which range between 6% and 12% depending on the price of the booking)8

The company has 12 offices around the world. 9

The service is available on their official website and also on a mobile application available in 26 languages which operates in iOS, watchOS, tvOS, Android and Windows.

Airbnb is the second most valuable startup, just ranking behind Uber. 10

Airbnb closed a $475 million round in April 2015 at a $10 billion valuation. It has raised nearly $800 million since its founding in 2008. 11

The brand is well-positioned in the users’ top of mind and has a very trendy public image.

The selection of listings is global.

Safe policies are guaranteed («Trust is what makes it work» is its slogan). Insurance now cover $1 million per booking. In addition, payments are done through a secure platform. As they explain in their website, «guests pay through Airbnb when they book a listing. Hosts receive payment through Airbnb 24 hours after guest check-in».

The interaction between the guest and the host is purely transactional.

There are only few filters available which enable the user (guest) to select an accommodation allocation which has to do with his or her personal preferences and curiosities.

Conflicts between local housing laws and regulations and the business model.

The company’s activity (even the accommodation offered can be found worldwide) is located in Europe and North America. Consequently, there is a vast part of the world which does not count with a significant supply of this service.

Some media have already highlighted some safety controversies

8 BLY, Laura. No place like someone else’s home. USA TODAY, 7 May, 2015 [online]. Available on: http://usatoday30.usatoday.com/LIFE/usaedition/2012-07-06-Airbnb_ST_U.htm 9 CLAMPET, Jason. The 5 Travel Companies in the Billion Dollar Startup Club. Skift, 19 February, 2015 [online]. Available on: http://skift.com/2015/02/19/the-5-travel-companies-in-the-billion-dollar-startup-club/ 10 CLAMPET, Jason. Airbnb’s New $1 Billion Funding Would Value it at $20 Billion. Skift, 28 February, 2015 [online]. Available on: http://skift.com/2015/02/28/airbnbs-new-1-billion-funding-would-value-it-at-20-billion/ 11 BOYD MYERS, Courtney. Airbnb is growing fast, adding 1,000 listings everyday. TNW News, 25 May, 2011 [online]. Available on: http://thenextweb.com/apps/2011/05/25/airbnb-is-growing-fast-adding-1000-listings-every-day/

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Couchsurfing

Established in 2003 as a non-profit organization and re-launched in 2011 as a for-profit corporation.

Focused on connections between hosts and potential local guests.

The company encourages users to explore their cities through events supported by other couchsurfers from all around the world.

Their services are offered in more than 200,000 cities.

Currently, the only way that Couchsurfing makes money is through offering member verification, for the cost of $25.

The service is available on their official website and also on a mobile application which operates in iOS and Android.

The services are for free.

One of the first main platforms based on the principle of sharing economy.

As the service is totally free, there are fewer problems related to legislation and laws.

Couchsurfing promotes closer relationships between the guest and the host.

Presence of fake profiles: according to information on the Couchsurfing site, «since 2011 a significant number of fake membership profiles have been created with the intention of inflating membership statistics».12

Many hosts and guests have been convicted all over the world for theft or even rape.

Lately, the application is being used as a dating and hookup site despite the petitions of the company.

The company is in the middle of a strong economic crisis. During this year, several layoffs took place, «bringing Couchsurfing employment to its lowest level since the for-profit corporation was created».

Vayable

Established in 2014

Mobile application and a platform composed of brilliant, driven people with an authentic passion for travel and a commitment to bridging cultures.

Vayable presents a refreshing alternative that allows the traveler to get closer to the places they visit by trying lesser known activities.

The platform and app are available to all users for free

Customer support before and after the trip

Friendly user interface and user experience: Platform allows you to easily list, modify and promote your experiences and message with customers anytime directly through the platform. Dashboard helps you manage reservations

Global ranking is lower than 1500.

The app is not targeting a wider market according to the apptweak.com

Lack of relevant keywords in the description of the app on I tunes thus the SEO is not optimized

The guides are not always available so you might reserve a tour

12 DEAMICIS, Carmel. How Couchsurfing became the Friendest of the sharing economy. GIGAOm, 10 January, 2008 [online]. Available on: https://gigaom.com/2015/01/10/how-couchsurfing-became-the-friendster-of-the-sharing-economy/

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Destination guides in Paris, Barcelona, Austria, Lisbon, Athens, Berlin, Dublin, Istanbul, Amsterdam, Rome

Available on IOS

The company’s revenue comes from 15% commission from those offering experiences and a 3% from travelers.

and facilitates payments so you don't have to worry about it

Marketing toolkits, and training in best practices are provided for the guides

The platform is growing 500% year over year, with a set of "insider" experiences now around 10,000 13

without being aware of that fact

Tripbod

Tripbod joined TripAdvisor Media Group in 2014.

