market opportunity analysis - the international school of hospitality (tisoh)

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Marketing Opportunity Analysis

Prepared for

Dr. Jack Schibrowsky

Mr. Ellis Norman

Mr. Timothy Lam

Prepared by

Cole Grundstedt

David Lee

Akshata Nilkund

Emily Tien

December 14, 2007

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Contents

EXECUTIVE SUMMARY .......................................................................................................................... 3

COMPANY AND ORGANIZATIONAL ANALYSIS .............................................................................. 4

INDUSTRY ANALYSIS .............................................................................................................................. 6

MACRO ENVIRONMENTAL ANALYSIS .............................................................................................. 9

PEST ANALYSIS ........................................................................................................................................11

COMPETITOR ANALYSIS ......................................................................................................................12

INTENSE COMPETITORS .............................................................................................................................12 LESS INTENSE BUT SERIOUS RIVALS ...........................................................................................................17 INDIRECT COMPETITORS ............................................................................................................................18

CUSTOMER ANALYSIS ...........................................................................................................................19

DEMOGRAPHIC MAKEUP ...........................................................................................................................22 ATTRACTING STUDENTS ............................................................................................................................24 MARKET POTENTIAL .................................................................................................................................25

SWOT ANALYSIS ......................................................................................................................................27

OUR PLAN ..................................................................................................................................................28

FOCUS SHIFT .............................................................................................................................................28 STREAMLINE CURRICULUM .......................................................................................................................28 INTERNATIONAL MARKET .........................................................................................................................28 INTRODUCE SPA MANAGEMENT CERTIFICATE PROGRAM .........................................................................29 BUDGET .....................................................................................................................................................30

DEMAND ANALYSIS ................................................................................................................................31

STREAMLINE CURRICULUM .......................................................................................................................31 INTERNATIONAL MARKET .........................................................................................................................33 SPA MANAGEMENT PROGRAM ..................................................................................................................34 ALL RECOMMENDATIONS ..........................................................................................................................35

FINANCIAL ANALYSIS ...........................................................................................................................37

BEST ESTIMATE .........................................................................................................................................38 PESSIMISTIC ESTIMATE ..............................................................................................................................39 OPTIMISTIC ESTIMATE ...............................................................................................................................40

OTHER ISSUES ..........................................................................................................................................41

CONCLUSION ............................................................................................................................................41

REFERENCES ............................................................................................................................................42

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Executive Summary

The purpose of this project is to do a Market Opportunity Analysis (MOA) on The International School of Hospitality (TISOH). At the same time, learn and experience the actual process involved at an MBA level. The project entails a number of analyses to determine whether the bottom line was to add new, drop old, or streamline the current certificate programs, and also the strategies for implementing the recommendations based on the environment here in Southern Nevada. Based on the results from all the analyses, we found that TISOH does have the participation potential to do well right here in the hospitality capital of the world, Las Vegas. Our internal analysis yields 2 proposals. First is to do a Focus Shift, and the second is to streamline the current curriculums. Our external analysis also yields 2 proposals; they are Expansion to International Market and introduce a new SPA Hospitality Management certificate. Our financial goal for TISOH is to both reduce costs and generate new revenues. The reduction of costs can be obtained by discontinue ineffective advertising and combining like courses thereby saving on professor’s salary. According to the information gathered through our industry and macro analyses, we found that there is an over abundance of opportunities in both the foreign and local Spa markets due to the weakening of the US economy and the rising popularity in the Spa industry. According to our financial analysis, after implementing all of our recommendations, the best estimate will yield an increase in profit of 8%, 13%, and 15% for the next 3 years, with pessimistic estimate ranging between 2 to 8%, and optimistic estimate ranging from 10 to 25%. In addition to the financial analysis, our demand analysis also yield the same conclusion that the attractiveness of the opportunities suggested are very high, with a 10% increase in student enrollment in our best estimate. As long as TISOH keeps its competitive advantage on maintaining the programs short and reasonably priced, continue to increase those valuable industry contacts, and utilizes the advantage of location, location, and location.

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Company and Organizational Analysis The International School of Hospitality (TISOH) is founded in 2005 and the original idea came from Dr. Norman and his wife, Patricia A Norman. Patricia has been the director of meeting and conference planning for the National Medical Association for over 20 years and she would like to contribute her experiences to people who are interested in this field. However, she is not able to teach in the college due to her education background, so they decided to launch a school to pursue their goal and also invite Timothy Lam to join with them. They started this idea in 2004 and rented an administrative office near by Norman’s house. Later on they got SBA loan approved for 1 million dollars / 30 years agreement so they bought their current office by sunset and peco also for investment purposes. They have contract with UNLV Hospitality Outreach Services Division of the Hotel College to give 30% of their revenue to the college and they are able to use some of the facilities and students will also certified by them upon graduation. TISOH recently filed articles as a non-profit organization.morfe than 20 years Patricia has been the Director of Meeting and Conference Planning for the National Medical Association (NMA).

Historical and Current Certificate Programs

Meeting Planning and event management is the very first class started in Fall, 2005 and 7 students graduated from this class. This class has average 10-12 students. They changed the name to “Conference Management & Event Planning” later on to better fit the job placement. The Art of concierge started in spring, 2006 and has average 12-15 students in each class. This program attracted people who are already working in this industry and pursuing for more knowledge and people who don’t have any experiences at all. Wedding Coordination & Design started in summer, 2006 and has average 15-20 students. People who attended to this program mostly are women and have strongly interested in wedding party design. Hotel Operation started in Jan, 2007 but didn’t attract as many students as they desired. They started the program off and on depending on the number of students enrolled. Later on, the program of “Hotel Operation” was changed to “Hotel Services” because some people misunderstood the meaning of Hotel “Operation” as Hotel “management” so they thought “Hotel Service” would be better fit the title of the program. The school offers the certificate programs both online and traditional classroom format.

Mission Statement

Offer quality hospitality certificate courses that bridge the gap between academic classroom teaching and practical, current training for the hospitality industry on a world-wide basis.

Past successes

1. On the right track to provide more practical and industrial-related certificate program and

not just focus on the textbook 2. Review the courses carefully and take students’ advice into a big consideration- This

school is what it is but not what it was.

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3. Retrieve once a year- staff and their families have a vacation together to celebrate their success for the whole year and also have a conference to discuss what they did wrong and right so that they can improve it for the future.

4. Honest- They do things in the right way and not try to be sneaky

Past failures

1. Teacher’s ability- A teacher with all kinds of background is not necessarily a good teacher. They probably know a lot but don’t know how to teach in a practical way. 2. Tuition payment- some students fail to pay their tuition and got kicked out in the middle

of the class and some students have students loan and didn’t pay it off and let the creditors chase after them.

3. Lack of advanced planning- They spent 20k to go to Korea and printed Korean version brochure trying to attract more students there but found out that they are not able to provide student visa.

4. Financial issue- Lost some chances to get assistance or contracts from the government due to not enough funds to hire more capable staff. Because of short staff, they can not promote their advertisement effectively.

5. Inability to attract students because they can only provide certificate instead of accreditation program. Also, they are not able to provide student visa so they can not attract international students.

The International School of Hospitality develops courses that are predominantly task oriented and practical. Instruction consist of training individuals using hands-on approaches that are applicable to specific industry jobs or professions, as apposed to degree-focused pedagogical approaches employed by colleges and universities. Quality service and professionalism consistent with the standards of expectation by the hospitality industry, are key ingredients of TISOH’s certificate offerings. In the process of offering these courses staff members, as well as contracted industry and academic professionals, set an appropriate example by interacting with students and each other in the spirit of hospitality. Most classes require class hours, project, and internship. Internship provides students a very good chance to take advantage of what they learn from the class to the real world. Most of the students got the internship position in the big casinos such as Venetian, Palms or MGM and that’s the big advantage for hospitality industry in Vegas. They will start Nightlife Operation and Hospitality Leadership & supervision classes in Jan, 2008. There are currently 2 classrooms available and one room reserved for library. The big classroom fits around 22 students and the small classroom fits around 12 students. The classes are currently offered in the evening and will start offering classes in the morning soon. They currently have ads in LV paper, Review Journal, Sunday classified, Google, and Press Releases, etc.

