Divvy Pricing:

Divvy has two primary classes of

users: subscribers and customers. Subscribers pay an annual fee of

$99 for unlimited rides limited to 45 minutes in duration. Customers may

pay either $3 for a 30-minute (or shorter) trip or a daily fee of $15.

Subscribers make up approximately 76% of Divvy's total rides. As of

December 31, 2019 there were approximately 40,000 subscribers. In 2018,

approximately 198,000 24-hour passes were sold to customers. The average

subscriber trip was 15.3 minutes long in 2018 while the average customer trip

(both daily/individual rides) was 62.6 minutes long.

Table 1:

March 2018

Aug.2018

Total 2018

Total number of trips

174,000

174,411*

531,000

530,755*

3,600,000

3,602,742*

Number of trips taken by Subscribers

159,000

158,577*

402,000

401,989*

2,920,000

2,924,847*

Number of trips taken by Customers

15,800

15,829*

129,000

128,766*

678,000

677,887*

Name/list the Top 3 Station Names whereSubscriber trips began

1.Canal St & Adams St

2.Clinton St & Washington Blvd

3.Clinton St and Madison St

1.Canal St & Adams St

2.Clinton St & Madison St

3.Clinton St & Washington Blvd

1.Canal St & Adams St

2.Clinton St & Madison St

3.Clinton St & Washington Blvd

Name/list the Top 3 Station Names whereSubscriber trips ended

1.Canal St & Adams St

2.Clinton St & Madison St

3.Clinton St & Washington Blvd.

1.Canal St & Adams St.

2.Clinton St & Madison St

3.Clinton St & Washington Blvd

1.Canal St & Adams St

2.Clinton St & Madison St

3.Clinton St & Washington Blvd

Name/list the Top 3 Station Names whereCustomer trips began

1.Lake Shore Dr. & Monroe St

2.Streeter Dr & Grand Ave.

3.Shedd Aquarium

1.Streeter Dr & Grand Ave.

2.Lake Shore Dr & Monroe St

3.Lake Shore Dr & North Blvd

1.Streeter Dr & Grand Ave

2.Lake Shore Dr & Monroe St

3.Millennium Park

Name/list the Top 3 Station Names where Customer trips ended

1.Streeter Dr & Grand Ave

2.Millennium Park

3.Lake Shore Dr & Monroe St

1.Streeter Dr & Grand Ave

2.Millennium Park

3.Lake Shore Dr & North Blvd

1.Streeter Dr & Grand Ave

2.Millennium Park

3.Lake Shore Dr & Monroe St

Table 2:

May 2019

Dec. 2019

Total 2019

Total number of trips

367,000

367,458*

155,000

155,092*

3,820,000

3,818,004*

Number of trips taken by Subscribers

286,000

285,834*

139,000

138,662*

2,940,000

2,937,367*

Number of trips taken by Customers

81,600

81,624*

16,400

16,430*

881,000

880,637*

Name/list the Top 3 Station Names whereSubscriber trips began

1.Canal St & Adams St

2.Clinton St & Washington Blvd

3.Clinton St & Madison St

1.Canal St & Adams St

2.Clinton St & Madison St

3.Clinton St & Washington Blvd

1.Canal St & Adams St

2.Clinton St & Madison St

3.Clinton St & Washington Blvd

Name/list the Top 3 Station Names whereSubscriber trips ended

1.Clinton St & Washington Blvd

2.Canal St & Adams St

3.Clinton St & Madison St

1.Canal St & Adams St

2.Clinton St & Washington Blvd

3.Clinton St & Madison St

1.Clinton St & Washington Blvd

2.Canal St & Adams St

3.Clinton St & Madison St

Name/list the Top 3 Station Names whereCustomer trips began

1.Streeter Dr & Grand Ave

2.Lake Shore Dr & Monroe St

3.Shedd Aquarium

1.Streeter Dr & Grand Ave

2.Lake Shore Dr & Monroe St

3.Shedd Aquarium

1.Streeter Dr. & Grand Ave

2.Lake Shore Dr and Monroe St

3.Millenium Park

Name/list the Top 3 Station Names where Customer trips ended

1.Streeter Dr & Grand Ave

2.Lake Shore Dr & Monroe St

3.Millennium Park

1.Streeter Dr & Grand Ave

2.Millennium Park

3.Lake Shore Dr & Monroe St

1.Streeter Dr & Grand Ave

2.Millennium Park

3.Lake Shore Dr & Monroe St

*Data set is from exported file is more precise than the information provided on the graphic model.Both numbers have been provided.

Table 3:

2017

2018

2019

Identify the month during each year with highest number of Subscriber trips (how many trips?)

August

412,000

August

402,000

August

403,000

Identify the month during each year with the highest number of Customer trips (how many trips?)