Tripbod gives real, on-the-ground insight - the kind of tips and tricks you usually only get from friends or family

Tripbod rewards you for sharing your knowledge and passion, as you advise and inspire the millions of travelers visiting TripAdvisor® each month.

Tripbods are local experts and travel lovers who can be involved in a variety of ongoing TripAdvisor projects.

The platform is part of TripAdvisor, the World's Largest Travel Site

TripAdvisor branded sites make up the largest travel community in the world, reaching 375 million unique monthly visitors, and more than 250 million reviews and opinions covering more than 5.2 million accommodations, restaurants, and attractions. The sites operate in 47 countries worldwide.14

Focuses only on the locals experiences (tips and tricks)

3. STRATEGIC PLAN

3.1. Customer Value Creation - Mission and Vision Trocal’s vision is to become the leading global online platform for unique, authentic travel experiences hosted by locals. Trocal will be the go-to site and the “home” for travelers who are seeking to experience the true culture of a destination through the eyes of a local and created, curated and hosted by passionate local insiders. Taking into consideration the vision, Trocal’s main missions are the following:

1. For travelers to have richer and more meaningful travel experiences by connecting them with locals and allowing them to have “insider” perspectives of a particular town or city within the region.

13 ZAX, David. With Vayable’s New Travel App, everybody’s a local. Fast Company, 10 July, 2014 [online]. Available on: http://www.fastcompany.com/3032816/most-creative-people/with-vayables-new-travel-app-everyones-a-local#5

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2. To empower locals in the ASEAN region by enabling them to use their time, passions, knowledge, and skills to earn a living and providing them an avenue to share and create real and honest experiences for travelers.

3. To create a more sustainable culture of travel by helping keep local cultures and traditions alive, bringing business and local commerce to towns that may not otherwise have access to the tourism that capital cities enjoy, and creating opportunities for locals and travelers to share ideas and inspire each other.

3.2. Product Description Trocal will be launched essentially as a travel guide app and website, an online platform where travelers can connect with local hosts in their chosen travel destinations throughout Southeast Asia. With the platform, local hosts offer unique travel experiences for the travelers, far from the typical commercial tours sold by tour companies or travel agencies; rather than being accompanied by professional guides, travelers can plan their itineraries around cultural and experiential activities from a local’s expert perspective: outdoor excursions, historical walks, art and cultural immersions, home-cooked meals, local dining experiences, and more. The platform is founded on the idea that people can use online technology to have a meaningful exchange of both personal experiences and money, benefiting not only each other but their respective communities as well. Upon launching the platform, users will be asked to register and indicate whether they will be using the app primarily as a traveler or as a host. They must “verify” their identity via a number of ways in order to ensure security and safety of the community:

a. Facebook or Google+ log-in (required for both hosts and travelers) b. Scanned copy of National Identity Card and verified background check by local authorities (for

hosts) c. Scanned copy of Passport (for travelers)

Once the user has specified their main function in the community, they will have access to the services: 1. As a Traveler Upon signing onto the platform, travelers would have to create their profile, which would include a picture along with personal information and details about their traveling style, interests, hobbies, etc. On the platform, travelers can browse information about their potential travel destination. As Trocal will be launched primarily in Southeast Asia with further global expansion after the first phase, the travel destinations will include cities in the following countries: Thailand, Vietnam, Cambodia, Malaysia, Philippines, Laos, and Indonesia. When browsing each country destination, travelers can choose from a host of local experiences:

a. Trocal TOUR – local hosts offer custom tours depending on the preferences of the traveler. The tours can range from: history walks through the Old Town, art tours in local museums and art galleries, city and market tours, and more.

b. Trocal EAT – local hosts offer to open their homes to travelers to experience authentic home-cooked meals consisting of local specialty cuisine. This can also include home-style cooking lessons.

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c. Trocal DO – local hosts offer to take travelers on various activities depending on the preferences of the traveler. These activities can range from: sports, outdoor excursions (i.e. hiking and exploring nearby villages or towns), nightlife (i.e. concerts, bars), and more.