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Industry Analysis

History of Certificate Programs

Certificate program stemmed from people realizing in order to get a higher paying job or to advance in the workplace, one needs to equip themselves with specific knowledge in that particular field. Thus, certificate program was developed purposely to improve one’s know-how in their domain. Historically in Southern Nevada were two main institutions that offered certificate programs, the University of Nevada Las Vegas (UNLV), founded in 1957, and the Community College of Southern Nevada, founded in 1971, now known as the College of Southern Nevada (CSN). These fine institutions offered a wide array of certificate programs ranging from Internet Design to Professional Writing. In the last two decades, industry specific certificate schools have evolved. Such as the PCI dealing school that caters exclusively to the gaming industry, bartending schools, and the Art Institute and the Le Cordon Blue of Culinary Arts, who dedicates their teaching solely to better the Food & Beverage industry.

Size of Market

The size of the market is bounded by two lines. First line is the lower limit, which the target market should have at least a high school diploma or equivalency. Than there is the upper limit, where people who’s got a graduate degree and beyond. The lower boundary was set by the schools that offer the certificate programs, and people who’s got a Master’s degree and above usually does not need a certificate to prove that they are qualified for the job.

EDUCATIONAL ATTAINMENT 2006 2005 2004 2003 2002

Population 25 years and over 1,168,695 1,095,527 1,055,390 1,009,576 972,373

Less than 9th grade 82,297 79,344 84,460 78,608 83,017

9th to 12th grade, no diploma 117,434 121,142 104,303 117,820 94,591 High school graduate (includes equivalency) 372,662 337,004 348,906 321,841 320,096

Some college, no degree 275,724 264,981 241,144 249,969 242,027

Associate's degree 84,810 75,538 82,880 55,568 60,897

Bachelor's degree 156,757 147,561 119,496 120,487 114,735

Graduate or professional degree 79,011 69,957 74,201 65,283 57,010 Percent high school graduate or higher 82.90% 81.70% 82.10% 80.50% 81.70%

Percent bachelor's degree or higher 20.20% 19.90% 18.40% 18.40% 17.70%

Thus, base on the above numbers obtained from the U.S. Census Bureau’s website1, the market size as of 2006 would be 889,953. This number was obtained by adding high school graduate and equivalency, some college no degree, associate’s degree, and bachelor’s degree all together.

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Growth rate

Using the same method of finding 2006’s target market, we calculated the market size for the last five years and put them in the table below.


Target market size 889,953 825,084 792,426 747,865 737,755

Percent increase over last year 7.3% 4.0% 5.6% 1.4% --

From the table above, one can see that there has been a constant growth of people who are seeking to better themselves. Over the last five years, the average growth rate is 4.6%. Using the average growth rate, below is a forecasted target market for the next 5 years.


Target market size (forecast) 1,114,360 1,065,354 1,018,503 973,712 930,891

Major trends and outlooks

The buzz around town is City Center. The trends are mega resorts with everything at your finger tips. City Center is equipped with casino, luxury hospitality including dinning and nightlife experiences, shopping, meetings and conventions, and entertainment. Shortly after City Center comes Echelon Place, another multi-faceted resort complex. At the mean time Venetian and Wynn are adding to their capacity to get ready to fight for their market share. Thus, it is not hard to foresee the explosive need for good hospitality talent in the near future.

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Success requirements

Porter’s 5 Forces

Using Porter’s 5 forces, the analysis shows the biggest road block to TISOH’s success are rivalry and substitutes. First, let’s talk about the competition, in the hospitality industry, the 2 biggest names for certificates are Cornell and UNLV. Thus, for TISOH to compete, it needs to build brand equity. Now, let’s look at the alternatives. For just about the same amount of money and a few more months of schooling, one can obtain an Associates degree, which is much more superior to a certificate. The up side is that certificate programs can be accomplished within 2 to 3 months.

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Macro Environmental Analysis

Demographic trends

Clark County is one of the fastest growing areas in the country, with more than 6,000 people moving here each month.

Visitor trends

Clark County is home to the Entertainment Capital of the world, the world famous Las Vegas Strip and 14 of the nation’s 15 largest hotels. Each year, Sin City lures as many as 43 million tourists. In 2006, the economic impact from visitor spending was $39.4 billion, including $10.6 billion spent on gambling. The average visitor stays 3.6 nights at an average nightly room rate of $120, spends $140 per visit shopping, has in his party 2.6 people and gambles away $652 for an average of 3.3 hours per day. 54% of tourists visit by car, and 46% come by air. 13% of the visitors come from other countries, 32% come form Southern California and 52% are from the rest of the United States.

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PEST Analysis

Political and Legal

There aren’t really any political or legal issues concerning certificate programs, although, to foster international expansion, the ability to issue student visas is definite a must. In addition, the absence of state tax here in Nevada is another attraction for people to stay and pursue a career here.

Economic Climate

Due to the sub-prime market, the state of the economy in the whole country is in turmoil. Coupling with sky rocketing gas price, monies are scarce right now. Those who want to better themselves by going to school might wait until their financial situation stables. On the flip side, others who are struggling financially might take this opportunity to improve upon their skills to get a better paying job.

Social and Cultural Issues

Traditionally, the amount of education ties directly to the amount of income an individual receives. But, here in Las Vegas, education is not deem as important as experience, and most often, all you need is connections to get a well paying job, such as a dealing position in one of the top casinos.

Technology Trends

The widespread of internet not only made researching easier, but also improved the lives of those who have a busy schedule. Thus, the internet made learning flexible and at the same time eliminated distance, allowing people from all over the world to access TISOH.

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Competitor Analysis

Locals have a variety of options offered by different colleges in Las Vegas for different aspects of the hotel and Hospitality industry. Some of the leading and popular schools located in Vegas are Le Cordon Bleu Culinary Arts Program, The Art Institute of Las Vegas, International Academy of Design and Technology, Las Vegas High Tech Institute, Las Vegas College and UNLV’s William F. Harrah College of Administration. Students also have an option of taking online classes from schools that provide this option. Some of the online certificates available are eCornell, University of California, Irvine Extension, UMassOnline, Roosevelt University, and Penn Foster Career School.3 We analyzed schools and colleges who provide hospitality industry related courses and certificate programs.

Intense Competitors

These are schools and colleges that provide certificate programs to students which are very similar to the certificate programs offered by TISOH. These universities provide online certificates and are established colleges and universities. These are accredited establishments. The following product book lists our intense competitors in no particular order. The product book lists the courses that these schools offer that are in direct competition with TISOH.

UNLV – Harrah College of Hotel Administration

Offers an online wedding planner class similar to the Wedding Coordination and design certificate offered by TISOH.

Position – UNLV positions itself as the Premiere metropolitan research university.

Courses, Certificate Programs Offered

Wedding Planner –All students receive a University of Nevada, Las Vegas.

• Duration – 4 months

• Prices – $1395

Strengths – Is part of University of Nevada, Las Vegas which is the Premiere Metropolitan Research University. Has the advantage of being UNLV’s outreach program. UNLV’s William F. Harrah’s College of administration is one of the top ranked programs in the nation.

Weaknesses – The certificate program is online and does not provide any hands-on training. No internship programs are offered.

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College of Southern Nevada

CSN is Nevada's largest institution of higher education and the 4th largest community college of its kind in the nation. It offers more than 200 degrees and certificates.

Position – Their mission ensures that they serve the diverse needs of the residents of Southern Nevada by responding to the educational needs of the communities and businesses within the CSN service area.


Hotel Management Certificate – This course teaches lodging, house keeping operations and other hotel management services for entry level jobs. All students receive a Certificate of Achievement in Hotel Management.

• Duration – 30 credits

• Prices – $2700.4

Strengths – CSN is Nevada's largest institution of higher education and the 4th largest community college of its kind in the nation. CSN operates in over 50 locations including 3 main campuses and 11 learning centers in 4 counties covering 42,000 square miles.

Weaknesses – Does not provide hands on training.

University of Massachusetts

UMassOnline is an online degree / certificate program from one of the nation's top-ranked universities, the University of Massachusetts. UMassOnline is regionally accredited by NEASC, the New England Association of Schools and Colleges. The Hospitality and Tourism Management Program is fully accredited by the Accreditation Commission for Programs in Hospitality Administration (ACPHA). 5The University of Massachusetts was ranked 22nd Best University in North America and 45th best in the World by the Times of London.

Position – UMassOnline positions itself as the university that enables you to earn an online high-quality accredited degree from one of the nation's top-ranked universities, the University of Massachusetts.


Certificate in Meeting & Event Management – This program is designed to provide knowledge in all aspects of event and meeting management, including the selection of appropriate meeting sights, pre-event publicity and marketing, audio-visual aids, budgeting, negotiation, and contracts. The course includes classes with catering and banquet management.

