Houses on the Lake

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Houseboat Rental Business Plan

Strategy and Implementation Summary

The basic strategy for Houses On The Lake is to target families and young couples interested in small, private houseboats on the inexpensive side for Lake Shasta. The business will offer additional activities and recommendations, but will be perfect for vacationers who can do without some creature comforts as they enjoy Lake Shasta.

Key elements of the strategy implementation include:

  • Website advertising
  • Awareness of and relationships with travel agents who will be offered discounted rates to bundle with packages for their clients
  • Reaching houseboat owners whose houseboats are not in use 90% of the time.

Competitive Edge

Houses On The Lake has a competitive edge in the hospitality experience of Robert Hopkins, who can bring the experience of an upscale bed and breakfast to his vacation houseboat business. This will be manifested in the marketing, sales experience, and operations of the business. The effect of this edge will be a high customer retention rate. Customers who think of the houseboat as "their" house on Lake Shasta will return to Lake Shasta, allowing marketing and sales efforts to be reduced due to the lower expense of keeping an existing customer than finding new ones. This will build the customer retention rate to 50% from the second to third full years of operation.

Marketing Strategy

Marketing for Houses On The Lake will focus in on the target markets of families and young couples. Materials will show families and couples having fun together, both together and in separate activities (waterskiing, fishing, slides, hiking, camping, swimming, using the spa, etc). Upon the launch, images will be provided by the manufacturers of the houseboats and other sources, as they will not yet be photos of actual customers using Houses On The Lake.

Marketing will include:

  • Local advertising in California vacation and travel magazines
  • Website creation and promotion (see Web plan)
  • Direct mail to travel agents across the U.S. and Northern California tourism
  • Partnerships with travel agents. These will be sought over time, not expected until year 3 or later

The marketing to vacationers will also be seen by owners, alerting them to this opportunity to rent out their boats.

Sales Strategy

Houses On The Lake's sales will be managed entirely by Robert Hopkins. He will receive reservation requests from interested customers, approve them by email, respond by phone to answer specific questions raised, and pursue business through partnerships with travel agents. This will include offering a discount to travel agents so they can bundle the rentals with travel packages to their customers. Sales will depend in large part on the online reservation request form to close business. The website will prepare customers with a great deal of information so they are better informed before reserving.

As an owner, Robert Hopkins will be paid a base salary and compensated for sales through the profits of the business. He will have the authority to vary from the advertised prices, but will use this at his discretion to book dates which are unlikely to be used otherwise (i.e., off season or last-minute bookings). Special higher rates for holidays and certain weekends in the spring, summer, and fall are expected to balance out these discounted dates. He will update the rates offered on the website and the availability calendar as needed.

An additional sales strategy exists to establish relationships with houseboat owners. Robert Hopkins will contact owners directly to advertise the services of Houses On The Lake to these "suppliers." This work will begin well before the business's launch in order to have a roster of at least three houseboats to rent for the first year.

Sales Forecast

The business will seek to launch in October, to allow a full winter to promote the upcoming summer rental period.

In the first year of operation, the average price for a week-long summer rental will be $1650, $1400, for a spring/fall rental, and $1100 for an off season rental. Rentals for fewer days are available at a lower price. Additional fees and services purchased are estimated to average $400 for summer rentals, $300 for spring/fall, and $200 for off-season. These additional fees include ski boat rentals, convenience store purchases, added fees to bring pets on-board. The prices listed reflect these totals and will be increased roughly with inflation in future years.

Direct cost of sales includes post-rental cleaning (generally $75 per houseboat) and basic amenities (shampoo, soap, tissue paper, etc.) to stock the boats for each rental ($25 per rental). These costs are expected to grow with inflation as well. Other costs of sales include gas and ice which is anticipated to cost 8% of sales as each rental will start with a boat fully stocked with both. An additional 20% of sales will be payment to the houseboat owners. This cost of sales would be higher, but houseboat owners will benefit from free moorage, maintenance, and discounted services at the Houses On The Lake marina.

Sales Forecast
Year 1 Year 2 Year 3
Unit Sales
Summer Rentals 60 90 135
Spring/Fall Rentals 30 45 68
Off Season Rentals 47 71 106
Additional Fees/Services - Summer Rentals 60 90 135
Additional Fees/Services - Spring/Fall Rentals 30 45 68
Additional Fees/Services - Off Season Rentals 47 71 106
Total Unit Sales 274 411 617
Unit Prices Year 1 Year 2 Year 3
Summer Rentals $1,650.00 $1,716.00 $2,230.80
Spring/Fall Rentals $1,400.00 $1,456.00 $1,892.80
Off Season Rentals $1,100.00 $1,144.00 $1,487.20
Additional Fees/Services - Summer Rentals $400.00 $416.00 $540.80
Additional Fees/Services - Spring/Fall Rentals $300.00 $312.00 $321.36
Additional Fees/Services - Off Season Rentals $200.00 $208.00 $214.24
Sales
Summer Rentals $99,000 $154,440 $301,158
Spring/Fall Rentals $42,000 $65,520 $127,764
Off Season Rentals $51,700 $80,652 $157,271
Additional Fees/Services - Summer Rentals $24,000 $37,440 $73,008
Additional Fees/Services - Spring/Fall Rentals $9,000 $14,040 $21,692
Additional Fees/Services - Off Season Rentals $9,400 $14,664 $22,656
Total Sales $235,100 $366,756 $703,549
Direct Unit Costs Year 1 Year 2 Year 3
Summer Rentals $562.00 $584.48 $607.86
Spring/Fall Rentals $492.00 $511.68 $532.15
Off Season Rentals $408.00 $424.32 $441.29
Additional Fees/Services - Summer Rentals $100.00 $104.00 $108.16
Additional Fees/Services - Spring/Fall Rentals $75.00 $78.00 $81.12
Additional Fees/Services - Off Season Rentals $50.00 $52.00 $54.08
Direct Cost of Sales
Summer Rentals $33,720 $52,603 $82,061
Spring/Fall Rentals $14,760 $23,026 $35,920
Off Season Rentals $19,176 $29,915 $46,667
Additional Fees/Services - Summer Rentals $6,000 $9,360 $14,602
Additional Fees/Services - Spring/Fall Rentals $2,250 $3,510 $5,476
Additional Fees/Services - Off Season Rentals $2,350 $3,666 $5,719
Subtotal Direct Cost of Sales $78,256 $122,079 $190,444

Milestones

The milestones table illustrates the key marketing activities around the launch of the business. Before the business officially opens in October 2010, the marketing campaign will begin with the development of the website, brochure, and print ads. Internet advertising, direct mail, and the running of those print ads will occur after October 2010.

Milestones
Milestone Start Date End Date Budget Manager Department
Build Out Marina & Purchase Equipment 8/1/2010 9/30/2010 $50,000 RH Operations
Create Brochure 9/1/2010 9/30/2010 $5,000 RH Marketing
Create Website 8/1/2010 9/30/2010 $5,000 RH Marketing
Create and Buy Print Ads 9/1/2010 9/30/2010 $10,000 RH Marketing
Direct Mail to Travel Agents & Tourism Groups 10/1/2010 10/31/2010 $3,000 RH Marketing
Web Advertising 10/1/2010 5/31/2011 $7,000 RH Marketing
Print Advertising Runs 10/1/2010 3/31/2010 $0 RH Marketing
Totals $80,000