Marcela and Josh put their creative minds together and founded a global tour company specializing in eco-friendly excurs
Posted: Wed May 04, 2022 8:13 am
Marcela and Josh put their creative minds together and founded a
global tour company specializing in eco-friendly excursions for
Generation Z (and Kyong). Marcela had proposed a tour in the
Arctic to observe the impact of climate change; however, Josh
pushed for a Mediterranean cruise off the coast of Spain, in
advance of his study abroad in Madrid. Marcela relented when
Josh agreed to reserve 15 seats for the Limelights, who would lead
evening singing sessions each night – in Spanish. Trevor, the
first passenger to sign up, agreed to give free fishing lessons on
board if no one forced him to sing.
Astoundingly, the pair managed to raise money from friends,
family, and proceeds from Lauren’s successful start-up cosmetics
business. They put this money toward some up-front
costs. Their biggest initial, and non-refundable, expenditure
was renting a ship and crew for the 15-day tour, at a cost of
$320,000. Additionally, they committed $35,000 for
preliminary magazine advertising, targeting wealthy seniors and
intellectually curious younger people, and $25,000 for
administrative expenses.
They set an average price of $1,500 for the tour that included a
room on the ship and all meals. For the budget-conscious set, they
offered some economy rooms for $900, as well as appealing to the
well-to-do with luxury suites for $2,300, with an average price of
$1,500 per passenger. Their estimated cost per passenger was
$550, mainly for food.
Kalamazoo Krazies, the ad agency hired to do the magazine ads,
estimated that 300 people would sign up for the cruise after
reading the April ads. Disappointingly, by May 1, only 200
people had reserved spots.
At this point, our entrepreneurs figured they had three
choices: 1) cancel the tour and take their
losses, 2) proceed with the tour with 200 people,
or 3) win the lottery.
Question #1: How many passengers are
needed to break even with the tour? ___________
Question #2: Ruling out choice 3 (I’m no
fun) which should they choose?
Choice (1) _________________
or Choice (2) ________________ (check
one)
global tour company specializing in eco-friendly excursions for
Generation Z (and Kyong). Marcela had proposed a tour in the
Arctic to observe the impact of climate change; however, Josh
pushed for a Mediterranean cruise off the coast of Spain, in
advance of his study abroad in Madrid. Marcela relented when
Josh agreed to reserve 15 seats for the Limelights, who would lead
evening singing sessions each night – in Spanish. Trevor, the
first passenger to sign up, agreed to give free fishing lessons on
board if no one forced him to sing.
Astoundingly, the pair managed to raise money from friends,
family, and proceeds from Lauren’s successful start-up cosmetics
business. They put this money toward some up-front
costs. Their biggest initial, and non-refundable, expenditure
was renting a ship and crew for the 15-day tour, at a cost of
$320,000. Additionally, they committed $35,000 for
preliminary magazine advertising, targeting wealthy seniors and
intellectually curious younger people, and $25,000 for
administrative expenses.
They set an average price of $1,500 for the tour that included a
room on the ship and all meals. For the budget-conscious set, they
offered some economy rooms for $900, as well as appealing to the
well-to-do with luxury suites for $2,300, with an average price of
$1,500 per passenger. Their estimated cost per passenger was
$550, mainly for food.
Kalamazoo Krazies, the ad agency hired to do the magazine ads,
estimated that 300 people would sign up for the cruise after
reading the April ads. Disappointingly, by May 1, only 200
people had reserved spots.
At this point, our entrepreneurs figured they had three
choices: 1) cancel the tour and take their
losses, 2) proceed with the tour with 200 people,
or 3) win the lottery.
Question #1: How many passengers are
needed to break even with the tour? ___________
Question #2: Ruling out choice 3 (I’m no
fun) which should they choose?
Choice (1) _________________
or Choice (2) ________________ (check
one)