Why online travel firm Luxury Escapes is opening shopfronts
For Adam Schwab, the decision to open the first bricks and mortar outlet for the online discount travel business Luxury Escapes was all about data.
Luxury Escapes has grown rapidly as a purely online business selling discounted luxury travel packages to destinations such as Dubai, Thailand, Bali and the Maldives. But four years after it was established, the group opened its first shopfront in Melbourne’s Little Collins Street and has plans to roll out more across other capital cities around Australia.
In doing so Schwab, a Young Rich List member and chief executive of Lux Group, owner of Luxury Escapes, is part of another trend starting to take hold in the tech sector.
His business is following in the physical footsteps of other online disrupters ranging from Amazon and Catch Group in establishing a retail presence years after building purely e-commerce businesses.
After six months of planning, Luxury Escapes opened its Melbourne shopfront two weeks ago styled, Schwab says, on a high-end airport lounge. The outlet includes free wifi an onsite masseur, a coffee barista, snacks, virtual reality goggles and a free BMW transfer service for members. (It has created a Platinum Club, based on the Qantas Chairman’s Club for high-spending clients.)
Most importantly, though, the outlet is fitted with technology developed by Melbourne data analytics firm Blix, which uses smartphone signals to count people and track how long they linger in the store, which then Luxury Escapes will match with the number of deals their staff sell in-store.
“E-commerce companies usually make all their decisions based on data, whereas retailers don’t do a lot of it,” says Schwab. “So what we are trying to do here is to analyse the data that we will get to find out what will work in the store and adapt the business accordingly.”
Schwab says he expects that the conversion rate in-store will be higher than online, justifying the spending on the fitout. He says the group has also got good business from traditional marketing strategies such as travel seminars and print media and television advertising.
“With a brand like ours it is about convincing people to use us and to get them to trust us. Once they do we find we have a lot of repeat business, but it is about getting them in the first place. This helps with our credibility.”
Lux Group, which Schwab co-founded with Jeremy Same, includes other e-commerce brands such as Cudo, deals.com.au and The Home.
The group made a pretax profit of $7.4 million from $134 million in revenue in 2016. The travel business accounted for more than half that result and Schwab says Luxury Escapes grew a further 30 per cent in 2017.
Schwab says the average number of trips per customer is up from one a year ago to 1.4 this year, and that Australians booking their deals overseas typically stay for longer than customers from other countries and therefore allow Luxury Escapes to cut better deals with hotel and travel groups.
“The hotels like Australians because they stay longer and tend to spend more on things like meals and other incidentals. That is where the hotels make their money.”
The group’s number one destination is Bali but the Maldives has been a rapidly growing market along with others that benefit from the rising Australian dollar against its US counterpart.
“We like the US dollar at 80 cents, and we’ve seen good numbers for places where the dollar makes it more accessible. Vietnam is pegged to the US dollar so that is growing, so is Dubai. Thailand is basically as well, and Hawaii is also popular.”
Originally published in Financial Review