It's hard to miss the advertisements. Shots of tropical islands and sun lounges beam out from newspaper pages and blink on computer screens selling holidays at five-star hotels all for bargain prices.Â
It's a new travel model and Australians can't get enough of it.Â
"I think everybody loves a bargain, everyone loves getting value," says Adam Schwab, founder and chief executive of Lux Group, of which the key business is Luxury Escapes.Â
Luxury Escapes turned over $200 million last year selling travel deals online, leveraging a Facebook community of more than 800,000 members.Â
Opening up the five star market
"The original business was more activities and experiences," Schwab says. "Travel is just growing at a faster size, it has been our evolution business. Our location is one really big point, Australia is a very wealthy country which allows a lot of Australians to travel very well. Luxury Escapes opens up the five star market to people who wouldn't usually go there."
Schwab claims the Luxury Escapes model benefits travel operators as well as consumers.Â
"We generate extra profitability," he says. "Inherently you might think that's strange but we will sell rooms that would otherwise be unfilled. We will get Australian customers, who are generally the best customers in the world on-site and they tend to have massages, eat at the restaurant, drink at the bar and stay longer. Its a classic win, win, win. The customer wins by getting the world's best holiday, the hotel wins by more profitability and we get to sit in the middle."Â Â
Luxury Escapes uses Salesforce to drive its sales, service and marketing, automating and speeding up the sales cycle so deals with vendors are signed faster and the business is able to market 15 to 20 offers each week
Schwab manages a team of 400 people across the broader Lux Group, which turns over $330 million a year, but he believes there is lots of room for further growth.Â
"We have 300,000 a year who travel with Luxury Escapes right now but there are a lot more that don't know about us or don't like buying online or any number of reasons they haven't engaged," he says.
Luxury Escapes is continuing to develop new products, including its recently launched tours portal with small group tours "which are really high end" and growing its villas vertical to target the family travel market.Â
"We have more product coming online for the US including Hawaii, where we are traditionally strong," he says. "We have had a business in NZ growing nicely and business in India last year and about to launch in Singapore as well."Â Â
The customer wins by getting the world's best holiday, the hotel wins by more profitability and we get to sit in the middle.
Adam Schwab
'Everybody wants a little bit of luxury'
Queensland-based Ignite Travel Group also targets the luxury market through brands such as GetLuxe.Â
Founded by Randall Deer in 2005 the travel business turns over $100 million a year and employs more than 150Â staff.Â
Deer started the business as a travel rewards venture but then had to reinvent the concept in 2009 when the global financial crisis hit. Â
"We kept our reward business going but we shifted our focus to not trying to convince marketing directors of travel promotions but to create a customer niche and go straight to the couch," Deer says."There was nobody doing the holiday in a box. Everyone had moved to loss leaders like Hawaii for three nights with flights but the reality is nobody goes to Hawaii for three nights. We saw the opportunity to sell the holiday people want to buy, not the one they are being sold."
Deer says travel shouldn't be driven just by price. Â
"In that luxury space you have a more discerning customer," he says. "We wanted to create a luxury package that left nothing to chance. It's the room that middle Australia wants, it's us. People value their vacation or holiday and it's the thing we all look forward to every day. Everybody wants a little bit of luxury, they want luxury for less if they can get it. By bundling we were able to secure way better deals than everyone else because it was opaque."
Ignite Travel's model caught the attention of Flight Centre, which bought a 49 per cent stake in the business in 2016 for an undisclosed sum. Â
"We didn't want to sell," says Deer. "We were courted for three years."
Deer says he doesn't like to call the deal a sale, instead viewing it as "an unlocking of Flight Centre's distribution arm".
"Flight Centre is the best at what they do, but that is the best of a traditional breed," he says. "I wanted to take an army like that and arm them with a product they didn't have. I wanted to partner with them to put that brand on the shelf." Â
​Deer's advice to other entrepreneurs is not to assume even big industries are operating as well as they can be.
"Travel is a big industry," he says. "We still managed to carve out an old-fashioned package model and make it into something different."
Almost too good to be true
David Beirman, senior lecturer in tourism at Sydney University of Technology, says a relatively buoyant Australian dollar has made luxury travel exceedingly affordable in certain parts of the world, especially Indonesia, Vietnam, Thailand, Malaysia, Philippines and the Pacific Islands.
"This has enabled many Australian to indulge in the champagne lifestyle on the proverbial beer budget," he says. "On a regular basis we see large ads for luxury package tourism and the deals sounds almost too good to be true. Some of these are introducing a new property or resort or engaging in a promotion to fill empty rooms during a seasonal slump."
Beirman says he would be surprised if these deals are not snapped up by consumers.
"There are few down sides to this sort of promotion except for the expectation that it may create in the consumer's mind that cheap deals on luxury products are to be expected."
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