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• Duration – 6 months

• Prices – $1450

Bachelor of Science in Hospitality and Tourism Management (Online) – The program integrates courses in business, hospitality and tourism, the humanities, and social and physical sciences while enabling students to select from five specialization tracks. Classes Include: Casino Management, Club Management, Food and Beverage Management, Lodging Management, Tourism, Convention and Event Management

• Duration – Depends on courses accepted by Admissions.

• Prices – $290 per credit.

Strengths – First-rate Faculty. Ranked 4th in the nation by the Princeton Review's Gourman Report. Has been providing distance education for more than a quarter of a century. Recognition of Work Experience 6

Weaknesses – Only offer online programs thus there is no hands-on experience.

Cornell University School of Hotel Administration

eCornell is established and wholly-owned by Cornell University. Eight select eCornell Certificate Programs have been recommended for college credit by the American Council on Education's College Credit Recommendation Service when applied towards a degree or certificate at a postsecondary institution. Cornell Credential.

Position – eCornell has the most comprehensive online, professional and executive development curriculum offered by any top-20 university in the United States. Their courses are authored by Cornell faculty. They position themselves as the College with Ivy League excellence, comprehensive online convenience and the college that delivers state-of-the-art professional education programs.


Master Certificate in Essentials of Hospitality Management – This program is tailored for hospitality industry employees and managers seeking an opportunity to obtain a richer, deeper understanding of industry best practices. All students who successfully complete all courses in this certificate series will receive a Master Certificate in Essentials of Hospitality Management from Cornell University's School of Hotel Administration.

• Duration – Approximately 90 hours. (6 months)

• Prices – $4999.

Certificate in Executive Leadership – is essential for all levels of managers, directors, and company officers who are responsible for making their

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organization a leader in its industry. All students who successfully complete the course will receive an Executive Leadership Certificate from Cornell University's Johnson Graduate School of Management and School of Hotel Administration.

• Duration – Approximately 24 hours. (8 weeks)

• Prices – $2149.

Certificate in Hospitality Marketing - The Certificate in Hospitality Marketing is designed for hospitality marketing professionals responsible for directing or implementing marketing research or the creation of strategic marketing plans. All students who successfully complete the course receive a Certificate in Hospitality Marketing from Cornell University’s School of Hotel Administration.

• Duration – Approximately 60 hours. (6 months)

• Prices – $3999.

Strengths – eCornell a highly recognized University wholly owned by Cornell Provide short duration courses. Students can earn Certificates and Master Certificates from the Cornell University School of Hotel Administration.

Weaknesses – The certificate is only available online and lacks hands-on training experience.

Promotional Activities – Currently a student receives a 25% discount on courses leading to a Master Certificate and 10-15% discounts on Certificate courses. Following is a promotion for their special Fall Savings.

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This school offers a Certificate in Executive Leadership which is in direct competition with TISOH’s Hospitality, Leadership and Supervision certificate program. The other courses offered are hospitality related courses and thus are important to consider.

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The Manfred Steinfeld School of Hospitality and Tourism Management, Roosevelt

University – RUOnline

They have partnerships with Houston Community College, U.S. Army, McHenry County College, College of DuPage, Caterpillar. They are based in Chicago and are part of Roosevelt University.

Position – Their mission is to broaden educational opportunity. They position themselves as a university that can provide Roosevelt standards anywhere, anytime. They market themselves as the University in the best location (Chicago), for the lodging management, food and beverage management; meeting, convention, and exhibition management industry. They are based in the Chicago metropolitan area which has a rich blend of ethnic cultures and cuisines, arts and entertainment, sports and recreation.

No. of students – 7400 Students enrolled in all.


Meeting Coordinator Certificate - The required courses provide an overview of the meetings and convention industry; incorporate specific meeting planning skills, techniques, and applications as they apply to the Convention Industry Council's Certified Meeting Professional Program; and offer the opportunity to explore in-depth issues and trends in the meetings industry. It is a 3 course certificate program.

• Duration – 6-8 months

• Prices – $5175

Strengths – They have been acknowledged for their academic integrity by Blackboard, Inc., the American Society for Training and Development, and most recently received a full ten-year accreditation by the Higher Learning Commission. It is also a member of the North Central Association.

Weaknesses – As compared to TISOH, RUOnline offers the Meeting and Convention certificate but it is much more expensive as compared to TISOH. Although RUOnline is a part of Roosevelt University, TISOH has the advantage of the course being taught at a lower price and the students have the opportunity to either take it online or on campus.

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Less intense but serious rivals

These are schools / college that either offer similar courses as TISOH or are not accredited and thus not direct competitors. There are a number of such competitors online we have listed a few important ones.

Le Cordon Bleu Culinary Arts - Associate of Occupational Science Degree Program – Le Cordon Bleu College of Culinary Arts Las Vegas is a branch campus of Scottsdale Culinary Institute, Scottsdale, AZ. Le Cordon Bleu College of Culinary Arts Las Vegas was established in January 2003. In addition to the Associate of Occupational Science Degree, graduates receive the Le Cordon Bleu Diplôme, recognized worldwide.

• Le Cordon Bleu Culinary Arts Program

• Le Cordon Bleu Patisserie and Baking

U.S. Career Institute – Offers a wedding consulting / planner class for $887. The course duration is 4 months and is Accredited by DETC (Distance education and training council)

Weddings Beautiful – Their course was first offered in 1954 as a part of the National Bridal Service, America's first national association of bridal consultants and wedding related businesses. Depending on the type of payment the course can cost either $695 of $780 (installments). Duration of the course is 6 months to 1 year. The certificate received is Certified Wedding Specialist. This is not accredited since it costs a lot of money and would increase the cost of the course. The course has been around since 1968 and only offers this course. They are proud to offer personal service and constant access to support that they feel other institutions lack.

George Washington University, Washington D.C – Upon successful completion of entire Program (7 classes), portfolio, and practicum hours, a student receives a Certificate in Professional Event Management from The George Washington University School of Business. Distance Learning courses must be completed within 2 years of registration and are non-refundable.

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Indirect competitors

These are schools that provide certificates not in hospitality but other fields such as Information Technology, Graphic / Web design, etc.

International Academy of Design and Technology – Offer Fashion Designing, Interior Designing, Visual Communications, Game Design.

Las Vegas High Tech Institute – Dental Assistant, Medical Assistant ,Medical Billing & Coding ,Pharmacy Technician ,Surgical Technologist ,X-ray Technician (Limited Scope) .

Las Vegas College - Business Administration Training – Have classes like Business Accounting Principles, Corporate Accounting, Computer Applications, Concepts of Finance, Principles of Management, introduction to Human Resources, Spreadsheets, Communications, and Advertising.

Casino Gaming School of Nevada – The school has an administrative office and a casino-style classroom with equipment for 4 Poker tables, 8 Blackjack tables, Shuffle Master dealing machines, Craps table, Roulette tables, Mini Baccarat table, and Pai Gow Poker table. Students who successfully complete a dealing course at Casino Gaming School will receive a Certificate of Graduation.8

DeVry University's Keller Graduate School of Management Las Vegas College – Offer Business Administration, Law Enforcement, Security, and Public Safety, Legal, Liberal Arts, Sciences, and Humanities, Medical and Health

The Art Institute Of Las Vegas – Offers Associates and Bachelors programs in Culinary Arts and Management.

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Customer Analysis

Potential students

To determine the market for potential students, we must make some assumptions about the population. This would entail determining who could be a customer of TISOH. This may not necessarily be the exact market that TISOH is targeting. First the potential customer must be an adult of at least 18 years of age, and second they should not be of retirement age so they are less than 65 years of age. This narrows the field to those seeking education to further their careers rather than for the joy of learning. Any potential student of TISOH would need to be either currently working full or part time or at least seeking this in their career. This would necessitate them to be between 18 and 64 years of age; this will be referred to as working age. Next we are assuming that they work or are considering work in the industries that TISOH caters. Based on the classes and programs that are currently offered, this industry would be most closely aligned with the Leisure and Hospitality Industry. This is a super sector of industry as defined by the North American Industry Classification System (NAICS). Leisure and Hospitality includes the arts and entertainment sector as well as accommodation and food services. TISOH’s courses fall in line with these industry sectors and would therefore attract people in these industries or seeking to join. Our last assumption is educational attainment of the potential student where we must assume the highest level of schooling completed. Firstly, the entrance requirements for TISOH specify that the potential student must possess at least a high school diploma or equivalent. This eliminates all high school dropouts from the pool of candidates not due to their desire not to attend but TISOH’s minimum standards. Secondly we assume that a potential student does not have a Bachelor’s degree. We make assumption based on the premise that an individual with a Bachelor’s degree will have many more career opportunities for them than a non-degreed candidate. If someone wishes to enter the Leisure and Hospitality field, they will have many more doors open for them if they have a Bachelor’s degree regardless of their particular major. Because of this, entering the TISOH program will have much less benefit for a degree holder than one without. Furthermore, the majority of labor in Leisure and Hospitality fall in the category of high school graduates without Bachelor’s degrees as can be seen in the tables below. It is for these reasons that we will only include in the potential student population those with high school diplomas or equivalent, some college but no degree, and Associate’s degree holders.

