TrippIn.com

Business Plan

David Chiu, Waqas Khan, Omar Sattar

Table of Contents

1 Executive Summary.............................................................................................................................................. 31.1 Mission Statement......................................................................................................................................................... 3

1.2 Market Opportunity...................................................................................................................................................... 31.3 Competitive Landscape................................................................................................................................................ 31.4 Competitive Advantage................................................................................................................................................ 31.5 Funding Needs................................................................................................................................................................ 4

2 Market Opportunity............................................................................................................................................. 42.1 Industry Overview......................................................................................................................................................... 42.2 Market Segmentation................................................................................................................................................... 62.3 Unmet Needs................................................................................................................................................................... 72.4 Competitive Landscape................................................................................................................................................ 7

3 Company Strategy............................................................................................................................................... 10

4 Operations............................................................................................................................................................. 154.1 Sales and Marketing................................................................................................................................................... 154.2 Product Development................................................................................................................................................ 16

5 Management......................................................................................................................................................... 17

6 Use of Funds.......................................................................................................................................................... 18

7 Financial Analysis............................................................................................................................................... 19

8 Risks........................................................................................................................................................................ 20

9 Appendix................................................................................................................................................................ 22

10 References............................................................................................................................................................. 28

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1 Executive Summary1.1 Mission Statement

TrippIn is a virtual comprehensive travel concierge that makes travel planning convenient, quick and

flexible by customizing your experience according to your personality profile.

1.2 Market Opportunity

The way we plan trips is changing. According to Faisal Galaria of Alvarez & Marsal, “it generally takes a

family more than three weeks to book a holiday, from deciding to travel to clicking the “pay now” button,

in which time they may visit seven websites” (Economist, 2014). In addition, a study by Expedia Media

Solution concluded that travelers actually visit over 38 sites before booking. Most, if not all online travel

agencies offer only the following travel services: flights, hotels, car rentals, and cruises. This means that

travelers interested in entertainment (restaurants, shows, and nightclubs, etc.) and local attractions

(tours, museums, etc.) would have to do additional research online to complete their travel experience.

Our comprehensive solution would be able to serve this unmet need saving users time and offers the

convenience of a one-stop-shop for trip planning.

1.3 Competitive Landscape

Four major online travel agencies - Expedia, Priceline, Orbitz Worldwide, and Travelocity control about

95% of the U.S. OTA market.

Smaller Companies that also compete this market: GoGoBot, Tripomatic, Viator and Quintessentially.

1.4 Competitive Advantage

Today, if you want to plan an all-inclusive vacation, aside from airfare and hotel reservations, you have to

perform a manual search on restaurants, bars, clubs, excursions, sight-seeing trips, etc. – the various

components of vacation planning are fragmented and time consuming. On average it can take 3-6 hours

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(and up to 10 hours) to book a trip. TrippIn is a one-stop shop that will plan your travel experience based

on your personality.

1.5 Funding Needs

TrippIn anticipates raising $492,000 of equity capital to launch and operate the company through its

initial phase. The nature and source of this funding shall include friends and family. This level of financing

is adequate to fund our initial development, launch, sales, and promotions and to carry the company to a

point where it will generate substantial revenue.

2 Market Opportunity

2.1 Industry Overview

Global tourism has grown into an industry that generates over $6.5 trillion dollars in annual economic

impact worldwide. After experiencing a period of decline in the late 2000’s due to the economic

recession, the global tourism industry has slowly recovered along with the global economy. According to

Statista, in 2012 international travel surpassed the one billion (1.035 billion) trips for the first time in

history. This is a 50% growth compared to ten years ago. Going forward the global tourism industry is

forecasted to grow 4% annually for the foreseeable future by the World Tourism Organization (UNWTO).

Most of the growth will be driven by emerging markets in the BRIC consortium (Brazil, India, Russia, and

China) which have seen a substantial rise in their spending in the last ten years. For example, China

surpassed the United States and Germany in 2012 to become the largest spender ($102 billion USD) on

international travel (World Tourism Organization). Of the one billion trips in 2012, 51% were for leisure,

recreation, and vacation, 27% to visit family and friends, and the rest for business travel (Salamone,

2011).

A subset of global tourism is the online travel industry. The industry started in 1995 when Hyatt

launched Hyatt.com to offer special discounts to consumers. Since 2006, customer spending for online

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travel has grown 17% annually. See Exhibit 6 for the evolution of the online travel industry. The online

travel industry consists of companies that facilitate the purchase of flights, hotels, rental cars, and other

travel related activities over the web. Companies operating in the industry fall into the following

categories:

● Suppliers - airlines, hotels, and rental car companies offering their services to consumers. They

sell their services via their own websites or use online travel agencies and aggregators.

● Online travel agency (OTA) - provides suppliers’ pricing to the consumer and fills online orders.

According to Euromonitor International, OTAs had combined bookings of $278 billion in 2013.