July

179,000

July

150,000

August

187,000

Identify the month during each year with the lowest number of Subscriber trips (how many trips?)

January

107,000

February

99,300

February

93,500

Identify the month during each year with lowest number of Customer trips (how many trips?)

January

5,315

February

3,598

February

2,638

Questions:

1.For the years 2018 and 2019 what patterns of behavior in terms of frequency of rides do you notice? (i.e. during which month(s) are Customers and Subscribers using the bikes the most/the least)

• Subscribers & Customers: The pattern for the year resembles a bell curve with the highest periods of ridership occurring in the summer and early fall.The number of trips lessen during the winter months and the contrast between subscribers and customers widen, as temperatures lower and road conditions make it challenging to safely ride a bicycle.More trips are taken in milder weather, during summer tourism, and with the influx of students starting school in the fall.
• Subscribers: Highest month in 2018 & 2019 is August

Lowest month in 2018 & 2019 is February

• Customers: Highest month in 2018 is July
• Highest month in 2019 is August
• Lowest month in 2018 & 2019 is February
• Other Comparisons:
• 2.68 times more subscribers than customers in August 2018

2.16 times more subscribers than customers in August 2019

25.60 times more subscribers than customers in February 2018

35.44 times more subscribers than customers in February 2019

2.Using the Top 3 2019 Subscriber departure stations (see Table 2 above); identify what is located at or near those departure points.Given this information, why do you think that the majority of Subscribers typically used Divvy Bikes during 2019?

According to a press release by Mayor's Office in 2019, Divvy is the largest bike share system in North America.The goals of the system in Chicago is to provide both residents and visitors and easy way "to get around and explore the city".It is also new part of the overall public transportation system that helps users to connect more quickly to CTA and Metra stations.

The top 3 2019 subscriber departure stations are in close proximity to the Ogilvie Metra, Union Station, Clinton CTA station, and other sources of public transportation.The departure stations are also near companies, school and medical centers. Divvy allows its users to quickly connect to the larger public transportation hub and to local businesses.Subscribers can ride Divvy bikes to the nearest public transportation hubs (i.e. Metra, CTA, etc..).Subscribers can also use them to get to their destination from a particular station. And outside of commuter activity, many users also use them to travel to concert venues or enjoy the weather and ride along the lake or river.

3.Using the Top 3 2019 Customer departure stations (see Table 2 above) identify what is located at or near those departure points.Given this information, why do you think that the majority of Customers typically used Divvy Bikes during 2019?

The top 3 departure stations for customers are close to Navy Pier (Streeter Drive and Grand Avenue), Maggie Daley Park (Lake Shore Drive and Monroe Street), and Millennium Park.The public park spaces, museums, and shopping in these corridors make these popular places for both Chicago residents and visitors.Bicycling from these areas is also much easier to navigate than using rideshare and provide opportunities for enjoying the city rather than sitting in traffic.According to Divvy, in 2018, the average trip length for a customer was 62.6 minutes long compared to the 15.3 minutes for a subscriber.It's reasonable to assert that leisure and recreational sites are more likely to attract users who may wish to sight see while riding, in contrast to the much shorter average trip of subscribers who are looking to get to their work, school, or home destination as quickly as possible.

4.In terms of quantity of rides do more Subscribers or Customers use Divvy Bikes?

Subscribers use Divvy Bikes more than Customers

5.Assuming there are 40,000 Subscribers in 2019 what is the approximate annual Subscriber revenue?

40,000 subscribers * $99 annual fee = $3,960,000

6.If an individual Subscriber took more rides (say 175) in 2019 than he/she took in 2018 (say 160), will that fact provide additional revenue for Divvy Bikes?

No. Subscribers pay an annual fee of $99 for an unlimited number of rides limited to 45 minutes in duration.According to Divvy, the average subscriber trip in 2018 was 15.3 minutes long.

7.Impact of COVID-19:Using the insight you gained from completing Tables 1-3 and answering questions 1-6 above, answer the following:

a.What do you predict will happen to the total number of Subscriber rides for March 2020 (remember that Shelter-in-Place took effect Saturday, March 21, 2020) compared to March 2019? Explain your answer.

Most subscribers who use Divvy services are likely to be Chicago residents.There is a significant cost savings for high frequency users to pay the annual $99 fee over the pay as you go model of a customer.On March 21, the state implemented Shelter-In-Place (SIP) protocols.Non-essential workers (where possible and/or permitted) began to work from home.Students were also transitioned to e-learning.Additionally, at the beginning of the SIP, people were encouraged to limit travel and activity.In the face of all of those factors, typical users of the public transportation system, were suddenly staying at home during the last 10 days of March 2020.It is to be expected that there is a significant drop in ridership in March 2020 if compared to the non-pandemic era of March 2019.