Customer Groups

To estimate the total potential student market for TISOH, we will first break up the population into two distinct groups – those that wish to attend classes in a classroom setting at a physical location and those who wish to attend classes online. The brick-and-mortar students will naturally need to live in Las Vegas area (Clark County) to realistically be able to attend classes. Online students could theoretically live anywhere in world. We will restrict our potential student market to the United States for simplicity and availability of statistical data, with one exception.

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There is a growing market for International students studying in the U.S. We will estimate this potential population of International students studying in the U.S. at brick-and-mortar facilities. This will be handled separately from the local market. We will assume that all International students are seeking education at a brick-and-mortar facility which will be explained later.

Local

The following is an estimate of the potential students in Clark County, Nevada for TISOH’s classroom programs.

By manipulating the above data yields the following summary:

Therefore there are 549,340 people in Clark County that meet the minimum requirements of TISOH and are of working age and do not possess college degrees which furthers the value of a TISOH education to them. Not everyone in this group is interested in TISOH because of the specific industry of its education. We must use the particular portion of the population that is in the Leisure and Hospitality Sector. The data as follows shows the population of labor in the Accommodation and Food Service Industry, which is the largest and most relevant industry of the Leisure and Hospitality Sector in Clark County As seen below, it is clear that the proportions of this industry for Clark County exceed those for the rest of the country by more than a factor of 3. This is why it is important to look at the local data. These results are expected given the make up of the Las Vegas industry and the surrounding areas. According to the 2006 Bureau of Labor Statistics numbers, 27.77% of all labor in Clark County is in the Accommodation and Food Service Industry.9 Combining this with the previous number of 549,340 eligible and interested persons, we get a total local market potential for TISOH’s classroom programs of:

Total (18+) 18 to 24 25 to 34 35 to 44 45 to 64 65 and Over

Total Population 18 and Over 1,025,435 125,035 223,556 224,404 305,896 146,544

Less than 9th grade 71,478 9,320 16,430 14,593 17,288 13,8479th to 12th grade, no diploma 156,948 34,108 33,975 29,391 33,217 26,257High school grad.(incl.equivalency) 309,002 40,175 63,798 66,388 89,627 49,014

Some college, no degree 270,656 33,007 58,581 60,765 85,622 32,681Associate degree 56,134 3,291 12,822 14,774 20,490 4,757Bachelor's degree 107,911 4,759 28,941 26,386 35,915 11,910Graduate or professional degree 53,306 375 9,009 12,107 23,737 8,078

Educational Attainment by Age in Clark County, 2000

source: U.S. Census Bureau (www.census.gov)

Area Population 18 - 64

Clark County 878,891 62.5% 549,340source: U.S. Census Bureau (www.census.gov)

At least High school graduate but no

Bachelor's degree

Year

Accommodation and Food

Service Industry % of Total

Total, All

Industries

Accommodation and Food

Service Industry % of Total

Total, All

Industries

2006 253,305 27.77% 912,129 11,123,421 8.31% 133,833,834

Clark County, Nevada Total United States

source: U.S. Department of Labor - Bureau of Labor Statistics (www.bls.gov)

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152,552 students This may, however, not be the target market that TISOH is interested in. We will talk more on this later.

International

The following is an estimate of the potential students for TISOH’s classroom programs worldwide. First we must look at the number of international students entering the United States for education. In the 2006–2007 academic year, 582,984 international students10 were enrolled in American institutions according to the Institute of International Education’s (IIE) 2007 report on international education exchange. Assuming that the United States statistics for industry is a sample of the developed World population, it follows that 8.31% of the developed World works in Accommodation and Hospitality (from above). This would produce a total potential population of international students at: 48, 446 students

It should be noted that according to the IIE, 59% of all international students in the U.S. are from Asia (10.7% from South Korea) in 2006/07. While the number of potential international students seems small in comparison, it is taken from a more motivated pool of applicants. Each student is coming to the U.S. for education and is therefore a much better candidate to market to. The local population already lives here and would need to be nudged in TISOH’s direction.

Online

The following is an estimated for the potential Students in the United States for TISOH’s the Online Program The only significant difference in the derivation of the potential market for the Online Program and the Classroom Program is the propensity of students to attend classes online rather than at a local brick-and-mortar facility. We start by using similar data for age range, educational attainment and industry sector: This data shows that 7.92% of the total U.S. labor force is in Leisure and Hospitality. This is a small deviation from the previous data of 8.31% but is within statistic error given the data taken from different agencies. Following this percentage, it lists the highest education attained from people age 18-64. This total (numbers in bold) is 6,968,000.11 Of these nearly 7 million potential online students though, we must further cross reference this against the statistics for online

18 to 64 years

Leisure and

hospitality

Total (all

industries)

Total 10,678,000 134,819,000

None - 8th grade 673,000 4,559,0009th - 11th grade 1,377,000 9,265,000High school graduate 3,732,000 40,025,000

Some college no degree 2,546,000 26,942,000

Associate's degree 690,000 13,130,000

Bachelor's degree 1,373,000 27,230,000Master's degree 223,000 9,574,000Professional degree 31,000 2,289,000Doctoral degree 33,000 1,805,000

United States - 2006

source: U.S. Census Bu reau (www .census.gov)

22

matriculation for the entire student population. We will only look at students attending schools that are entirely online or have a 100% online option. This eliminates schools that have a handful of online classes but no full online degree program; in the case of TISOH, the online program can be fully completed online, and it would make sense to only compare as such. Additionally, an out-of-area student would not have the option to attend a portion of their school at a physical facility since TISOH is only located in the Las Vegas area. This is a stratified sampling of university enrollment for schools with greater than 15,000 students for Fall 2005. This will provide a good sample of the entire university population. We tabulated the sampling of only the online university enrollment and determined that 1.85% of all enrolled students in post-secondary education are at online universities.12

This further reduces the potential students in the United States for the Online Program to: 128,908 students

Demographic Makeup

For the purposes of the demographic analysis of the potential customer population, we will focus on the educational attainment aspect in determining other demographic characteristics.

Age

In tables above, it shows the demographic makeup of Clark County by age and educational attainment. Through this we can see that of the people with high school diplomas but no Bachelor’s degree between 18 – 64 years are:

• 13.9% are 18 – 24 years

• 24.6% are 25 – 34 years

• 25.8% are 35 – 44 years

• 17.8% are 45 – 54 years

• 17.8% are 55 – 64 years (assuming uniformity for 45 – 64 years) This shows that the majority of potential applicants with the selected educational attainment are between 25 and 44 years old. This age group would be most attracted to the services of TISOH given that by this age range with their education level, they would have reached a plateau in their

F al l 2004 Fall 20 05

Un ited States, a ll institu tion s 13,00 0,9 94 13,200 ,790

Univers ity of Phoeni x, O nline Cam pus 11 5,7 94 11 7,309

A merican Intercontinental Univers ity Online N/A 3 2,880

Kaplan Univers ity 1,9 32 1 1,095

Walden University 13,0 93 1 8,388

Western International Univers ity 2,3 06 5 0,544

Strayer Univers ity, W ashington Campus 6,0 25 1 4,437

Instituti ons wi th mo re than 15 ,00 0 enro lled student s

sourc e: N atio nal Center for Educat ion Statist ics (www .nces.ed.go v)

Onl

ine

Uni

vers

itie

s

F ull- time-equi valent en ro llment

23

career advancement. It is at this time that they would look for more opportunities yet the notion of attending a 4-year university to get a Bachelor’s degree is either too time consuming or not feasible given their full time workload. Therefore according to demographics, TISOH should focus on this age group (25 – 44) as their target.

