much money will FaceBook Travel
Before I go into estimations and the various profit centers, I wish to point out that since February when I started to write this proposal, I’ve been working pretty much solo, and whilst that does not effect the ideas process, it does limit my research capacity, which save previous knowledge, just left the internet, which is surprisingly empty on Travel stats, so the following numbers I present are based on the few stats that I could find and will need to be double checked. So these figures are a best guess, not a factual certainty, due to this I have tacked an extremely cautions approach by halving my true expected profit of $17Billlion to 8.5 Billion in 2017
So to my first researched statistic, “how much is
spent on Travel & Tourism each year?” What is the Market Share
have Wikipedia http://wiki.answers.com/Q/How_much_money_is_spent_on_travel_and_tourism_each_year
And if we cross reference this stat with Factoidz, http://factoidz.com/10-countries-that-spend-the-most-money-on-travel-each-year/. Which claims the top 10 highest spending countries in the world, spend about US$400 Billion, I think we have a relatively solid argument that there is about US$ 900 Billion in the global travel pot. Interestingly Germany, not the USA is the highest spending Nation at $US 81Billion
from Travel Weekly is a little confusing as it takes into account some
travelers going on more than one holiday
But if I
break it down, it looks something like
It should however be noted that Travel Weekly, claims whilst only 20% of people booked through an on line operator, over half the travelers had done there research on where to go, on the Internet.
And if we
look at this stat specifically about on the on line market
We can see 63% of online bookings are direct to supplier and 37% are via tour operators, which is fairly close to the previous stats.
So if we take world travel at $900B and use Travel Weekly interpretation, we are looking at
with the individual item (flight ticket, hotel) 45% = US$ 405 Billion
Another article I found interesting was this
like to highlight two things, firstly it highlights that the Biggest Travel
Agents are intrinsically linked to Airlines,
But more importantly, it adds to my previous statement that Travel Agents that work for these travel companies haverarely been to the country they are visiting, worse there agents are under instruction to try to put clients off there chosen holiday and instead move them to an alternate holiday where the Travel Agency will make more profit.
This is where FaceBook Travel draws the battle lines against opposing Travel Agents, and added to our “Give Half Back” initiative, soon to be superior networking and software systems, I don’t see them staying in business for long, allowing our Partner Travel Agents to take their market share, and so make us more money.
like to point out why, High Street Travel Agencies and Venues themselves
have 80% of all bookings, whilst over 50% of people do there research
on line. Its simple, going direct to a venue or a big name operator, avoids
worry of fraud or possible liquidation of the smaller company. This worry
would of course be completely removed from on line operators if they were
part of FaceBook Travel
booking with the hotel, airline etc 45% = US$ 405 Billion
I can’t see a way to stop, people booking flights direct, so I’ll take of 10%
Of the remaining 35%, even if we make the booking, we would need to pay the accommodation venue about 65%, so there is a pot of = US$ 110 Billion available in accommodation commission in this sector.
I’m generalizing but, most people that book direct probably do so as they feel it is not only a safe way to book but also the cheapest, as they do not understand the STO (Standard Tour Operator) discount rate system, where in almost all cases booking direct is actually the most expensive way to book.
weapon here is S-World Virtual World. Let’s skip forward to 2017
and say at this point half of the world’s
S-World will give the public the opportunity to deal with and book direct
with all accommodation, so as
And as it’s a direct booking that asks for no service, we keep all the commission which will be around 35%
would mean we make 900 x 35% = 315 x 50% = 152.5 x 50% = 76.25 x 35% =
US$ 26.7 Billion
additional money will also be made, by adding additional travel content
to accommodation venues websites, flights, excursions & car hire,
so each accommodation venue itself becomes a source of FaceBook Travel
enquiries, if we err on the low side and say 10% of bookings are made
via these websites, half the venues have our web feed, and after reps
are paid, FaceBook will make about 20% in commission hence we are looking
2. Booked through a high street Travel Agent (or subsidiary website) 35% = US$ 315 Billion
In general Travel Agents have no idea about the product and knowingly sell holidays that are not what the client wishes. FaceBook Travel on the other hand will have hundreds of thousands maybe millions of local representatives across the Globe, real knowledge, real people and real experiences.
We attack this market in two ways,
1. Same product sold via FaceBook but cheaper.
Selling Package Holidays directly though FaceBook and S-World, available from all FaceBook Travel Reps, Agents, affiliated tour operators and Travel Agents.
I can really
see quite a big swing here, but I’ll prudently say only 25%. To
out price our competitors we cut our commission from 30% to 20% plus give
a conservative rep 5% each time so we end up with 15% commission
2. Partnering with Major High Street Names
I can’t see an end to High Street Travel Shops, but I can see a way to make sure they are all a part of FaceBook Travel.