Each experience will be listed alongside a corresponding price per person (to be determined by the host). There will also be a list of available dates when the experience/activity is available, and other pertinent information. When travelers are certain of an experience of activity, they can request a booking and proceed to make a payment. A confirmation email will be sent with more details on the activity and the host. 2. As the Host Anyone in the primary launch cities can become a host, as long as they have a service or a skill they would like to share with potential travelers. Hosts can sign up to offer any activity that would fall into any of the Trocal EAT, TOUR and DO activities. Hosts must specify the exact activity they are offering, the price and duration of the activity, and any other information travelers might need to know prior to making a booking. Payments by travelers will be held in escrow, until activity is completed, upon which it will be transferred to the host.

3.3. User Experience and Interface

We aim for our users’ experience while using the app and site to be clear, comfortable and easy.

ILLUSTRATION 7: User Experience of Traveler

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ILLUSTRATION 8: User Experience of Host

ILLUSTRATION 9: Platform Sitemap

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3.4. SWOT analysis for the company ILLUSTRATION 10: Company SWOT Analysis

STRENGTHS -Combination of skills from various hosts: Trocal will partner with local hosts of different skills sets which will allow travelers to choose from a wide variety of activities (dining, outdoor excursions, historical tours, art exhibitions, etc) -User design experience and interface of the app: The app will be attractive and easy for both hosts and travelers to use and navigate. Photos and content will be up-to-date. -Trocal will employ only the most knowledgeable and experienced staff members to manage the app, in order to ensure quality engagement and CRM with hosts and travelers

WEAKNESSES - Lack of a reputation in comparison to existing competitors, due to Trocal being a new player in the market -Limited financial base compared to the major players in the industry

THREATS - Existing competition (i.e. Established travel and tour agencies, online guide apps, etc) -Present growth in the tourism sector may result in an increase in the number of competitors entering the market -The struggle to continuously offer new and exciting trips while maintaining the level of quality that is established over time from similar offerings

OPPORTUNITIES -Tourism trends in the region indicate that today's travelers wants a more enriching experience than that provided by conventional tour agencies - Current drive by governments in ASEAN towards encouraging the participation of indigenous entrepreneurs in tourism presents an opportunity which Trocal may fully utilize

3.5. Competitive Advantage and Differentiation Strategy

1. Curated local experiences - All the activities available on Trocal will be created and curated specially for the traveler. Hosts will be hand-picked by Trocal, therefore travelers can be guaranteed that they will get a real and honest feel of the city/town.

2. Hyper local experiences - There will be a special emphasis on experiences that are not readily available to the public. Trocal will ensure that all activities are truly authentic from local insiders perspectives, such as: taking travelers to off-the-beaten track destinations; inviting travelers to their homes for home-cooked meals; inviting travelers to local festivals and/or cultural traditions; and sharing special stories or information that are not the usual from guidebooks (i.e. stories passed on from elders/older generations).

3. Ease of use - Both the app and the website will be designed in a manner that is attractive for

both hosts and travelers. The user interface will be simple and easy to navigate around, and will host content that is relevant for any type of user. It will include vivid curated photographs and information about each destination city along with the following sections:

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a. Most Popular - the most popular and in-demand activities b. Top Picks- every month, Trocal will feature select activities and hosts to be displayed

optimally in the search page c. Best for You - Trocal will curate activities and experiences specially for travelers

depending on what they have specified in their profile (their preferred type of cuisine, interests, hobbies, pace of travel, etc). It will gather the activities that would be a good match with their traveling style.

3.6. Strategic Objectives

1. To position Trocal as the leader in tourism and travel services in the Southeast Asia region among Europeans, North Americans and Australians aged 18-35 by June 2017

2. To offer at least 50 activities each for Trocal TOUR, Trocal DO, and Trocal EAT upon launch of the app in March 2016.

3. To achieve 5,000 downloads on the App Store and Google Play within 12 months of launch date 4. To connect and engage more than 10,000 unique hosts and travelers by June 2017

3.7. Financial Ambition

Achieve positive cash flow before end of Year 3 Reduce cost of acquisition of new user to half of revenue per user Double the value of transaction per traveller every two years