Well-known companies in this space include Expedia, Travelocity, Orbitz Worldwide, and

Priceline.com.

● Aggregators - meta-search companies that allow web users to compare prices of different OTAs

and suppliers and direct the customers back to these companies for purchases. These companies

normally do not offer the capability for purchase directly on their website. These include Kayak,

Booking.com, AirFareWatchDog, and BookingBuddy.

The online travel industry is currently a $400 - 500 billion dollar industry. The Euromonitor

International predicted the global market would increase to around $830 billion in sales by 2017. This

growth is expected to be driven by the following factors:

● Global economic growth with rising discretionary income (biggest impact on the industry)

● Increased Internet usage worldwide with developing countries providing the most potential

(emerging markets such as the BRICs). By 2017 over 30% of online travel bookings will be made

via mobile devices (Euromonitor International, 2014)

● Rising hotel rates (OTAs receive a commission on purchases, this will contribute to an increase in

their revenue)

● Increasing importance of Millennials and seniors

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○ Millenials are more likely to travel internationally for leisure and will use technology in

their planning

○ Over 1 to 1.3 billion seniors worldwide with a preference for rest and relaxation

The biggest market is the United States at around $157 billion dollars which makes up about one third of

the global market (Statista, 2014). The US market is expected to grow at a slower pace compared to

other countries (Europe, Latin America, and Asia) but should be able to maintain its leader position for

the next few years.

Based on Euromonitor International projections on global online travel sales, the online travel industry

could be a $250 billion business in the United States by 2017. In addition, PhoCusWright a market

research firm estimated shares of online travel bookings would rise from 41% in 2012 to 43% by 2015 in

the United States.

2.2 Market Segmentation

Target Market

We are targeting individuals with the following characteristics:

● Leisure traveler who

○ travel at least once per year (domestic or international)

○ is too busy with limited time to plan a vacation

○ has discretionary income

■ Traveling households earn more than non-traveling households, $62,500 compared

to $52,800 for the general U.S. population

○ is tech savvy (web searches and social media) with more emphasis for early technology

adopters

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■ One in ten used destination websites, 9% used traveler provider websites (airline,

hotel, rental car, cruise, tours, etc.), 5% used social networking and 4% used a

mobile device to help plan their trip.

According to the US Travel Organization, leisure travelers are older than business travelers. The average

age of leisure travelers is 47.5 years old. The age group composition of leisure travelers are as follows;

36% are >55 of age, 36% are 35-55, and 28% are 21-34. According to a survey on Expedia.com,

Millennials are more likely than the older generations (among 46 - 65 year olds) to use mobile phones

(32%) and tablets (20%) to book their travels.

2.3 Unmet Needs

The way we plan trips is changing. The days of going to the same local travel agency to book our trips are

gone, and it’s for the better. The Information age and the Internet have corrected the information

asymmetry and given the general public easy access to all sorts of information that were not available to

them in the past. This has increased the power of the consumers giving them more options to compare

prior to purchase. This is especially true of the online travel industry with the abundance of OTAs and

aggregators offering their services to the consumers. Having more choices is a good thing, but this has

increased the amount of time consumers spend on trip planning. According to Faisal Galaria of Alvarez &

Marsal, “it generally takes a family more than three weeks to book a holiday, from deciding to travel to

clicking the “pay now” button, in which time they may visit seven websites” (Economist, 2014). In

addition, a study by Expedia Media Solution concluded that travelers actually visit over 38 sites before

booking. Most of these visits are to OTAs (47%). One reason why travelers are visiting all these sites can

be attributed to the limited offerings of OTAs. Most if not all OTAs offer only the following travel services;

flights, hotels, car rentals, and cruises. This means that travelers interested in entertainment

(restaurants, shows, and nightclubs, etc.) and local attractions (tours, museums, etc.) would have to do

additional research online.

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Our comprehensive solution would be able to serve this unmet need saving users time and offers the

convenience of a one stop shop for trip planning.

2.4 Competitive Landscape

SWOT Analysis

Strengths

● Growth of tourism industry

○ Increased interest from Millennials and seniors (1 - 1.3 billion) for leisure travel.

○ Growing importance of travel to maintain a healthy lifestyle and to show financial stability.

● Abundance of suppliers and information

○ Readily available suppliers (airlines, hotels, car rental companies, cruises, entertainment,

booking services (Sabre), etc.) willing to work with OTAs

○ Access to travel information via APIs to suppliers and other OTAs

Weaknesses

● Limited growth potential in Europe and United States

○ Online booking now accounts for 43% of total travel sales in America and 45% in Europe.

Potential for the OTAs’ market to grow seems limited (Economist).

● Strong Competitors

○ Difficult to compete with the Big 4 who control major of the market shares.

● High customer acquisition costs

○ High spending on advertising and marketing in order to be successful. According to

eMarketer, estimated advertising spend of $4 billion for OTAs in 2014, with Priceline and

Expedia accounting for over 50%.