1. What impact do you predict that COVID-19 will have on the quantity of Customer rides from April 1, 2020 - June 30, 2020?Provide at least 3 reasons to support your answer and explain your conclusion.

The overall public transportation activity is likely to have decreased as non-essential workers and students are not traveling at the usual levels.People are being encouraged to limit travel and be conscious of being socially distant.However, customers are generally a set of Divvy riders who essentially pay as they go.They do not typically appear to be part of the commuter group that seems to make up the Subscriber base.It is possible that the customer group will maintain their levels of ridership during Q2 of 2020 for the following reasons:

1.Safety:Chicago is a city with a vast public transportation system.It is possible to live in Chicago without ownership of a car, and many people do so.During a time where social distancing is important for public health, riding a Divvy bike in mild weather may be a safer alternative than being in an enclosed bus or train car for those without a car.Running light errands to the grocery, bank, or other tasks can be reasonably managed on a bicycle.

2.Cost:Cost of a single trip or a daily rate as a customer is cheaper than ride share services (i.e. Lyft, Uber).

3.Recreation:In the early days of the pandemic, the information regarding disease transmission was still confused.Riding a bicycle was perceived by some as a safe way to go outside and maintain safe distance from others.

Your group is continuing in its role as a business advisor to Divvy Bikes /Motivate/Lyft (DML).DML has hired you to design a plan to increase its operating revenue and cash flow in order to recover from the substantial decrease in revenue attributable to the effects of COVID - 19.As part of the contract Motivate/Lyft (ML) entered into with the City of Chicago. ML is required to pay the City $6,489,600 on June 30, 2021 and is looking for guidance regarding strategies to increase operating revenue.As a result, your group's task is to develop proposals to assist DML in increasing Divvy Bikes operating revenue and cash flow.Your group will be delivering a PowerPoint video presentation to the Board of Directors for Divvy Bikes that outlines your proposals.In your video presentation be sure to include the following:

Using your analysis of Part I of this assignment, what was the total operating revenue for 2019?Operating revenue is defined as revenue from Subscribers and Customers from using the Divvy Bikes (include calculations, methodology and assumptions).This will be your starting point or baseline amount of revenue under normal operating conditions.Operating revenue does not include advertising or any other source of revenue.Information you need to determine the 2019 operating revenue was addressed in Part I of this assignment.

Using the data in the City of Chicago Data portal and information provided in Part I of this assignment develop two detailed proposals to increase operating revenue for the calendar year 2021 from the baseline operating revenue of 2019 calculated above.For your group's three proposals, at least one must focus on Subscribers and at least one on Customers.In other words, do not submit three proposals that focus exclusively on Subscribers or three that focus exclusively on Customers). Your proposals should focus only on the "traditional" Divvy Bikes.Do not include any operating revenue projections for the E-Bike.

Each proposal should:

1.Be thoroughly summarized and reflect your knowledge of the Divvy Bikes system data and trends that resulted from your group completing Part I of this assignment.

2.Focus on incorporating specific information about Divvy's operations and Customer/Subscriber behavior and trends from the knowledge gained in Part I.Any proposal that does not incorporate this data will receive a score of 0.You must use the data from the Chicago Data portal to determine the best strategies to maximize operating revenue for Divvy Bikes.For example, a proposal to increase the single ride rate for customers in the month of January would reflect the data but would not maximize the potential operating revenue.

3.Include all relevant details and calculations

4.Illustrate incremental revenue generated by each proposal relative to 2019 operating revenue

5.Assume only increases in Divvy's operating revenue and cash flow are proposed.In other words, no proposal should require Divvy to spend any additional funds to implement the strategy.

A summary of 2021 projected total operating revenue if all your group's proposals are implemented. In other words, the projected 2021 operating revenue should be 2019 operating revenue plus the impact on operating revenue of your group's three proposals.(Show your calculations).

Your group is not permitted to propose the obvious to DML's Board of Directors.Your group has been hired due to your collective analytical expertise to analyze the data in order to develop the best proposals to ensure the long term financial success for DML

Obvious proposals would include the following:

Increasing the overall subscriber annual fee.

Increasing the overall customer single ride or day pass rate.

Operating revenue data for Divvy Bikes from both class of riders (Subscribers and Customers) for 2013 - 2018 are presented below.

2013 *

2014

2015

2016

2017

2018

2019

$2,230,588

$4,138,188

$6,727,926

$7,566,460

$7,958,473

$8,038,207

Divvy began operations in June 2013.

You are to submit your video presentations to the appropriate "Forum" in Discussions on D2L by 6:00 p.m. on Tuesday, November 17^th.Post your PowerPoint slides to the designated folder in Submissions at the same time.