Now I’m not sure what the monopolies and mergers commission will say about this but considering half the profit goes to the betterment of mankind, I think we have a good shot. If we look at the UK, there are 4 big operators
I suggest we pick one, at most 2 partners per territory, and try to freeze the rest out, on one side allowing our partner to use the FaceBook Travel partner and “Give it back” logos, direct access to our reps, all our advances, our database and of course S-World, on the other side bringing it to the attention of the world, the lack of 1st hand knowledge the competing travel agents have over there rivals, there policy of selling vacations based on there profit not customer experience and make some disapproving statements about there lack of charity
I’m sure by the time, we have really brainstormed these travel ideas, have an S-World demonstration and a strong hard nosed business plan, we will be able to charge a significant amount to these Travel Agents to join with us and ask a reasonable commission on every booking. Let’s say 10%.
So, by 2017 I’d like to see half the Travel Agents out of business, (or bought up by our partners) and FaceBook Travel affiliated to 50% of the rest.
So we have $315 Billion: the suppliers (Venues Airlines etc) take 65% = 110.25 Billion, we network to half the operators = 55.1 we take 10% = $US5.51 Billion.
3. Booked through independent Internet Tour Operator 20% = US$ 180 Billion
As our reps and agents have no real overheads they will all be able to afford, small PPC (Pay Per Click) Google adds as well as other search engines. With maybe a million Reps and a million websites I’d expect most search results for any venue across the globe will have our reps and agents at positions 1, 2 & 3.
All of our FaceBook Travel agents and reps websites will be more concise, have better rates, infallible credibility and offer a customer centric experience throughout there stay.
Add to this, S-World, Give Half Back & the Magazines and as far as “New Business” is concerned, I’d really be looking at a clean sweep, but for safety, I’ll say 50% of “New Business”
The market share between new businesses and repeat or referral customers I don’t know, I’ll go for 50%.
Here we will be working on a 30% STO (discount) whilst giving the Agent 10% so we take 20%.
So from “New Business” we will generate 180 Billion/2=90x20%=18/2=9 - US $ 9 Billion
As for the
other 50% (US$ 90 Billion) in repeat business, much in the same way we
partner with Travel Agents, we will also partner with Tour operators,
but here I expect to make a bigger percentage of the commission 15%. Considering
every advance we have works for Internet Tour Operators I’ll audaciously
say, I don’t think there will any internet tour operators that are
not networked to FaceBook Travel by 2017. We will become to internet tour
operators, what the GDS’s are to Travel Agents, a must use network
As for the
other 50% (US$ 90 Billion) in repeat business, well much like we will
pick a one or two Travel Agents per
So 90x15% = 31.5% = UD$ 13.5 Billion
much money will FaceBook Travel make in 2017?
This US$ 900 Billion is roughly split.
As mentioned at the top of the page, these calculations really are broad estimates, based on limited data, hence the 50% reduction for unknown factors, but I’m happy to be debated on all points, from both technical and business development perspectives.
This method has been referred to a few times during the FaceBook Travel presentation as “selling trading rights” as company partners will have to pay upfront to be a FaceBook Travel Partner.
To further increase our appeal in other industries, we will need to split this profit in 2 again, by sharing them with our Travel Network, like “Give Half Back” this action will in the long run increase profits and more to the point allow us to use this business model and gain investment in other industries.
It also alleviates the one possible problem with this plan, and that is becoming too successful, David becomes Goliath, and everyone is out to beat you. It’s possible.
If instead of creating one FaceBook company “FaceBook Travel” we will also created another company “Experience” and made a profit share between the two companies. Then sell off shares in “Experience” till it was fully owned by the best venues, airlines, travel agencies tour operators, car hire companies and villas. All under the “FaceBook Travel” & “Give Half Back” banners
Then there is no longer a conflict, no Goliath, just clever software that prop’s up the best in travel. Plus the decision-making can be largely left to the Experience Board of Directors, it is their industry after all, they are the experts, all we are doing is providing the technology.
This way instead of begrudging partners seeing nothing but our stranglehold on technology for there 10 to 20 percent, we have willing loving partners, basking in dividends and market share.
This path adds experience and takes a lot of unknowns out of the equation. I expect this route would make it possible to collectively gain a lot more market share, maybe even twice as much, which balances out for earnings being halved. This said, I’ll decline to factor this into the figures, simply because I wish to approach a under promise over deliver approach not just to FaceBook, to the world.
And so finally
we take our $17 Billion and split it with our new FaceBook Travel and
“Give Half Back” partners making a pre tax profit of $US8.5