Opportunities

● Global economic growth

○ Increase in discretionary income to spend on leisure travel8

● International growth

○ Still markets with untapped potential such as Germany (still use traditional travel agents)

and emerging markets (China - online travel industry expected to grow to $30 billions in

2015. (PhoCusWright)

○ “By 2017, Western Europe is forecasted to reach North America at the top of the ranking

and Asia Pacific is expected to be the fastest growing region over the next five years in

terms of online travel sales, which are set to double from US$78 billion in 2012 to US$155

billion in 2017 in the region.” (MarketWired)

● Increase in Internet and mobile use

● Preferences for luxury, eco-friendly, and multi-generational travel

Threats

● Increased competition

○ Increased competition from Google (bought ITA in 2010), CTrip, and TripAdvisor.

○ Industry consolidations as bigger operators are buying up smaller companies.

○ Popularity of consumer-to-consumer transactions (airbnb) which has the potential to

eliminate the need for suppliers and OTAs.

● Global recession and pandemic events

○ A recurrence of the global economic recession in the late 2000s or another pandemic

(H1N1 or Ebola) will have a negative impact on travel.

Competition

Premium travel agencies/concierge services

● American Express: provides travel services to members. As of 2012, is the 5th largest travel

retailer in the world in terms of sales.

Online Travel Agencies (OTAs)

The Big Four

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Four brands - Expedia, Priceline, Orbitz Worldwide, and Travelocity control about 95% of the U.S. OTA

market.

● IAC (InterActiveCorp): owns Expedia, Hotels.com, Hotwire.com, and Trivago. Holds over 40%

market share with recent gross bookings of 39.4 billion which is the largest in the world.

● Priceline.com: owns Booking.com and Kayak. Is the 3rd largest in the world with gross bookings

of 39.2 billion. Continues to gain on the leaders through acquisitions and marketing.

● Orbitz Worldwide: 3rd largest, owns 21% of the US market

● Travelocity: 4th largest providing flights, hotels, and car rentals

Smaller Players

Smaller companies tend to compete in a niche market offering incremental services and innovations.

● Gogobot - dishes up interesting things to do for any type of traveler across a wide range of cities

around the world. It has suggestions for family friendly activities, stuff for outdoorsy people, in

addition to the typical shopping/eating/sightseeing agenda.

● Tripomatic - helps you plan what to do and see on your next trip, and on which days. Tripomatic

has more than 40,000 attractions listed in 300 destinations.

● Viator - shows you deals and discounts either nearby or in the place you're going to visit next—

provided that location is in Viator's list of potential cities, regions, and countries.

● Quintessentially - members-only concierge service is opening its door to all through its latest

app. Users can purchase latest event tickets and lavish Valentine’s Day gifts, for example, within

the app’s boutique. The app also provides recommendations from restaurants to spas.

3 Company Strategy

Value Proposition

TrippIn is a virtual comprehensive travel concierge that makes travel planning convenient, quick and

flexible by customizing your experience according to your personality profile.

Business Model - How TrippIn works

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Today, if you want to plan an all-inclusive vacation, aside from airfare and hotel reservations, you have to

perform a manual search on restaurants, bars, clubs, excursions, sight-seeing trips, etc. – the various

components of vacation planning are fragmented and time consuming. TrippIn is a one-stop shop that

will plan your travel experience based on your personality.

We plan to cater to people who do not have the time to book travel itineraries, as well as people who

want to plan themselves (by providing additional options). TrippIn plans to provide customers a quick

yet thorough turnkey service with respect to travel planning that includes access and reservations to

flights, accommodation, transportation, restaurants, dining, sightseeing, nightlife, excursions, cruises, etc.

The process would work as follows:

● In order to get to know our customer’s needs better, TrippIn will ask users a series of basic

questions through an automated questionnaire. Responses to the questionnaire would be saved

and used to generate recommended results.

● The questionnaire would cover areas such as budget, lifestyle, personal interests, hobbies,

lifestyle, preferences, time, etc.

● Users will have the option to save their profile so they do not have to repeat the process the next

time they want to plan a trip.

● Users will always have the option to update, amend and change their responses whenever they

would like. They would have the option to resubmit their entire profile, or change responses to

specific questions at any time.

● Should users want to take a vacation but don’t know how to get started, TrippIn will assist with

recommendations based on criteria such as age, geographic location, personal tastes, popular

events locally or internationally, etc.

● TrippIn’s itinerary would be made flexible to the extent possible, for cancellations, changes to

existing reservations, or offering additional options, are all functions we plan to offer.

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Let’s take the example of the couple, “Mr. & Mrs. Smith” who are planning their honeymoon to Greece.

Mr. & Mrs. Smith are young, busy urban professionals between the ages of 28 and 34 who don’t have

much time to plan the trip, nor have they been to Greece before.

