This semi-absentee operated Los Angeles sightseeing tour business offers customers customer private tours to the city’s most popular destinations with its 3 – 8 passenger vans and staff of 5 professionally trained combination drivers and tour guides. The operator typically hosts nearly 50 tours per month, with the average one day tour lasting 6 hours. Since the City of Los Angeles is said to be dissuading large tour busses, the city has experienced a good deal of growth in the smaller tour bus market segment. This, coupled with the Los Angeles based tourism expected to continue to grow, the market outlook for this industry is projected to be a positive one.
The vans are housed in a secured indoor 1,400 square foot facility that leases for $2,500 per month on a lease expires in 2018 with options to be determined. The freeway accessible facility is conveniently located next to a self-serve car wash. It can accommodate 4-5 similar sized vans. All of the business’s furniture, fixtures, equipment (including the 2 vans which will be paid off in the sale), and goodwill will be included in the sale.
Competition naturally exists in this popular market. This company, however, has engaged in a solid marketing strategy that has paid off with their small, private and customized tour seeking client base. Because of this, they do not ‘fight’ for customers based on price or location as many operators do. Rather, the offer customization and convenience, as well as a far marketing reach. As a result, the majority of their tours are booked and scheduled two weeks in advance.
Tremendous additional growth opportunity exists for this company. First, the company does not engage in several of the ‘traditional’ means of marketing that tour companies compete in. They partner with hotels, travel concierges, other tour operators, travel agents, travel advisors (e.g. American Express), hire outdoor canvassers, get listed in travel books or on online travel sites, etc. Second, the firm does not have any staffers who speak foreign languages. They feel a great deal of business is foregone as a result (particularly with the Chinese speaking community – which is the #1 tourist market), which is a missed opportunity. Third, they can promote tours to and from Orange County, which they can charge an additional $200 for. Fourth, they may also add vehicles and additional custom tours. Fifth, since the business is run semi-absentee, it could likely benefit from a full-time working owner who is also a drive, managing marketing or business growth. Finally, an additional $24,000 per year in savings may be realized if an owner has a place to park the vehicles, eliminating the need for warehouse based parking.
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