Race

United States, 2006 Total

High School

Completion Some college Associate's degree

Total high school no

Bachelor's % of total % within race

Total, 18 - 64 184,344 56,366 37,486 16,335 110,187 100.00% -

White, 18 - 64 124,326 37,746 26,386 12,312 76,444 69.38% 61.49%

Black, 18 - 64 21,854 8,008 4,911 1,647 14,566 13.22% 66.65%

Hispanic, 18 - 64 26,051 7,753 3,991 1,479 13,223 12.00% 50.76%

source: National Center for Education Statistics (www.nces.ed.gov)

As can be seen in the table more than two-thirds of all people with a high school diploma but no Bachelor’s degree are white. Blacks and Hispanics are pretty much evenly split. The more interesting fact though is the percentage within the racial group compared with the total of all 18 – 64 year olds within their respective race. With this, more than two-thirds of all blacks fall into the specific educational attainment category, whereas only one-half of all Hispanics are in this group. This means that a greater proportion of blacks fit the recommended educational target of TISOH compared with the whole population of blacks than any other race. As far as targeting blacks more than other races, this would be a judgment call since the total population pool is less than other races, yet any marketing aimed at this group would be more effective for the group as a whole and therefore more efficient in the way the advertising funds were spent.

Sex

United States, 2006 Total

High School

Completion Some college

Associate's

degree

Total high school no

Bachelor's % of total % within sex

Total, 18 - 64 184,344 56,366 37,486 16,335 110,187 100.00% -

Male, 18 - 64 91,161 28,896 17,671 7,171 53,738 48.77% 58.95%

Female, 18 - 64 93,184 27,470 19,815 9,165 56,450 51.23% 60.58%

source: National Center for Education Statistics (www.nces.ed.gov) The split between males and females with the required educational attainment shows that there are more females than males. If you look within each gender, this trend continues showing that almost 61% of all females fall with the category versus 58% of males.

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Income

Mean earnings by highest education

attained, 2006

Total mean all

education

High School

Graduate

Some college no

degree Associate degree

Mean 18 - 64 years 41,810$ 31,443$ 32,458$ 40,076$

18 to 24 years..... 15,532$ 16,500$ 13,210$ 21,476$

25 to 29 years... 32,365$ 26,745$ 27,745$ 31,827$

30 to 34 years... 40,734$ 30,356$ 34,888$ 38,557$

35 to 39 years... 48,617$ 34,957$ 39,098$ 45,545$

40 to 44 years... 48,633$ 35,195$ 42,629$ 44,527$

45 to 49 years... 50,350$ 36,972$ 42,608$ 47,846$

50 to 54 years... 51,983$ 37,414$ 43,482$ 43,210$

55 to 59 years... 50,060$ 37,048$ 43,173$ 41,277$

60 to 64 years... 44,858$ 31,394$ 37,035$ 39,142$

source: Current Population Survey, BLS & Census Bureau (www.census.gov) 13 Regardless of the age group, it’s clear to see that having a high school diploma with no Bachelor’s degree places your mean income below the mean of the population. It can also be seen that although income in the first 20 years of employment steadily climbs, it plateaus at 40 most likely because work and life experience contributing to the employee’s value starts to wane. This further strengthens the argument that TISOH should target the population less than 45 years of age.

Current Demographics

According to the data provided by TISOH the current makeup of the student population is:

• 70% female, 30% male

• 90% local

• Average age late-twenties Attracting Students

There are many reasons why students would choose to enroll. Given the lower income levels of the potential customers in comparison to the mean population it’s clear to see that the ability to make more money beyond their current means is definitely a significant motivation. Persons who are not currently in the leisure and hospitality industry would find it difficult to be competitive with persons already having relevant work experience and education. Using the assumption that most potential students are currently working full-time, their time is very important to them as they will have precious little to spare. While a 4-year degree may yield more money in the long run, most potential students would not have the time to pursue it. Four years is quite a long time to reap the benefits; furthermore, a full-time worker would only realistically have time to pursue an education part-time. This could extend their time in school to more than 8 years which is ludicrous to someone looking for a career boost soon and now. When referring to International students, the time issue is much more critical because often they have a

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set period of time in which they can travel for education – often during their school and work breaks in the summer. Along with time, customers would furthermore want something that is costs effective. Since customers are seeking more money in their career, they would clearly not have copious funds from which to draw to pay for education. If one is choosing to enter the leisure and hospitality industry or advance their career within the industry, they would naturally choose a school located in place that has perfected the leisure and hospitality industry. Las Vegas has more than 3 times the job opportunities in this industry than the rest of the country (28% vs. 8%), which equates to 3 times the experience and knowledge. Taking into account the preferred age of the target market (suggested 25 – 44 years), a reason for enrollment could simply be a career change. During this age is when people start to rethink their path in life and are looking for something different. Assuming all the other issues mentioned above are true (time and money), TISOH must cater to these needs.

Success Factors

In order to be successful in attracting students for the aforementioned rationales, TISOH must exhibit the proper attributes. The ability for TISOH to remain aligned with the Leisure and Hospitality Industry is critical key to its success. TISOH has industry contacts, but they must put these relationships as a priority in their business. The usefulness of these contacts will be explored later. Since time was a factor in attracting students, TISOH must keep their programs short especially for International students as previously mentioned. When exploring new programs, they must be mindful not to alienate their students through more involved and longer certificate programs. In keeping with their cost conscious customer base, TISOH must keep their costs reasonable. Although they offer some unique services, inflating their certificate program fees could detract potential students. Rather than raising program costs, attracting more students to the already reasonable costs of the program will help to increase revenue. This will be explored later. Lastly, TISOH is located in Las Vegas, arguably the hospitality capital of the world. As they have only one location, TISOH needs to do little to achieve success in attracting new students in this regard. Should they ever choose to expand locations, it would be in their best interests to keep Las Vegas as the core of their business. Other cities, while the education content may be similar, cannot offer the benefits of the industry contacts or the international name recognition of Las Vegas. Market Potential

As previously calculated, it was estimated that there are 152,552 potential students for the local market to attend physical classes as well as 48,446 International students. It was also estimated that there are 128,908 potential students nation wide for the online education program. Using the weighted average income of the potential students of $33,068, we can calculate the total market potential. According to the 2005 Consumer Expenditure Survey an average of 1.6% of the

26

average household’s gross income is spent on education. For International students, we used the IIE survey on 2006/07 tuition per student which is $17,030. This yields a total market size as seen below.

Potential

Students

Average

weighted income

% spent on

education Total market potential

Local 152,552 33,068$ 1.601% 80,765,673$

Online 128,908 33,068$ 1.601% 68,247,819$

Int'l 48,446 17,030$ - 825,035,380$

Conclusions

From the customer analysis, we can draw the following conclusions:

• TISOH should seek to attract more male students. Currently they is a 30% male population. They should aim to increase this towards the high 40’s.

• TISOH should seek to attract students from outside the local area, namely international. According to the market data, TISOH should have 24% of their population from out of the country as a target goal.

• Along with that, the International Market has a huge potential compared to domestically, whereby there may be a smaller pool of candidates, but the money spent per student is much higher, since each international student arriving in the U.S. is here for one thing only and is focus purely on their education. Also, as previously mentioned, the pool of International students is of a higher quality with more motivation since there are coming to the U.S. strictly for educational advancement. In other words, “an easy sell”.

• The Online market not as strong compared to the local and international market. This is in additional to the rationale that the competition for online education, especially in Event Planner and Wedding Coordination is intense.

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SWOT analysis

Strength

According to our internal analysis, we found that there are several strengths that TISOH possesses. The association with UNLV, the industry contacts with major hotels on the strip, and the ability to offer internship.

Weakness

Stemming also from the internal analysis, we found that because the school is relatively new, there is the lack of name recognition. Undifferentiated products resulted in insufficient revenue to cover the high cost of overhead created by the recent small business loan and the fees due to UNLV. In addition, we feel that accreditation opens the door to those who are struggling financially by allowing them to obtain financial aid through government. Therefore, without it would be a detriment to the company.

Opportunities

According to our industry analysis, we found that there lies a huge opportunity in the international market. In addition, our customer analysis shows that over 50% of the students are from Asia. Thus, we feel penetrating one of the Asian countries first would be the best bet. Furthermore, our macro analysis indicated the spa industry is where TISOH should be. According to ISPA, the spa industry is the fastest growing in the hospitality and leisure arena, with a 12% annual growth rate.

Threats

The biggest threats that we found according to our competitor analysis are competing with well established online education. On top of that, there are hundreds of institutions offering similar certificates to TISOH’s core competencies, weddings and events planning.

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Our Plan

Using the SWOT, Competitor, Customer and demand analysis, we have 4 recommendations for TISOH –

• Focus Shift

• Streamline Curriculum

• Venture into the International Market

• Introduce a Spa Management Certificate

Focus Shift

Currently TISOH offers both online and classroom programs. From our customer analysis, we found that there a number of schools that provide certificate programs for the hospitality industry and there is fierce competition in the online market. The Online market also has the smallest market potential in terms of dollar value of $128000. TISOH’s competitive advantage is that they have great industry contacts, they are located in Las Vegas which is the hub for the hospitality industry and they provide good internship programs. They must therefore focus on the opportunities they have in classroom training programs. Although we are recommending that TISOH shift their focus to classroom education and place more emphasis on internships we are not suggesting that they stop offering online courses.