Step 1 is to fill out a questionnaire that would take a few minutes and can be filled out by one person. The

questionnaire would ask questions such as: Purpose of the trip (honeymoon, bachelor party, family

vacation, etc.), hobbies (diving, hiking, etc.), budget, ($1,000-$10,000) distance (0-10,000 miles), location

preferences (such as big cities, remote locations, beaches, etc.), number of people (1-25) and preferred

cuisines (Thai, Indian, Greek, etc.)

Step 2: Submit the user profile and wait for results. Mrs. Smith filled out the form and indicated in her

profile that she is going on her honeymoon - her destination is Athens and Mykonos from August 1 st to

August 10th would prefer to stay in five star hotel, likes hiking, fine dining and museums. Mrs. Smith also

indicated in the questionnaire things her husband enjoys - scuba diving, fishing and experiencing the

local nightlife.

TrippIn now has relevant information in its database. Mrs. Smith hits the submit button and the TrippIn

database goes to work by scanning millions of options from its database in just seconds. Mrs. Smith views

the following results 8 – 15 seconds later in a time line format, with each event in separate box:

a. Delta flight 2185 from JFK to Athens for two on August 1

b. Island Car service will receive Mr. & Mrs. Smith at the Athens arrival terminal

c. The couple will be staying at the Ritz Carlton Athens Aug 2 – Aug 6

d. Lunch reservations can either be made at the Ritz Carlton or, if Mrs. Smith decides to go somewhere

else, she can always press a button below lunchtime that says “more options” and TrippIn will return 10

additional lunch spots within a 1-mile radius of Ritz Carlton.

e. Selecting a dinner spot will follow the same format as lunch; however TrippIn found a popular local

seafood restaurant next door for the couple because Mrs. Smith has indicated on the questionnaire that

she enjoys seafood.

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f. The following day, August 3rd, the couple will be going out on an all day boat tour that includes scuba

diving, reef diving and a freshly cooked lobster dinner on the boat hosted by a local boat tour known as

Helios Pontoons.

g. August 4th, Mrs. Smith indicated that she wants a late start to the day and they visit the local museum.

TrippIn made a prior reservation with the Athens Museum of History when Mrs. Smith booked with

TrippIn a month ago. The couple walks past the long line of tourists and simply picks up their entry

tickets and enjoys the museum.

h. August 5th, the couple will be hiking at a spot 45 minutes away from Athens. A local tour operator,

Galapagos Tours picks up the couple from their hotel at 10 am, has breakfast ready for the couple in

(because it was indicated to us via our website) the van. The couple returns to the hotel at 7 pm just in

time for their dinner reservation at 8pm down the street at an Indian restaurant called Taj. It is 7:30 now

and the couple decides they are too tired and would rather order room service. Mr. Smith logs on to the

TrippIn website from his ipad, pulls up their trip – selects the date and dinner reservation and simply

cancels. The process takes under 15 seconds, and the restaurant is notified of the cancellation through

the TrippIn website.

i. Similar to the format described above, the couple continues with their trip to Mykonos that includes

travel by boat, a stay for two nights in a villa, more restaurants suggestions, night light life options, local

excursions, etc.

Customer Evidence

Research indicates that 26% of people spend 10+ hours planning a trip (Quora, 2014). We conducted a

survey at NYU’s Executive MBA program, work colleagues, friends, and family. In total, we surveyed 1,000

participants. More than 90% of the surveyed individuals believed that our idea was unique, practical and

attractive. When we asked for feedback on our idea, we gathered two common themes from our survey:

1) timesaving and 2) a one-stop shop to travel planning that is quick, automated and provides for

thoughtful travel options.

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We believe there is a need for such service because it serves multiple needs such as timesaving,

convenience, a one-stop approach and a well-researched customized itinerary. For example, while there

are dining options such as opentable, it is not directly linked to travel. To make, change or edit

reservations, one has to visit the opentable portal. Each component of travel requires a separate effort

that is time consuming. We want to offer a consolidated, visually pleasing; flexible approach to travel that

currently does not exist. Furthermore, we would like to stress the importance of flexibility. While TrippIn

makes travel recommendations, we plan to offer multiple options to our users so they can pick and

choose if they are not satisfied with our recommendations.

Differentiation

We are not trying to recreate the wheel of travel and are simply trying to consolidate existing

components of travel and vacationing. We are currently not aware of a solution that provides vacation

planners with a 360-degree vacation planning service and we believe TrippIn has the opportunity to

introduce such services. Over the last few years, the use of a travel agency has declined 1 due to the fact

that more and more online users are taking control of their own travel plans through travel websites

such as Priceline, Orbitz, Expedia, etc. Using the example of Mr. & Mrs. Smith’s honeymoon to Greece

above, TrippIn allows for increased sales for Delta Airlines, Ritz Carlton hotel and all the Greek vendors

utilized during the trip. End users want a flexible, seamless, well thought out hassle free vacation

experience, and TrippIn would like to introduce that very concept.

