The attack is relentless. The emails never stop. In they come, day after day, selling the most ridiculous deals. Ridiculous! $1499 luxury Bali (or Thai) resort, breakfast every day, x3 dinners, cultural show, shopping tours, x30 minute massage for two, airport transfers and more…
Next day, same thing. Somewhere right now someone’s phone is pinging with the latest deal from one of the New Package Kings and they open that email and think, how do they do that? And, yes I’d like to do that. Only $999. Bargain.
Welcome to the new world of travel retailing, where a bunch of companies, many with roots in other industries, have come from nowhere over the past 18 months to gain a disproportionate share of voice, mainly through super aggressive use of old media – newspapers and TV in particular.
The most visible players are Luxury Escapes and Trip A Deal, who use the weekend travel supplements as their personal message board, full-page page ads, one after the other, in addition to all available online channels, especially email. It’s like they’ve come from nowhere.
Scoopon, another market leader, flies more under the radar, eschewing print, favouring niche television when it comes to mainstream media, sponsoring two Channel 9 programs Getaway and Postcards, while investing very heavily in digital.
All three are notable for their use of blonde brand ambassadors, all aged 40+ and with solid TV careers: Shelley Craft (Trip A Deal), Catriona Rowntree (Scoopon) and Livinia Nixon (Luxury Escapes), clearly articulating their primary target market, 35+ aspirational females with money to spend.
And spend they do.
Luxury Escapes, for example, sold 48,000 room nights at Sea World on the Gold Coast in just 10 days across its online distribution network.
“In one campaign we can move more than Booking.com or any other channel does in a year,” claims Adam Schwab, Managing Director of the Lux Group.
Its origins can be traced to 2010 when he and co-founder Jeremy Same launched Deals.com.au at the height of the love-it-or-hate-it group buying frenzy led by the likes of Groupon and LivingSocial.
Two years later Deals. com.au bought Ouffer, creating the AussieCommerce Group, which went on an acquisition spree right at the time many leading Australian group buying/flash sales companies were struggling – too much competition, not enough deals or customers.
In this environment there were lots of sellers and very few buyers.
AussieCommerce Group quickly gobbled up Cudo, Luxury Escapes (previously Getaway Lounge), The Gourmet (previously Meat Merchant), brandsExclusive, Spreets, Dailydo NZ, LivingSocial, PINCHme and Lust Have It!
Luxury Escapes (and travel) is the undisputed jewel of what is now known as the Lux Group.
Started in 2013 from the ashes of ninemsn group buying site Getaway Lounge, Luxury Escapes has a total turnover of more than $200m a year with annual sales growing at 40%.
That is more than two-thirds of the $299m Lux Group turnover for the 2016 financial year.
Schwab says its member database now exceeds 1m and is growing by 2000 a day or 700,000 a year. Its daily emails have an open rate “well above 30%” while the opt-out rate is “so small it’s almost infinitesimal – travel has by far the lowest churn”.
Until now, the sector has operated outside normal the travel mainstream, with consumers buying vouchers which they then have to redeem direct from the properties, typically resorts, using the companies such as Luxury Escapes.
But that’s now starting to change as the sector evolves.
“At the moment we’re operating a hybrid system offering vouchers and also instant booking on some products,” says Schwab.
“However within two to three months every campaign will be instantly bookable and also have a ‘book now pay later’ option.”
Consumers have embraced instant booking with more than 75% of consumers using that option where it’s available so they can secure dates immediately.
“Most issues we’ve had with customers have been around booking dates,” Schwab says.
“Instant booking is massively, massively better and we’re seeing a significant increase in our booking conversion rates.”
Instant bookings are also a priority at Scoopon.com.au with the diversified site “about to launch a booking engine with live availability,” says GM Jon Beros.
He declined to confirm informed speculation that travel turnover on the site now exceeds $200m but says travel is now its biggest and fastest-growing sales vertical.
It all started a few years ago when Scoopon put some hotel rooms at Portsea near Melbourne on the site and sold 800 of them before anyone knew what was happening.
“We thought ‘shit, we can sell accommodation’.”
Times have certainly changed since then, a period when many hoteliers and accommodation suppliers were wary of dealing with deal sites after getting burned during the early days of group buying, which were characterized by 50% commission and poor customer services.
The sector has now matured – with commissions around standard wholesale rates of 25% or so – and many doors that were once closed to the deal sites are opening.
“What’s turbo-charging the sector,” says Beros, “is that we’re starting to see supply really open up.”
“We can sell a large amount of volume in a very short period of time.”
And that works for hotels and resorts trying to build an occupancy base during periods of low demand.
Randall Deer, founder of Ignite Travel Group, which has just launched GetLuxe.com in partnership with Flight Centre, agrees that there’s “excess capacity everywhere” which is helping fuel the sector, one that is able through its massive email databases and real-time thinking is able to turn deals around very quickly and, they all claim, deliver new customers.
Deer also says the marketing is key.
It’s not just about the discounts, rather, delivering everything in one place – appealing to a marketplace thoroughly confused by the disintermediation wrought by the internet.
So the game has changed. But it hasn’t. We’re back to the future.