In-Depth

Hoseasons CEO interview – Richard Carrick

Posted by Juliet Dennis on
Hoseasons CEO interview – Richard Carrick

The short breaks market is being hit hard by the downturn in holiday sales, but mounting evidence suggests UK operators could benefit from the recession.





PricewaterhouseCoopers recently fired a warning shot to companies in the short breaks sector. At the same time, its latest poll showed 17% of holidaymakers plan a domestic holiday this year.


So what is the situation for companies with a foot in both camps?


Hoseasons chief executive Richard Carrick readily admits he has had concerns about how the company will fare in the downturn, having turned the business into a short breaks specialist over the last two years.


“I was concerned the short break would go. More than 50% of what we sell is short breaks,” he says.


Certainly, recent figures from other short-break specailists, particularly in the city hotels sector, suggest trouble ahead.


However, Hoseasons booking figures say otherwise. Sales of its UK products – cottages, holiday lodges and boating trips – are between 15% and 20% up. Contrast this with sales for its European villas, which are suffering because of the strength of the euro, and it is clear the UK business is weathering the storm far better.


Carrick concedes: “We know Europe is struggling; our villa business is down 20% – but it makes up only 5% of what we do.”


He claims the price and flexibility of UK self-catering holidays are giving holidaymakers the chance of a holiday that some thought they would not be able to have this year. Even the “rip off Britain” mentality of 18 months ago has been destroyed by the euro effect.


“The perceptual leap between not going away and having a self-catering self-drive UK holiday is not that great. It’s an economic holiday. In the current climate people do not need much pushing to have a holiday because of the doom and gloom,” he adds. “If there is a trend away from short breaks, we’re bucking it.”


But Hoseasons has not escaped the late bookings trend, with sales peaks tending to be a week after pay day and directly linked to how holidaymakers perceive their own personal finances.


Carrick adds: “The peak season has not really kicked in yet. I think it will be after Easter.”


It is unlikely the operator will top last year’s performance – it doubled its profits in 2008 – but it should improve its profits, says Carrick. “We are on track to better where we ended up but it’s not going to be an easy year. There is worst to come,” says Carrick.


Overall, the company has sold 50% of its product so far for this year compared with 45% this time last year, with 5% less product on offer.


The strong position is not purely attributed to a strong domestic market and agent support for more economical UK holidays.


Carrick says it reflects changes made at the operator over the last two years. The group switched from selling seven and 14-night holidays to three and four-night breaks, replaced its 30-year-old reservation system and invested heavily in the web. Without this, the company would probably have struggled to adapt to changes to booking patterns and demand for more flexible, shorter holidays.


The changes, including a management restructure, mean the company can now sell any duration holidays at any time. “In the past, the system could not take bookings overnight. It only sold one season at one time and it only sold weeks,” says Carrick.


The results of the switch are obvious: about half the operator’s bookings are now made online with a third of web sales coming from agents, compared with 10% last year. Agent web sales are predicted to reach 50% within 18 months.


It is ironic that the recession may have speeded up this process. Thomas Cook is among the agencies that have increased their focus on UK holidays.


For a company that used to rely more heavily on direct bookings, in part because of a lack of agent support, trade sales now make up 40% of Hoseasons’ total business. Carrick adds: “Historically we have not had much choice [but to work more direct]; we have had to find that business from elsewhere.”


But he says there is still work to do. “We have to educate agents. Their perception rules what they sell. A long-haul customer may also go to a cottage for a short break, for example.”


Specialisation


Part of Hoseasons’ strategy to deflect the impact of the recession is to give holidaymakers a reason to come on holiday by establishing itself in niche holiday markets.


For Carrick, this means developing activity holidays, promoting itself to the young family market, alligning itself with a trend for healthier living, and launching new product ranges such as city apartments.


Much of this is about improving the marketing of Hoseasons’ existing holidays in a different way. Or as Carrick puts it: “We have quite consciously sexed up our product. We had a reputable but staid image; we are trying to change that.”


An important plank of this strategy will involve employing a well-known sports personality as an ambassador to promote the operator as one of the largest sellers of UK sports and activity breaks.


It will also work with specialist suppliers to increase the activities it offers, sell more aggressively through sports clubs and associations, and consider providing cycling proficiency tests on its holidays as well as offering sports such as archery, clay pigeon shooting and white-water rafting.


A sport breaks tab will be introduced to its website – hoseasons.co.uk – next month.


“Historically, we promoted accommodation, but you don’t go on holiday because it’s a cottage, you go because you want to go walking, or because it’s by the sea.”


Carrick is also keen for Hoseasons to tap into the young families market, a move which could help boost sales in shoulder seasons when the school-age family market evaporates. “This market does not want to go abroad; parents with babies are paranoid about any change in routine,” he says.


Hoseaons’ decision to branch out into four-star city apartments – it has apartments in 22 UK cities – aims to provide more upmarket product to tap into demand from both groups and families, with separate bedrooms and living space a pull for families used to staying in one hotel room with their children.


It is the first product the operator has launched purely online and is not traditionally sold through the travel trade.


Cross-selling opportunities


With acquisitions unlikley to be pursued in the current climate, Carrick says the operator is looking at other ways to expand its reach in the market place.


It is to trial links to the websites of tour operators with similar customer bases to capitalise on potential cross-selling opportunities.


The idea is that operators can provide each other with the opportunity to convert more bookings by tapping into each other’s databases, without losing customers.


He says: “Most travel companies are not short of demand but are very poor at converting that demand. The opportunity to sell other products is phenomenal but you have to be careful you don’t stretch the brand too far. We should be capable of selling other holidays.”


He adds: “If you have an open mind about the opportunity then I think there is enormous scope.”


It also offers a way for Hoseasons to offer new products without moving into a new market itself, says Carrick.


He adds “It’s more cost effective to try new ideas online before going out into the market with a view to acquiring new companies.” 


Carrick says the company will “suck it and see” before making firm commitments to partnerships with other tour operators. Hoseasons gets around 12 million visits to its website every year and has a conversion rate of 1.5%.

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