Key success factors

● TrippIn’s website design and functionality would be a key success factor as our service is only

offered online. Our website has to be aesthetically pleasing, easy to use and produces quick

results.

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● It is imperative for TrippIn to source experts who have specific industry experience. The three

founders have experience in the fields of Finance, Technology and Operations; however what

TrippIn is highly dependent on is industry relevance.

● Advertising and marketing dollars have to be spent wisely and timely. Not spending the

advertising and marketing dollars (one of the biggest budgets) ineffectively can cause the

company to lose valuable funds very quickly.

● TrippIn is highly dependent on the development of a successful algorithm that will drive our

search engine. Please refer to the Risks section.

4 Operations

4.1 Sales and Marketing

TrippIn is an Internet based service that is available to end-users 365 days of the year. As such, users

have the ability to utilize our services at any time to make travel plans. TrippIn plans to advertise its

services through various means such as:

1. Online Advertising - TrippIn will feature banners and buttons on third party websites such as

Delta Airlines, Ritz Carlton, etc. that would direct users to our services. We also plan to run our ads

on YouTube. Additionally, vendors will have the opportunity to advertise on TrippIn’s website.

2. Paid search (Online) – TrippIn will pay for its service to appear on major search engines such as

Google, Yahoo, Bing, etc.

3. TrippIn would rely heavily on social media for marketing. TrippIn will be proudly featured on

Facebook, Instagram, Pinterest, Reddit, Twitter, etc. We believe our target market spends a lot of

time on social media (and online in general).

4. Leverage Travel Blogs - TrippIn plans to work with bloggers to promote our services. Research

indicates that Millennials are more likely to blog than any other age group.

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5. We plan to place print ads on public transportation in densely populated cities such as New York.

Millions of people ride the New York subways on a daily basis, giving our target market the

opportunity to notice TrippIn.

We plan to utilize marketing consultants who will help promote TrippIn’s service. Marketing consultants

will be used before, during and after our launch. We plan to create brand awareness and a market buzz

prior to launch. We expect our marketing consultants to leverage multiple avenues such as trained

marketers who would explain our service (in person) to our target market in areas such as airports,

shopping malls, department stores, hotels, etc.

4.2 Product Development

Our product will consist of proprietary, third-party, and hosted components:

Website and mobile app

Our website and mobile app is the gateway for users to access our services so the design will be simple,

clean, and intuitive. There will be four tabs for navigational purposes; Profile (user preferences), Trips

(current and upcoming), Reviews, and Rewards. Our website and mobile app will be designed to be

highly available and secured. We will leverage the GoDaddy hosting service (includes privacy measures

such as firewalls and encryption technology) for the initial roll out. As our user community expands in

the near future we will scale it to run within a cloud based solution (servers) offered by Amazon.

Recommendation Engine - Algorithm

The recommendation engine is the most important component of our product. For our business to be

successful and provide the differentiation we’ve mentioned, it needs to be state of the art and created in a

way that would allow us to maintain the IP rights. The algorithm to power the recommendation engine

will leverage existing APIs of suppliers, OTAs, and aggregators to compile the travel information and

match the relevant information based on the user’s travel profile to create a recommended

comprehensive itinerary for the user in real time. The challenge will be to incorporate local

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entertainment options that might not be readily available online. We will need to work with other smaller

players that do offer this service to tap into their database for this information. Our algorithm will

improve as more users enter in searches similar to the Google search function.

Resources

To build the website, mobile app, and algorithm, we will leverage TopCoder, a crowdsourcing platform

providing access to top coders and engineers throughout the world at an affordable price. We’re

choosing the TopCoder platform for it capabilities as well as our ability to protect the intellectual

property of the algorithm.

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Timeline

We envision the development time of the website and mobile application to take between 24 - 30 weeks.

The development does not include testing time and we believe it would take another 10-12 weeks to test

the draft product before we plan to go live. In general, the busiest leisure travel time is considered to be

the summer, May through August. As such, it would be ideal to launch the business application around

March or April of 2016, so customers can take advantage of our offering prior to the summer 2016.

Therefore, development would need to start in September 2015, with testing completed by February

2015. Please refer to Exhibit 7.

Intellectual Property

The algorithm to our recommendation engine would be our biggest intellectual property to protect and is

part of our core strategy going forward to ensure our continued growth and to maintain our competitive

advantage. We seek to protect our rights through the following channels; patents and trademark laws as

well as leveraging confidentially agreements. We will enter into confidentiality agreements with our

employees, business partners, consultants, and suppliers. In addition to the algorithm, we would want to

trademark our brand “TrippIn”, and register our Internet domain name for our website, TrippIn.com.

5 Management

Outside CEO - TBD. TrippIn has yet to identify a Chief Executive Officer and is currently in the process of

reviewing resumes of qualified candidates. The ideal candidate would have 10+ years of professional

experience in the online travel industry.