Streamline Curriculum

We closely studied the programs offered by TISOH and found that the Convention and Event planning certificate covered similar courses as those taught in the Wedding Certificate program. We thus recommend that TISOH combine the common classes and make the program an Event Management core program and offer concentrations in either Wedding Planning or Convention Planning. We found that by streamlining these courses, TISOH could increase student capacity and reduce payroll. Since the program has a choice of either a single or dual concentration, more students will be attracted to the program. Also according to the current demographics at TISOH, 70% of their student population comprises of females. Since this will now be a more event management oriented program, we hope to attract more male students. Our target audience for this recommendation is people who want a shift of career and those who want to enter the hospitality industry.

International Market

We recommend TISOH seize the great potential in the international market especially in Asia. TISOH can now issue an M1 visa which is a non-immigrant student visa that allows foreign nationals to engage in a full course of vocational or non-academic study in the United States. 14

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According to our customer analysis, approximately 48,000 international students all over the world want to come to USA for hospitality. Over 50% of all foreign students in USA are from Asia. TISOH could benefit greatly with this recommendation since foreign students always pay in cash since they get financial aid from home their countries and pay higher tuition as compared to local / domestic students. We also suggest that TISOH have summer classes designed specifically for the international students who want to come to USA for the summer. TISOH should include a Hospitality Industry Jargon class to familiarize the international students with the American Hospitality industry. We also greatly recommend that TISOH use their competitive advantage and focus on internships for these courses. TISOH should increase advertising in Asia. Print campaigns in hospitality magazines and schools. Emphasise on the “Las Vegas” location in all advertising, i.e. TISOH Las Vegas. Use Las Vegas skyline in print media. We also suggest adding a link on UNLV’s website since a lot of international students will visit the website while looking for hospitality schools. The target audience for this recommendation is international students especially in Asia who are looking for experience in the hospitality industry. Since TISOH has great contacts and is located in Las Vegas, it is a great platform for these students to launch their careers from. This will also be targeted to students who want to come for summer vacation when they can take a break from school and work and while visiting Las Vegas can take the small courses and receive a certificate. Introduce Spa Management Certificate Program

Our Industry analysis suggests that the Spa sector is the fastest growing in the Hospitality industry with a growth rate of 12% annually. Spa is a vital part of Las Vegas’ economy. Over 2.1 million visitors come to Vegas for Spa treatments alone. There are only two schools in USA which provide a Spa Management Certificate and they are the University of California Irvine Extension and Arizona State University. TISOH has a competitive advantage can offer a class room course and provide hands on experience. The Spa Management Certificate Program will include the following courses -

• Introduction to the spa industry, Services and treatments

• Spa Operations

• Spa Industry Finance

• Spa Marketing and Branding

• HR and Leadership for Spa Managers

• Guest Services and Relationship management

• Spa Resort design

• Career Management

• Internship For advertising and marketing purposes TISOH should scale back pay per click advertising on Google. We found that only a certain combination of words brings the pay per click add for

30

TISOH. Also when these do come up the regular search also has the link to TISOH. This can save TISOH $30000 per year. TISOH should advertise at the Las Vegas ISPA (International SPA Association) when they have conferences. TISOH has the best location for hospitality education, Las Vegas being the hub for the hospitality industry. It can also offer valuable industry experience. We thus recommend positioning TISOH as “The Only Place for Hospitality – TISOH Las Vegas”

Budget

Our plan for the streamline curriculum for evening planning management certificate plus one concentration is $2,950 and additional fee of $1,000 if the students are taking dual certificate. In this case, we can reduce the cost of the professor’s salary for around 40 hours times 50/hr wage which will be $2,000 per core class. The Hospitality Industry Jargon class for international students are $1,100 based on the average of ESL class. The Spa Management Certificate Program is $2,950 for 72 hours class. All of the professor’s salary is based on $50 per hour with additional $1,000 for the leading professor of each class. We also add additional administrative assistant for every $110,000 increased sales revenue according to the industry report. We estimate that the current building needs to be expanded due to the increased students after 2008 and the cost will be $2,500 according to the rental expense for the past two years. Also, we add $20k to advertise in Asia each year from TISOH’s past experience.

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Demand Analysis In order to logically forecast the demand and enrollment for TISOH over the next 3 years, we had to make a few assumptions:

• Any programs not affected by our recommendations will not be counted in the analysis. We assume that they will continue in the usual fashion.

• All data for 2005 – 2007 (historical data) is correct

• Any programs that did not have historical data were not included.

• Our recommendations could work on their own without being in conjunction with other recommendations we’ve suggested. In that way, our forecasts include each recommendation separately.

• Our recommendations could work in combination with all other recommendations we’ve suggested. In that way, our forecasts include the implementation of all recommendations simultaneously.

• Our recommendation for focus shift would be inherent to all the other recommendations and therefore does not have its own forecast

• The implementation of no recommendations assumes that TISOH will stay in business in the usual fashion and all enrollment would follow a linear trend.

• All calculations of students resulting in a non-integer number were rounded down.

No Program Changes

This forecast assumes no changes are implemented. We assumed that the enrollment would follow a linear trend over the next 3 years. Since none of our recommendations were used, we had no need for a pessimistic or optimistic estimate. We used simple linear regression to forecast 3 years. What follows is our best estimate given the data.

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

2005 7 0 0 0

2006 24 18 16 6

2007 30 35 28 10

2008 43 52 42 15

2009 54 70 56 202010 66 87 70 25

Streamline Curriculum

This forecast assumes that our recommendation to streamline the curriculum by creating an Event Planning core from which students then choose a concentration in Conference Management or Wedding Coordination. We used the data from the No Program change as a base. Further we assumed that the enrollment for the Event Planning core plus 1 concentration would be additive for the enrollment of the current programs of Conference Management/Event Planning and Wedding Coordination and Design. These programs separately have a zero enrollment for 2008 – 2010. We further added a percentage increase for students taking dual concentrations.

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Best Estimate

For our best estimate we assumed the increase due to the Dual Concentration option is 10%.

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Event Planning

core + 1 conc.

Dual Conc.

Convention &

Wedding

2005 7 0 0 0 0 0

2006 24 18 16 6 0 0

2007 30 35 28 10 0 0

2008 0 0 42 15 95 9

2009 0 0 56 20 124 122010 0 0 70 25 153 15

Pessimistic

For our pessimistic forecasts, we assumed that there would be no increase for Dual Concentration option. This forecast mirrors that of No Program Changes.

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Event Planning

core + 1 conc.

Dual Conc.

Convention &

Wedding

2005 7 0 0 0 0 0

2006 24 18 16 6 0 0

2007 30 35 28 10 0 0

2008 0 0 42 15 95 0

2009 0 0 56 20 124 02010 0 0 70 25 153 0

Optimistic

For our optimistic forecast, we assumed that the increase due to the Dual Concentration option is 15%. Additionally, we assumed that there would be a 37% increase in enrollment in these programs due to additionally attracting more male students as one of the benefits of the recommendation. This was calculated by taking the proportion of additional students that would enroll assuming the school population (now 30% male) followed the demographics of the customer market (evenly split).

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Event Planning

core + 1 conc.

Dual Conc.

Convention &

Wedding

2005 7 0 0 0 0 0

2006 24 18 16 6 0 0

2007 30 35 28 10 0 0

2008 0 0 42 15 129 19

2009 0 0 56 20 169 252010 0 0 70 25 209 31

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International Market

This forecast assumes that our recommendation to seek International students is implemented. We used the No Program Change as a baseline. We then further added a percentage increase in enrollment based on the expected percentage of International students given the Market size calculated earlier. This yields a 32% increase for our Best Estimate for all programs with historical data except the Online Program. We assumed that the Online Program would not be affected by the International population since our recommendations are to target students wanted to study in Las Vegas on TISOH’s M1 Visa. What follows is our Best Estimate based on this data.

Best Estimate

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

2005 7 0 0 0

2006 24 18 16 6

2007 30 35 28 10

2008 56 68 55 152009 71 92 73 202010 86 114 92 25

Pessimistic

We added a 50% decrease adjustment of the 32% increase. This reduces the effect that International students have on the enrollment forecast. This assumes that TISOH population of International students will be less than the expected population of the market.

