Democratising luxury travel: Behind the successful business model of holiday site Secret Escapes

Francesca Washtell
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Secret Escapes offers customers up to 70 per cent off hotel stays (Source: Secret Escapes)

With 19.5m active members worldwide, at this point it’s safe to say Secret Escapes is living up to its early tagline that it’s “the worst-kept secret in luxury travel”.

The company has flourished since launching in 2011 as an online-only, deals-based travel agent offering flash deals with up to 70 per cent off luxury hotel stays. It has sold more than 6m room nights and now operates in 21 countries.

But there is more to Secret Escapes than spa breaks, fluffy towels and plush countryside hotels. According to its co-founder and chief executive Alex Saint, there’s an egalitarian element behind it all too, in bringing luxury travel to the masses.

“To my mind making luxury travel accessible to a vast swathe of people across the country, that kind of democratisation of luxury travel, is something that we’re really excited about as a concept and really proud of,” Saint says.

“I can think of many people I interact with who have booked Secret Escapes trips who you wouldn’t necessarily think of as luxury travellers but they have that opportunity now.”

Read more: Secret Escapes gets $60m funding from Google

This is all well and good, but doesn’t opening up the exclusivity of luxury travel to the masses undermine the whole idea of luxury?

Saint is adamant that it doesn’t, although he does chuckle that it’s a “good philosophical question”.

Regardless of the theory behind Secret Escapes, the secret to its success has been simple: a savvy business model that solves an enduring efficiency problem in the travel industry, namely that top hotels always need to top up their occupancy rates.

“Average occupancy of a hotel globally is somewhere in the region of 70 per cent. We may well add 20 per cent to their occupancy at a given time so we are having an influence on the demography of their user base… but it’s not an overwhelming influence,” Saint says.

“We’re not changing the nature of the hotel or in any way changing the experience I don’t think and certainly the hoteliers are in no way dropping their standards in order to be able to service the kind of deals we’re offering.”

Secret Escapes offers city breaks, such as to Paris, where diners can eat at Raffles restaurant (Source: Secret Escapes)

Perhaps the biggest success is how it has managed to pull this off so well, using its memorable TV ads, as well as a slick site and app.

In 2015, it turned over £175m, up from £111m in 2014.

Last year the cut-price holiday site expanded its operations into another four European countries, entering into France, Slovakia, Hungary and the Czech Republic, adding to its existing user base in countries including the US, Hong Kong, Malaysia and Germany.

The next phase of growth will be to push further what is known in the industry as “dynamic packaging”, which means offering users a range of flight options during the booking process.

Read more: Britons' top holiday destination for this summer: The UK?

Saint says this has led to more people putting a booking through. At the moment it’s available to “probably less than 10 per cent” of Secret Escapes’ UK packaged business, but will probably represent 75 per cent or more of the packaged business in two years’ time.

Secret Escapes also operates in Hong Kong (Source: Secret Escapes)

There has been another bonus to adding more dynamic packaging. “The other thing which was a bit of a surprise to us which seems to be the case is that when we are offering flights it seems to be encouraging people to actually stay for longer,” Saint says.

“If I’m being 100 per cent honest I don’t really understand why that is yet but people are making longer bookings when they’re including flights.”

The company is also reaping the benefits of a wider boom in leisure spending, as customers wean themselves off buying “things” by spending big on experiences and “doing” things.

While the growth is tech-focused and internal for now, in the longer run there may be a listing in the pipeline.

Saint says he is “definitely” thinking about an initial public offering and would consider New York but most likely London for the task. This would in part be to give early investors more liquidity, but another benefit would be the easy access for funds for M&A – the company snapped up travel groups Justbook and Travelist for undisclosed fees in 2014.

“At some point in the next three to four years I think we will seriously consider it. It’s not on the short-term radar, but it’s very much part of my thinking.”

For now, though, Saint is looking ahead to his Barbados holiday in October. Even in the travel industry, there’s only so much you can do without an escape.

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