Omar Sattar – Chief Financial Officer. Omar has over 7 years of experience in the financial operations

experience. Omar has worked in investment banking and corporate development.

Waqas Khan – Chief Operating Officer. Waqas has over 10 years of consulting experience in the financial

services sector focusing on areas of business transformation, process improvement, regulation, tax

reporting and information management.

David Chiu – Chief Technology Officer. David has over 15 years of experience in business and

information technology. He has a strong background in systems design and development,

implementation methodology, and project management. He has a proven track record of leading large

complex IT projects with cross-functional teams from multiple functions.

Outside consultants and contractors will be hired as needed.

6 Use of Funds

TrippIn anticipates raising $492,000 of equity capital to launch and operate the company through its

initial phase. The nature and source of this funding shall include friends and family. This level of financing

is adequate to fund our initial development, launch, sales, and promotions and to carry the company to a

point where it will generate substantial revenue.

The start-up and development costs for this initiative are fairly high. The web site is a non-standard

design, and will require careful design and capital investment to develop properly. The business will also

have to make significant investments in marketing before sales revenue can grow.

The initial equity investment will be arranged upfront, since most of the assets are directly required to

initiate the operations.

Financial Characteristics

Because TrippIn is a new concept, a significant portion of our operating costs will be towards technology

and marketing related functions.

● Our primary costs include website development, website operations, and marketing.

● Website development is largely a one-time initial cost.

● Operating costs correlate to the amount of sales we expect to grow each year.

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7 Financial Analysis

Financial Statements

The company has prepared sales projections for the first five years of the operations, as presented in

Exhibit 1. These projections reflect our rate of anticipated growth and take into account the foreseeable

growth in the travel industry market as well as the economic growth.

Income Statement Revenue Assumptions:

● We assume the average trip booked is $1,145.

● TrippIn receives a commission fee of 7.5% for all trips booked through our website.

● Cost of revenue consists of direct costs incurred to generate our revenue, including credit card

processing and related costs, fulfillment and customer service. In general, cost of revenue is

variable and is higher as a percentage of revenue for merchant transactions where we have to

incur credit card processing fees and higher service costs. By using industry comparable company

cost of revenue assumptions, we assume 20% of costs in year 1, however, we decrease to 18% by

year 5 as we increase operations efficiency.

Income Statement Cost Assumptions:

● Marketing costs consists of online marketing and brand marketing expense. Online marketing

includes search engines fees, contextual advertising placements and affiliate marketing. Other

marketing costs includes affiliate expense, public relations cost and other general marketing costs.

Brand marketing expense includes TV, billboards and display advertisements, and creative

development fees. Marketing costs are initially 84% of sales in year 1 to create brand awareness.

By year 5, marketing costs are 55% of sales because we do not need to market as much due to the

perceived brand awareness.

● Technology costs consists primarily of operation of our data centers. In addition, we also

categorize minor hardware and software purchases, equipment support and third-party

technology consulting or services as technology costs. We initially cost only 1.2% because we did

not invest in heavily in technology. Once sales gain traction, technology costs approximately 15%

of sales.

● General and administrative costs are all other operating costs. The largest items in this category

of expenses are legal and accounting fees, bad debt expense and facilities expenses. In year 1,

there are some initial startup costs at 22% of costs. By year 5, we will reach SG&A costs of 7% of

sales as we increase operations efficiency.

In addition, Exhibit 2 gives details of the company’s profits and losses over the first five years of

operation. In our base case scenario, we forecast a net profit of $870,000 on sales of $20 million by the

end of year 5, achieving over 4% net income. The exhibit describes the assumptions on which the

estimates are based, which were developed after consulting with various sources, including travel agents,

travel industry association and travel bloggers.

Exhibit 3 presents a 5-year cash flow statement for an illustration of cash inflows and outflows over the

time period.

Exhibit 4 presents a 5-year projected balance sheet. Please note that since, we are a technology company,

there are not many hard assets that we would own.

Exhibit 5 presents detailed sources and uses of funds.

8 Risks

We’ve identified the following key risks that may potentially have an adverse impact on the viability of

our business. Key risks and mitigating factors:

● Ability to optimize technology (algorithm) - As noted above, the success of our business model is

completely dependent on the creation of a unique algorithm. Any delays or duplication by

competitors could potentially stall or cripple our business idea.

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● Strong competition - While our idea may be unique, we understand we could potentially face stiff

competition from our competitors who are considered giants of the industry. Our competitors

have the ability to quickly replicate our idea.

● Low barrier of entry - We understand that once the technology is developed, many competitors or

tech start-ups can copy our business idea and consume our market share.

Exit Strategy

TrippIn plans to enter into a positive cash flow in its fifth year, after which we would ideally like to be

acquired by a strategic buyer in the travel industry to maximize returns. Companies in the OTA

technology industry have been acquired for 10-15 times of its revenue. We potentially can sell TrippIn

for approximately $200 million.

