STA group managing director interview – John Constable

High-street agency chain STA Travel has reported a hike in customers to its shops this year thanks to the recession.

According to John Constable, who has recently taken on the new role of STA Travel group managing director, the 44-strong chain has even been forced to delay some shop refits in its brand roll-out programme based on increased footfall.

He said: “In this climate we have seen a big increase in customers to stores in terms of footfall, which has delayed our retail roll out.

“There are more people shopping around and they want to speak to someone. That’s restricted us from saying we are going to close a shop or do a refit because it would be wrong thing to do at this time.”

The unusually upbeat report from a high-street agency chain is linked to its customer base. Not only does it have a core base of students, who are either unaffected by the recession, have deferred university entry or cannot find jobs and are choosing to travel instead, it is also attracting business from older professionals who have been made redundant or have time off to travel.

The biggest growth is coming from an older market impacted by the recession, according to Constable.

He added: “Because we have repositioned our brand what we have seen this year is not only students who are getting deferred entries [for university] but customers made redundant or who are taking three months off.”

The company has not been immune to the recession, however, with short breaks particularly suffering.

Constable said: “I’d be lying if I didn’t say times are not challenging because they are. We are not seeing those discretionary trips like the weekend breaks to New York. That element has gone down but growth in high revenue areas has definitely outweighed that.”

Prices have changed significantly, with lead-in prices for Australia shifting from £698 last year to £469 this year. “Prices have chome down because we are all focused on volume right now. We recognise the need to get great prices for a market that is growing and we are talking to the airlines constantly.”

The UK

The company’s new positioning in the UK means the chain hopes to appeal to a broader base of repeat customers, rather than losing student clients once they start work.

Constable said: “Students are at the core of what we do and we will always provide for them. The gap year market is really big for us: it’s an area of the market we feel we own.

“But research told us that on top of students, we were restricting our customer base by saying ‘what age are you’ rather than saying we are here to provide travel relevant for you to experience the world.”

He added: “Our focus right now is how do we bed in our new customer groupings. In the UK we’ve gone through two years of change to get our business into shape to be fit for the future. Our staff and service are very consistent and that helps us when times are tough.

This doesn’t mean the company will move into selling large volumes of holidays, such as cruises sold by other high-street agencies or try to compete with the multiples, said Constable.

But it does mean it will work harder on holding on to customers over a longer period of time. “We want to get to the point where there is no point graduating away from STA,” he said. “We want to own our own content so our database of accommodation is for our customers, from hostels to small hotels. We want to drive you to something relevant in our database rather than to the big brands.”

Perceptions of STA Travel are largely based on the company’s focus on student-led promotions, admitted Constable. This has now shifted to more destination-based promotions, using inspirational images.

International markets

STA Travel hopes to improve profitability in its international markets following an internal restructure.

This year to date, 29% of the group’s sales have come from the UK, while Australia and New Zealand have made up 26% of sales, Europe 24%, the US 13% and other countries 9%.

The promotion of John Constable to group managing director, with responsibility across Asia Pacific, northern Europe and Africa, as well as the UK, follows three years of UK growth.

Profitability has triped in the three years under Constable, with last year a record year in the UK.

Constable said: “It’s about how we can drive what we have achieved in the UK across the global business, drive better synergies and make our customers’ experiences common – previously they have been miles apart.”

This is not a “one size fits all” approach, according to Constable, who insisted: “We recognise there are local needs but we want to drive some consistency. What we have seen in different markets are different levels of productivity growth.”

Sweden and the US have proved the toughest markets. “Sales have declined in Sweden and the US is having a challenging time,” he said.

But a “fair chunk” of sales lost out of South Africa to the UK as a result of new visa restrictions have been recouped following a campaign promoting the UK as a value destination, he added.

Expansion plans

As with most businesses, STA Travel is always on the lookout for growth opportunities, said Constable. “We are always considering other markets and opportunities that come our way,” he said.

In terms of new markets to operate in, the Republic of Irealnd is continually reviewed, according to Constable, while new branches are also opening across STA’s different markets.

Four new branches have opened in South Africa this year, representing a 25% growth, while further sites are being sought to fill gaps in the UK, Sweden and New Zealand.

Constable added: “We do have gaps in the UK but we don’t need a store on every street corner. People [are willing to] drive 40 minutes to get to our stores.”

Already new-look UK shops are trialling new meet and greet services and have new services, such as a wall for customers to post up comments in shops and in-store internet terminals.

The web

Constable stressed STA Travel would never be a large high-street agency network in the UK; as a result the web plays a pivotal role in the group’s distribution strategy.

“We firmly believe our website plays a really big part in our multi-channel strategy. Around 95% of our customers touch our site prior to coming to us for research or bookings and 12% of our bookings are made online globally,” he said.

However, the group has seen a bigger growth in the number of customers booking an appointment online to see an instore consultant than in online bookings, he admitted. “This says we don’t need a store on every high-street corner. We need to have one major strategic store to drive people to and it needs to be profitable.”

He added: “Where I see the web adding value is as a tool to inform our customers about our offering.”

The recent roll-out of a social networking forum, called, is already working well in terms of allowing customers to communicate with each other and boosting enquiry levels.

“The Travelbuzz connects people. What that’s done for the business is phenomenal in terms of increasing our voice online and volumes of people talking about STA and allowing people to speak positively and negatively about us but giving it a place to be authentically presented. It does also equate to an increase in enquiry levels.”

According to Constable, there has been significant growth in volumes to the website in the last month. “The challenge is how we make the most of this traffic. We recognise not everyone will book online.”

This month, the company is launching live web chats, which will enable customers to communicate online with a call centre agent to get more information when they are browsing the site.

“We are launching a pro-active live chat service because we recognise we have grown web traffic year on year and peole are hovering around the site. It allows customers to engage with a consultant while they are browsing, when they want to talk to us. It’s less of a hard sell and more service-orientated. We are spending a lot of time understanding our customers and firmly believe it is about customers being at the centre.”

Constable is also keen to increase sales conversions from emails sent out to customers. Currently around 12% of all emails result in sales, but he would like to see this hit 15%. He added: “It’s not the highest of revenue channels and we have found it hard to get conversions but we now have a dedicated email team and are trying to give people more informed emails.”

John’s career to date:

* May 2009 to date: STA Travel group managing director

* November 2008-April 2009: STA Travel managing director for northern Europe and Africa

* February 2006-November 2008: STA Travel managing director UK

* January 2003-January 2006: UK managing director longhaul, TUI UK – Specialist Holidays

* 2001-2003: Austravel managing director

More information:

* STA Travel

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