4. MARKETING PLAN 4.1. Product Distribution - App and Website The service will be available on two different online platforms. The first, the official website of the company, will give users access to the different services that Trocal offers and will be utilized by both travelers and hosts. The service will also have a simpler version in the form of a mobile application, which will have all the features and functionalities as the website but customized for smartphones. The application will be available both in Apple IOS App Store and Google Play, the two main service distribution platforms for these devices. 4.2. Pricing Strategy The price setting process will be dependent on the hosts. However, as there is a large variety of activities being offered, we will implement a mandatory price range which hosts will have to be aligned with when dictating the prices of their activities.This range will be specific to the nature of the offer (i.e. the same range will not be applied to a local dinner vs. a two-day hiking adventure). With this policy, we ensure that we are able to regulate our internal market and that prices stay fair and affordable both for guests and hosts. To maintain fairness and to be able to get a return on investment, our minimum cost for Trocal transactions will be at $12. Trocal will receive 20% of the price set by the host as a commission. Trocal will also implement some other proceedings related to the pricing policies in order to offer an additional value to the customers:

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All the activities available on Trocal will be reviewed and ranked depending on the traveler’s

experiences. In order to ensure high quality service and also to motivate hosts to do their best while carrying out the activities, Trocal will reduce the percentage of the commission for each activity. Therefore, hosts with higher rankings and more positive reviews will only be charged 10-15% commission, enabling them to earn a higher overall take-home pay.

Also, the company will have a secondary income resource via the “Premium Listing” program.

Trocal will offer to the hosts the possibility of optimizing their profiles in the platforms by signing up to a Premium Account. By doing so, hosts will ensure that their activities will appear on top positions and will be more visible for potential travelers. With the Premium Listing, hosts will have access to added features, such as a premium “Safe Profile” (with more data and certification spaces) which will provide them one the most valuable tools in the online context, confidence and credibility.

4.3. Sales Strategy As our company is based on a digital platform, our sales strategy is mostly concentrated on online sales through our channels. The marketing efforts developed are all in line with acquiring customers from various channels to sign up with our services and use the app. Moreover, in order to recruit the hosts and local businesses to work with Trocal, our on-ground team will have direct meetings with the potential locals to make sure that services are to the standard that we need. The personal connection is also very important to ensure that the locals are invested into the business and are truly interested in providing such services. 4.4. Advertising and Promotion Since we are a new online consumer service, we want to reach our target audience in places which they are most accessible, and use a well-funded advertising budget. Most of our promotion and advertising will be online. We will start with Facebook and Youtube ads. We will also register with Google through Adwords resulting in high positioning on its SERP. Our ads will show up when people are searching and planning vacations to our pilot zone. We also want to invest in Google display advertising with banner ad campaigns. Since we are a startup, we do not only want to focus all our promotion efforts on paid media. Therefore, we will have presence on social media in order to take advantage of the buzz generated in these kind of platforms. Besides the website and the application, we will count on our own social networking sites: Facebook, Twitter, Instagram, Google+ and Tumblr. By doing this, we will be able to raise our awareness and also generate engagement with our audience. At the same time, we will also make the most of these platforms by creating and promoting different online campaigns that will help us to gain shared media. This could be useful for potential promotions or discounts or other kind of advertising efforts. We will also register the business on free and low-cost online catalogues and business directories to include our website.

We plan to host a launch event in London, as it is central and accessible to both Europeans and Americans. Influential travel, tech and lifestyle bloggers will be invited to attend and learn about the app. We hope to gain earned media via blog posts following this event. To gain more access and positive

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image with bloggers, we will invite some of them to join us for test activities and tours with our prospective hosts, to give them an insight of how we work and pre-test each new host initially. One of the offline marketing promotions that will use during the launch and throughout the first year is to attend various startup accelerator programs, venture days and tech and travel conferences or expos. This way we will get more exposure to the market of customers, get people to talk about our service and provide a positive buzz. 4.5. Marketing Key Performance Indicators We will use Google analytics as well as analytics for the social media platforms. Trocal will analyze user trends from each target country to improve our marketing measures, for example which keywords are used most, which links most of our web traffic flows in from and what the user demographics are. Of course we will monitor the articles, blog posts and social media conversations taking place regarding the app and see how we can get more conversations going. We will also install cookies on our website to track visitor usage habits, how long they stay on the website, what their surfing habits are and where the clogs or prevention from completing purchases may arise. 5. Business and Operational Plan 5.1. Process Since Trocal offers local experiences to travelers, our main concern at the beginning will be to acknowledge those places, venues, cultural spots and activity centers in the ASEAN region. The first stage of building our operation will be the host recruiting process. The team will reach out personally, in order to build a relationship with local businesses and citizens who can potentially become Hosts. This way our team will assure the best quality standards in the services offered to our customers. Before signing up hosts into our service, our team will personally experience the “Trocal” service and review the host. In order to pursue this approach each of the partners will be assigned a target country to test hosts. After the first six months of operations, we will recruit our first team of regional customer service representatives, one for each country who will operate the live chat and emergency phone line. 5.2. Locations Trocal is a startup project that will start as an online company with no physical locations. We will incorporate Trocal as a Limited Liability Corporation (LLC) in Hong Kong. We chose Hong Kong specifically as it has tax breaks for companies that do not directly operate in Hong Kong territory. As planned the Legal, IT and Design team will be located in Philippines - as service contractors, reporting back to the founders to develop and design the App and the website. The rest of the operations will be conducted by the founders for the first 6 months. In Southeast Asia, where tourism will take place, Trocal needs to focus on managing hosts. And in the US, Europe, Australia, and New Zealand where Trocal’s customers are mainly located, we will concentrate our promotional activities.