22

9 Appendix

Exhibit 1

TrippinProjected Trip Forecast and Assumptions

Commission Rate 7.5%Average Cost per Trip Booked $1,145Revenue per Trip 85.88$

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Annual Booked

Trips Growth Annual RevenueYear 1 - - - - - - 485 485 485 485 485 485 2,911 NA $250,000Year 2 1,092 1,092 1,092 1,092 1,092 1,092 364 364 364 364 364 364 8,734 200% $750,000Year 3 3,275 3,275 3,275 3,275 3,275 3,275 1,092 1,092 1,092 1,092 1,092 1,092 26,201 200% $2,250,000Year 4 9,825 9,825 9,825 9,825 9,825 9,825 3,275 3,275 3,275 3,275 3,275 3,275 78,603 200% $6,750,000Year 5 29,476 29,476 29,476 29,476 29,476 29,476 9,825 9,825 9,825 9,825 9,825 9,825 235,808 200% $20,250,000

Exhibit 2

TrippinIncome Statement Summary

Year One % Year Two % Year Three % Year Four % Year 5 %

Total Income $250,000 100.0% $750,000 100.0% $2,250,000 100.0% $6,750,000 100.0% $20,250,000 100.0%

Total Cost of Sales $50,000 20.0% $142,500 19.0% $416,250 18.5% $1,215,000 18.0% $3,645,000 18.0%

Gross Margin $200,000 80.0% $607,500 81.0% $1,833,750 81.5% $5,535,000 82.0% $16,605,000 82.0%

Total Salary and Wages $54,070 21.6% $55,685 7.4% $57,348 2.5% $59,186 0.9% $60,700 0.3%

Operating Business ExpensesMarketing $210,000 84.0% $750,000 100.0% $1,687,500 75.0% $4,387,500 65.0% $11,137,500 55.0%Technology $3,000 1.2% $112,500 15.0% $337,500 15.0% $1,012,500 15.0% $3,037,500 15.0%General and Administrative $55,500 22.2% $60,000 8.0% $157,500 7.0% $472,500 7.0% $1,417,500 7.0%

Total Operating Business Expenses $268,500 107.4% $922,500 123.0% $2,182,500 97.0% $5,872,500 87.0% $15,592,500 77.0%

Other ExpensesDepreciation $0 $0 $0 $0 $0Interest

Commercial Loan $0 $0 $0 $0 $0Commercial Mortgage $0 $0 $0 $0 $0Line of Credit $0 $0 $5,700 $40,448 $81,706

Taxes $0 $0 $0 $0 $0Total Other Expenses $0 0.0% $0 0.0% $5,700 0.3% $40,448 0.6% $81,706 0.4%

Net Income ($122,570) -49.0% ($370,685) -49.4% ($411,797) -18.3% ($437,134) -6.5% $870,094 4.3%

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Exhibit 3

TrippinProjected Cash Flow Statement

Year 1 Year 2 Year 3 Year 4 Year 5

Beginning Cash Balance $492,000 $361,097 ($0) $0 $0

Cash InflowsIncome from Sales $187,500 $562,500 $1,687,500 $5,062,500 $15,187,500Accounts Receivable $52,083 $190,104 $546,875 $1,640,625 $4,921,875

Total Cash Inflows $239,583 $752,604 $2,234,375 $6,703,125 $20,109,375

Cash OutflowsInvesting Activities

New Capital Purchases $0 $0 $0 $0 $0Inventory Purchases $0 $0 $0 $0 $0Cost of Sales $47,917 $143,099 $413,398 $1,206,680 $3,619,688

Operating ActivitiesSalaries and Wages $54,070 $55,685 $57,348 $59,186 $60,700Operating Business Expenses $268,500 $922,500 $2,182,500 $5,872,500 $15,592,500Taxes $0 $0 $0 $0 $0

Financing ActivitiesLoan Payments $0 $0 $0 $0 $0Line of Credit Interest $0 $0 $5,700 $40,448 $81,706Line of Credit Repayments $0 $0 $0 $0 $0Dividends Paid $0 $0 $0 $0 $0

Total Cash Outflows $370,487 $1,121,284 $2,658,946 $7,178,814 $19,354,593

Cash Flow ($130,903) ($368,680) ($424,571) ($475,689) $754,782

Operating Cash Balance $361,097 ($7,583) ($424,571) ($475,689) $754,782

Line of Credit Drawdowns $0 $7,583 $424,571 $475,689 $0

Ending Cash Balance $361,097 ($0) $0 $0 $754,782

Line of Credit Balance $0 $7,583 $432,154 $907,843 $907,843

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Exhibit 4

TrippinBalance Sheet

Base Period End of Year One End of Year Two End of Year Three End of Year Four End of Year Five