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

2005 7 0 0 0

2006 24 18 16 6

2007 30 35 28 10

2008 49 60 48 152009 62 81 64 202010 76 100 81 25

Optimistic

We added a 50% increase adjustment of the 32% increase. This enhances the effect that International students have on the enrollment forecast. This assumes that TISOH population of International students will be more than the expected population of the market.

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

2005 7 0 0 0

2006 24 18 16 6

2007 30 35 28 10

2008 63 76 62 152009 79 103 82 202010 97 128 103 25

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Spa Management Program

This forecast assumes the successful introduction of a Spa Management Certificate Program. For calculating the enrollment, we took the total sum of the enrollment from the other programs from the 2008 – 2010 No Program Change forecast. We then multiplied it by the proportion of which the Spa Industry in Las Vegas alone (2.18%) is of the total national Hospitality Industry (8.31%). For the 2008 number, we only used 50% of the total number assuming the program start mid-year 2008. These calculations gave us our Best Estimate forecast as follows:

Best Estimate

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Spa

Management

2005 7 0 0 0 0

2006 24 18 16 6 0

2007 30 35 28 10 0

2008 43 52 42 15 192009 54 70 56 20 522010 66 87 70 25 65

Pessimistic

We added a 50% decrease in the total number of Spa Management enrollees. This assumes that there is not a large market for Spa as anticipated. Given the strong market for Spas, though, this number should still be above zero.

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Spa

Management

2005 7 0 0 0 0

2006 24 18 16 6 0

2007 30 35 28 10 0

2008 43 52 42 15 92009 54 70 56 20 262010 66 87 70 25 32

Optimistic

We added a 50% increase in the total number of Spa Management enrollees. This assumes that there is a larger market than expected, or TISOH advertizing strikes the right chord with prospective students.

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Spa

Management

2005 7 0 0 0 0

2006 24 18 16 6 0

2007 30 35 28 10 0

2008 43 52 42 15 292009 54 70 56 20 782010 66 87 70 25 97

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All Recommendations

Since our recommendations were not mutually exclusive, each can be implemented in conjunction with one another. To obtain the maximum benefit, we would strongly suggest that all be implemented together. We combined our forecasts using the aforementioned methods to obtain an enrollment forecast over the next 3 years that assumes that:

1. TISOH combines Conference Management/Event Planner and Wedding

Coordination/Design into an event planning core curriculum with concentrations in Conference and Wedding with an option for dual concentration

2. TISOH markets to International students using their M-1 Visa and implements summer programs tailored to International Hospitality students including, but not limited to, a Hospitality Jargon class

3. TISOH implements a Spa Management Certificate Program modeled after current hospitality management certificate programs.

If all 3 recommendations are implemented, our Best Estimate enrollment forecast is as follows:

Best Estimate

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Event Planning

core + 1 conc.

Dual Conc.

Convention &

Wedding

Spa

Management Sum

2005 7 0 0 0 0 0 0 7

2006 24 18 16 6 0 0 0 64

2007 30 35 28 10 0 0 0 103

2008 0 0 55 15 124 12 27 233

2009 0 0 73 20 163 16 71 343

2010 0 0 92 25 200 20 88 425

Pessimistic

Combines the criteria for the 3 pessimistic recommendations

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Event Planning

core + 1 conc.

Dual Conc.

Convention &

Wedding

Spa

Management Sum

2005 7 0 0 0 0 0 0 7

2006 24 18 16 6 0 0 0 64

2007 30 35 28 10 0 0 0 103

2008 0 0 48 10 109 0 10 177

2009 0 0 64 10 143 0 28 245

2010 0 0 81 10 176 0 35 302

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Optimistic

Combines the criteria for the 3 optimistic recommendations

Year

Conference

Management /

Event Planner

Wedding

Coordination

and Design

Art of

Concierge Online

Event Planning

core + 1 conc.

Dual Conc.

Convention &

Wedding

Spa

Management Sum

2005 7 0 0 0 0 0 0 7

2006 24 18 16 6 0 0 0 64

2007 30 35 28 10 0 0 0 103

2008 0 0 62 15 139 20 46 282

2009 0 0 82 20 182 27 122 433

2010 0 0 103 25 225 33 151 537

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Financial Analysis Financial Issues for 3 years forecasting

• SBA loan $678,000- Add 5,000/month for mortgage

• Renegotiate certificate fee- Lower the certificate fee to 20% of the sales revenue

• Bigger space as capacity grows- The current building won’t be big enough after 2008, so we add 2,500/month rental expense starting from 2009

• Travel expenses-Add additional travel expense to advertise in Asia for international expansion, roughly estimate $20,000/ yr due to the experience in 2006

• Costs for additional classes- Add additional class depending on the demand analysis. We estimate that there are 15 people in each class and the salaries for the professors are based on $50/hr times hours of classes, and additional $1000 for leading professor for each class. Also, we add additional administrative assistant for every $110,000 increased sales revenue based on “strategy4u” report.

• Other forecasting expenses are based on the income statement from the past three years with 5% inflation for each year.

There are three ways to show our financial forecasting which are our best estimate, pessimistic estimate and optimistic estimate. The revenue covers the tuition of all the classes including the three main certificate classes and our recommendation. The following table will show the number of additional classes we need to add on for the following three years, class hours and additional professor salaries. Also, the income statement shows all the detailed expenses and the net profit. We also highlight the expenses that were mentioned above.

Tuition and hours for each class

• The Art of Concierge – 40 hours, $1,650

• Online Class – Average $1,000

• Event Planning + one concentration class- 66 hours, $2,950

• Dual certificate- 26 hours, $1000

• Spa management- 72 hours, $2,950

• Hospitality Industry Jargon class- 60 hours, $1,100

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Best estimate

• Detailed table of costs for additional classes

Student Enrollment Conference Wedding Concierge Online Event Planning Core Dual Spa

2007 30 35 28 10

2008 55 15 124 12 27 42

2009 73 20 163 16 71 56

2010 92 25 200 20 88 69

Additional Class

YEAR Concierge Event planning core Dual Spa Jargon

2007

2008 2 4 1 2 3

2009 1 3 0 3 1

2010 1 2 0 1 1

Class Hours Concierge Event planning core Dual Spa Jargon

40 66 26 72 60

Projected additional salary for professor

YEAR Concierge Event planning core Dual Spa Jargon Total

2007

2008 6,000 17,200 1,300 9,200 12,000 45,700

2009 3,000 12,900 0 13,800 4,000 33,700

2010 3,000 8,600 0 4,600 4,000 20,200

International Students

• Projected Income statement for 2008-2010

Revenue

Product A 609,400.00 100.00% 908,350.00 100.00% 1,122,300.00 100.00%

Product B 0.00 0.00% 0.00 0.00% 0.00 0.00%

Product C 0.00 0.00% 0.00 0.00% 0.00 0.00%

Product D 0.00 0.00% 0.00 0.00% 0.00 0.00%

Total Revenue 609,400.00 100.00% 908,350.00 100.00% 1,122,300.00 100.00%

Total Cost of Goods Sold 0.00 0.00% 0.00 0.00% 0.00 0.00%

Gross Profit 609,400.00 100.00% 908,350.00 100.00% 1,122,300.00 100.00%

OPERATING EXPENSES:

Accounting & Legal 5,160.00 0.85% 5,934.00 0.65% 6,824.10 0.61%

Advertising & Promotions 45,600.00 7.48% 50,160.00 5.52% 55,176.00 4.92%

Bank Charges 4,200.00 0.69% 4,326.00 0.48% 4,455.78 0.40%

Freight 1,920.00 0.32% 2,016.00 0.22% 2,116.80 0.19%

Dues & Subscriptions 1,200.00 0.20% 1,260.00 0.14% 1,323.00 0.12%

Insurance 3,000.00 0.49% 3,150.00 0.35% 3,307.50 0.29%

Licenses & Fees 3,000.00 0.49% 3,150.00 0.35% 3,307.50 0.29%

Office Expense 11,454.55 1.88% 12,027.27 1.32% 12,628.64 1.13%

Owner Salary 0.00 0.00% 0.00 0.00% 0.00 0.00%

Employee Salary 260,896.00 42.81% 378,454.88 41.66% 486,040.53 43.31%

Payroll Taxes 15% 20,871.68 3.42% 30,276.39 3.33% 38,883.24 3.46%

Rent 0.00 0.00% 30,000.00 3.30% 33,000.00 2.94%

Telephone 1,008.00 0.17% 1,209.60 0.13% 1,451.52 0.13%

Travel 14,400.00 2.36% 15,840.00 1.74% 17,424.00 1.55%

Depreciation 1,200.00 0.20% 1,200.00 0.13% 1,200.00 0.11%

Amortization expense 4,800.00 0.79% 5,280.00 0.58% 5,280.00 0.47%

Website 1,440.00 0.24% 1,512.00 0.17% 1,587.60 0.14%

Certification Fee 121,880.00 20.00% 181,670.00 20.00% 224,460.00 20.00%

Employee Insurance 1,320.00 0.22% 1,386.00 0.15% 1,455.30 0.13%

Internet Connectivity 2,160.00 0.35% 2,268.00 0.25% 2,381.40 0.21%

TOTAL EXPENSES 505,510.23 82.95% 731,120.14 80.49% 902,302.90 80.40%

EARNINGS BEFORE INT & TAX 103,889.77 17.05% 177,229.86 19.51% 219,997.10 19.60%

Less:Interest Expense(loans) 54,035.32 8.87% 53,565.23 5.90% 53,056.12 4.73%

NET PROFIT 49,854.46 8.18% 123,664.63 13.61% 166,940.97 14.87%

2008 2009 2010

39

Pessimistic Estimate



2007 30 35 28 10

2008 48 10 109 0 10 20

2009 64 10 143 0 28 27

2010 81 10 176 0 35 34

Additional Class


2007

2008 1 3 0 1 1

2009 1 2 0 1 1

2010 1 2 0 1 0


40 66 26 72 60



2007

2008 4,000 12,613 0 3,067 5,333 25,013

2009 3,200 9,747 0 5,520 4,000 22,467

2010 3,000 8,600 0 4,600 0 16,200



Revenue

Product A 462,250.00 100.00% 649,750.00 100.00% 803,500.00 100.00%

Product B 0.00 0.00% 0.00 0.00% 0.00 0.00%

Product C 0.00 0.00% 0.00 0.00% 0.00 0.00%

Product D 0.00 0.00% 0.00 0.00% 0.00 0.00%

Total Revenue 462,250.00 100.00% 649,750.00 100.00% 803,500.00 100.00%


Gross Profit 462,250.00 100.00% 649,750.00 100.00% 803,500.00 100.00%

OPERATING EXPENSES:



Bank Charges 4,200.00 0.91% 4,326.00 0.67% 4,455.78 0.55%

Freight 1,920.00 0.42% 2,016.00 0.31% 2,116.80 0.26%


Insurance 3,000.00 0.65% 3,150.00 0.48% 3,307.50 0.41%

Licenses & Fees 3,000.00 0.65% 3,150.00 0.48% 3,307.50 0.41%

Office Expense 11,454.55 2.48% 12,027.27 1.85% 12,628.64 1.57%

Owner Salary 0.00 0.00% 0.00 0.00% 0.00 0.00%

Employee Salary 189,521.33 41.00% 268,361.64 41.30% 343,300.49 42.73%

Payroll Taxes 15% 15,161.71 3.28% 21,468.93 3.30% 27,464.04 3.42%

Rent 0.00 0.00% 30,000.00 4.62% 33,000.00 4.11%

Telephone 1,008.00 0.22% 1,209.60 0.19% 1,451.52 0.18%

Travel 14,400.00 3.12% 15,840.00 2.44% 17,424.00 2.17%

Depreciation 1,200.00 0.26% 1,200.00 0.18% 1,200.00 0.15%


Website 1,440.00 0.31% 1,512.00 0.23% 1,587.60 0.20%




TOTAL EXPENSES 398,995.59 86.32% 560,499.44 86.26% 684,383.66 85.18%



NET PROFIT 9,219.10 1.99% 35,685.33 5.49% 66,060.21 8.22%

2008 2009 2010

40

Optimistic Estimate



2007 30 35 28 10

2008 62 15 139 20 46 64

2009 82 20 182 27 122 84

2010 103 25 225 33 151 105

Additional Class


2007

2008 2 5 1 3 4

2009 1 3 1 5 1

2010 1 3 0 2 1


40 66 26 72 60



2007

2008 6,800 21,213 1,733 14,107 17,067 60,920

2009 4,000 12,327 1,300 23,307 4,000 44,933

2010 3,000 12,327 0 8,893 4,000 28,220



Revenue

Product A 694,450.00 100.00% 1,171,500.00 100.00% 1,452,650.00 100.00%

Product B 0.00 0.00% 0.00 0.00% 0.00 0.00%

Product C 0.00 0.00% 0.00 0.00% 0.00 0.00%

Product D 0.00 0.00% 0.00 0.00% 0.00 0.00%

Total Revenue 694,450.00 100.00% 1,171,500.00 100.00% 1,452,650.00 100.00%


Gross Profit 694,450.00 100.00% 1,171,500.00 100.00% 1,452,650.00 100.00%

OPERATING EXPENSES:



Bank Charges 4,200.00 0.60% 4,326.00 0.37% 4,455.78 0.31%

Freight 1,920.00 0.28% 2,016.00 0.17% 2,116.80 0.15%


Insurance 3,000.00 0.43% 3,150.00 0.27% 3,307.50 0.23%

Licenses & Fees 3,000.00 0.43% 3,150.00 0.27% 3,307.50 0.23%

Office Expense 11,454.55 1.65% 12,027.27 1.03% 12,628.64 0.87%

Employee Salary 301,460.00 43.41% 431,469.13 36.83% 548,665.21 37.77%

Payroll Taxes 15% 24,116.80 3.47% 34,517.53 2.95% 43,893.22 3.02%

Rent 0.00 0.00% 30,000.00 2.56% 33,000.00 2.27%

Telephone 1,008.00 0.15% 1,209.60 0.10% 1,451.52 0.10%

Travel 14,400.00 2.07% 15,840.00 1.35% 17,424.00 1.20%

Depreciation 1,200.00 0.17% 1,200.00 0.10% 1,200.00 0.08%


Website 1,440.00 0.21% 1,512.00 0.13% 1,587.60 0.11%




TOTAL EXPENSES 566,329.35 81.55% 841,005.54 71.79% 1,036,007.56 71.32%



NET PROFIT 74,085.34 10.67% 276,929.24 23.64% 363,586.32 25.03%

2008 2009 2010

41

Other Issues

Benefits

A side benefit of targeting International students is more brand awareness across the world. International students receiving education from TISOH will return to their home country with nothing but good things to say about the school and word will spread fast, especially since there is not much competition internationally when it comes to hospitality education in the hospitality capital of the world.

Additionally having more international students would create a more diverse pool of students. This makes for a much richer learning experience, not only for the students but also for the teachers as well. Each international student brings their own unique experiences and points of view from their culture. The benefit from this would not only be felt by the international students but by every alumnus that leaves TISOH.

Potential Negative Impacts

With all the influx of new students to TISOH, there may be a problem as to where to put them. Capacity will become a big issue as enrollment grows. We have accounted for this very issue in our financial analysis, but it should be made aware so that provisions can be made in advance.

With more students come more administrative costs to enroll students and register and maintain records. It takes money to make money, but again we accounted for this in our Financial Analysis

Conclusion

The purpose of this project is to give TISOH ideas to attract more students and bring more revenue. We have several ideas that TISOH could implement such as a new Spa Management Certificate class, international expansion and streamlining curriculum that will help TISOH increase its student base and increase revenue.

Using all the analysis we learned from the MOA class, we feel that we have successfully justified our recommendations to achieve these goals. Besides increasing the revenue, we also tried to reduce the cost and save some expenses that are not justified, to increase profits. When we did the financial analysis, we found that the major expenses for TISOH are advertising and Certificate fee. If TISOH can adjust, renegotiate these expenses and also implement our recommendations, we believe that TISOH can be more successful and start making more profit every year.

42

References

1 U.S. Census Bureau (www.census.gov) 2 http://www.co.clark.nv.us/ 3 http://www.elearners.com/programs/hotel-and-hospitality-management.htm 4 http://www.csn.edu/admissions/aid/tuition.asp 5 http://www.isenberg.umass.edu/htm/Online_Certificate_Programs/ 6 http://www.umassonline.net/degrees/BSHospitalityTourismMgmt.html 7 http://www.hotelschool.cornell.edu/industry/executive/online/cert/ 8 http://www.learntodeal.com/nick-on-tv.html 9 http://www.learntodeal.com/nick-on-tv.html 10 The Institute of International Education. www.iie.org. 2007 Report on International

Education Exchange 11 United States Census Bureau. www.census.gov. Educational Attainment by Industry Sector,

2006. 12 National Center for Education Statistics. www.nces.ed.gov. Enrollment 2004-2005. 13 Census Bureau & Bureau of Labor Statistics (joint venture). www.census.gov. “Current

Population Survey, 2006”. 14 http://www.immspec.com/m1-visa.htm