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5.3 Legal Framework Prior to the launch of Trocal, the legal team will be outsourced on a retainer to work on the contracts that will be signed between all the parties. Below are the types of contracts:

1. Contract for service contractors such as IT team, design team, etc. 2. Non-Disclosure Agreements for the service contractors to make sure that the intellectual

property developed during their service hours belongs to Trocal company 3. Contract for local hosts - this will also include a clause where the service provided by the host

will be explained by detail to make sure that in case the service is not of the highest quality we have a legal document to pursue sanctions on hosts

4. Disclaimers and Terms & Conditions and for usage of the app and site for the travellers and hosts

5. Partnership agreement among the founders 6. General record-keeping for future legal purposes, including possible lawsuits, merger &

acquisition, sale or IPO purposes. 5.4. Management and Administration ILLUSTRATION 11: Organizational Chart

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6. FINANCIAL PLAN In order to create a lean startup, we are doing away with traditional brick and mortar offices and encouraging the team to work virtually. This reduces our infrastructure and asset costs. 6.1 Cash Flow Statement ILLUSTRATION 12: Financial Statement

Year 1 Year 2 Year 3

Business Registration $ 500.00 $ - $ -

Website Hosting $ 96.00 $ - $ -

Website Development + Maintenance

$ 10,000.00 $ 3,000.00 $ 3,000.00

Application Development+Legal $ 10,000.00 $ 3,000.00 $ 3,000.00

Chat Support $ 180.00 $ 180.00 $ 180.00

Internet $ 1,200.00 $ 1,200.00 $ 1,200.00

Equipment $ 2,800.00 $ -

Email $ 1,410.00 $ 1,410.00 $ 1,410.00

Total $ 26,186.00 $ 8,790.00 $ 8,790.00

Personnel

Founders $ - $ 50,400.00 $ 50,400.00

Business Development $ 84,000.00 $ 168,000.00 $ 168,000.00

Marketing $ 21,000.00 $ 33,600.00 $ 33,600.00

Total $ 105,000.00 $ 252,000.00 $ 252,000.00

Operational

Marketing $ 48,000.00 $ 48,000.00 $ 48,000.00

App Store (Apple+Google) $ 124.00 $ 124.00 $ 124.00

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Training $ 8,400.00 $ - $ -

Research $ 6,300.00 $ - $ -

Total $ 62,824.00 $ 48,124.00 $ 48,124.00

Total Costs $ 219,013.20 $ 368,436.08 $ 424,619.31

Number of Users 10,000 14,000 19,600

Average Transaction value 17 20 20

Average number of transactions per user

3 5 7

Total number of transactions 30,000 70,000 137,200

Revenues $ 102,000.00 $ 280,000.00 $ 548,800.00

Number of Hosts 1000 1400 1960

% of Verified Hosts 200 280 392

Verification Cost per user $ 35.00 $ 35.00 $ 35.00

Total Revenues via Verification $ 7,000.00 $ 9,800.00 $ 13,720.00

Revenues from Promotion $ 1,400.00 $ 1,960.00 $ 2,744.00

Total Revenues $ 110,400.00 $ 291,760.00 $ 565,264.00

PayPal Expenses $ 25,003.20 $ 59,522.08 $ 115,705.31

Total Gain/Deficit -$ 133,616.40 -$ 136,198.16 $ 24,939.38

EBIDTA -$ 133,616.40 -$ 136,198.16 $ 24,939.38

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Tax $ - $ - $ 3,990.30

Net Income -$ 133,616.40 -$ 136,198.16 $ 20,949.08

Cash from Founders $ 70,000.00

Cash from investors $ 300,000.00

Total Cash/Equity $ 370,000.00

Cost per user $ 21.90 $ 26.32 $ 21.66

Revenue per user $ 11.04 $ 20.84 $ 28.84

ILLUSTRATION 13: Balance statement:

Year 1 Year 2 Year 3

Assets

Cash $ 233,583.60 $ 97,385.44 $ 122,324.82

Equipments $ 2,800.00 $ 2,800.00 $ 2,800.00

$ 236,383.60 $ 100,185.44 $ 125,124.82

Liabilities

Shareholder Equity

Ordinary Shares $ 370,000.00 $ 370,000.00 $ 370,000.00

Retained Earnings -$ 133,616.40 -$ 269,814.56 -$ 244,875.18

$ 236,383.60 $ 100,185.44 $ 125,124.82

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6.2. Break-even analysis We break even in the third year when total gain exceeds net investment. ILLUSTRATION 14: Break Even Analysis

6.3. Exit Strategy We have identified five possible exit strategies:

1. Sell - We can opt to “cash out” so we can pay investors and ourselves. We will look for a buyer

who is ideally one with more skills and interest on the operational side of the business, and can scale it. This could most likely be one of our competitors such as: AirBnB or Couchsurfing.

2. Merger or Acquisition - If we get an interested related company, typically bigger than us, to merge with or get acquired by them. In this case, we make sure the offer prices matches our business valuation, which will be based on our goodwill and brand equity. This is a win-win situation.

3. Sell Shares - In this scenario one or more of the partners sells their shares to either existing partners or future eligible employees.

4. IPO - The option to “go public” will not be possible within the first 3 years, but we are hopeful that within 5 years of operation we will be in a stronger position to consider this exit strategy.

5. Dry-Out - In the event the proposed plan is not successful we will implement necessary measures to exit the business venture with minimal damage to the owners and investors. Any remaining debt will be paid by the owners in the form of monthly payments until all debts are paid in full. Definitions of "successful" and time limits for achieving milestones have been included in the owners' partnership agreement. Acceptable loss has also been calculated and if the business exceeds this amount and is unable to compensate the owners, we will begin the the process of closing the business and paying back debt.

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7. RISK MANAGEMENT Any business venture includes risks that are associated with the strategy, launch, and operation of the service. In the case of Trocal, there are various risks that need to be considered and planned for.

1. Competitors - Big companies such as AirBnB and TripAdvisor can enter the market of the local activity based travel. Though we have a first mover advantage, the competitors have more resources to promote and develop their business. Nevertheless, Trocal is prepared to face this situation by taking advantage of its expertise and its intense knowledge of the region. By going hyper local, we make ourselves the specialists in the region. The provision of security to the users in the way Trocal provides is unmatched.

2. Natural Disasters - According to the United Nations Statistical Yearbook, this region is the world’s most natural disaster-prone area. However, the management and security and evacuation protocols are improving every year. Furthermore, our money-back policy lets users feel secure in the knowledge that if the activity can’t be performed, they do not suffer monetary losses.

3. Political Unrest - There are several scenarios taking place in the region which can cause instability or mistrust in the travelers. Activist protests, terrorist attacks, and corrupt governments can make users think that Southeast Asia is not a safe or stable destination. We will however focus attention to the more peaceful and stable regions and combat misleading information with positive perspectives via our social media sites.

4. Lack of operational cash flow- As we are a startup, we are taking several financial risks. The self-investment process implicit in these kinds of companies gives us a weak context with regard to financing and saving capital. We are managing our expenses by not investing in too many assets that might require liquidation.

5. Low demand for the service or negative reviews- Different factors (such as the established competition, the change in the travel or tourism flows, wrong implementation of our marketing efforts or poor customer reviews) can lead to mediocre adoption of the platform. We plan to rely on constant customer feedback and engagement to consistently monitor and improve our services.

6. Lawsuit/Legal proceedings against Trocal - Just like others companies based on the concept of sharing economy, Trocal could suffer some problems related to legal proceedings, especially while we are moving in an international context where we will have to take into account different jurisdictions. We have outsourced a strong legal team to take into account various possible legal issues that could arise, and in this respect have drafted a very holistic disclaimer and terms & conditions for use of the service on the website.

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