AssetsCurrent Assets

Cash $492,000 $361,097 $0 $0 $0 $754,782Accounts Receivable $0 $10,417 $7,813 $23,438 $70,313 $210,938

Total Current Assets $492,000 $371,513 $7,813 $23,438 $70,313 $965,719

Total Fixed Assets $0 $0 $0 $0 $0 $0Less: Accumulated Depreciation $0 $0 $0 $0 $0 $0

Total Assets $492,000 $371,513 $7,812 $23,437 $70,312 $965,719

Liabilities and Owner's EquityLiabilities

Accounts Payable $0 $2,083 $1,484 $4,336 $12,656 $37,969Notes Payable $0 $0 $0 $0 $0 $0Mortgage Payable $0 $0 $0 $0 $0 $0Line of Credit Balance $0 $0 $7,583 $432,154 $907,843 $907,843

Total Liabilities $0 $2,083 $9,067 $436,490 $920,499 $945,812

Owner's EquityCommon Stock $492,000 $492,000 $492,000 $492,000 $492,000 $492,000Retained Earnings $0 ($122,570) ($493,255) ($905,052) ($1,342,187) ($472,093)Dividends Dispersed $0 $0 $0 $0 $0 $0

Total Owner's Equity $492,000 $369,430 ($1,255) ($413,052) ($850,187) $19,907

Total Liabilities and Owner's Equity $492,000 $371,513 $7,812 $23,437 $70,312 $965,719

Exhibit 5

TrippinSources and Uses of Funds

Required Start-Up FundsOne Time Costs Amount Reason

Website Development $150,000 4 developers @ $50 an hour to spend 6 months designing, implementing, testing and launching itDigital Pitch $2,000 Graphic designer fees to design logo, pitch slides, mock website, printing materialsPrint/Physical Materials $5,000 Business CardsInternet Domain and Hosting $500 www.trippin.comInventory of Office/Electronics/Software $3,000 Computers, telecommunications, printer, software, securityLegal Fees $10,000 Cost of legal research and drafting of contractsAccounting Fees $1,000State Filing Fees $2,000 NYS DOS Fee, publication requirement, registered agent costs

Monthly Costs Assumed we need cash for the entire yearSalary of CEO $50,000 Salary with EquitySalary of CTO $0 No salary during the first year (Paid in Equity)Salary of COO $0 No salary during the first year (Paid in Equity)Salary of CFO $0 No salary during the first year (Paid in Equity)Marketing/Advertising Expenses $210,000 Marketing expense to build user awareness and adoptionRent $4,800 NYU Incubator in BrooklynWebsite Dedicated Server Hosting $3,000Supplies $3,000 Office suppliesTelephone/Internet $4,200 Internet provider costsPayroll $1,800 ADP Payroll ServicesInsurance $30,000 General liability insurance, business property insurance, workers compensationOther $11,700 General unforeseen costs

Total Operating Capital 492,000

Total Required Funds $492,000

Sources of Funding Amount Totals Loan Rate Term in Months Monthly PaymentsOwner's Cash Injection 20.33% $100,000Friends and Family Investors 79.67% $392,000

Total Sources of Funding 100.00% $492,000 $0.00

Exhibit 6: Evolution of the Online Travel Industry

Exhibit 7: Product Development Timeline

Step Time Frame

Development July 2015 – January 2016

Testing/Beta January 2016 – March 2016

Advertising March 2016 - Indefinite

Launch / Go Live March/April 2016

10 References

Statista.com, http://www.statista.com/markets/420/travel-tourism-hospitality/

Sharma, Asit; The Online Travel Industry: Investing Essentials, August 2014, http://www.fool.com/investing/general/2014/08/25/the-online-travel-industry-investing-essentials.aspx

Scola, Violetta; Global Online Travel and Tourism Sales to Reach US830 Billion in 2017, Euromonitor International, March 2014 http://www.marketwired.com/press-release/global-online-travel-and-tourism-sales-to-reach-us830-billion-in-2017-1885494.htm

Sun, Sea, and Surfing, Economist, June 2014, http://www.economist.com/news/business/21604598-market-booking-travel-online-rapidly-consolidating-sun-sea-and-surfing

Growth of Travel Industry Online, Metrics, http://www.wwwmetrics.com/travel.htm

Wikipedia, http://en.wikipedia.org/wiki/Tourism#cite_note-Barom201304-6

Salamone, Gennaro; Why Do People Travel (Chart), July 2011, www.enduringwanderlust.com/why-do-people-travel-chart

Quora, How Long Do Customers Spending Researching Online Before Booking, http://www.quora.com/How-long-do-customers-spend-researching-travel-online-before-booking

Weber, Rebecca; The travel agent is dying, but It’s not yet dead, CNN Travel, October 2011, http://www.cnn.com/2013/10/03/travel/travel-agent-survival/

PhoCusWright, http://www.phocuswright.com/

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