Directline Holidays to expand into new markets

Online travel agency and tour operator Directline Holidays is to expand into the domestic, luxury and long-haul markets for the first time, new chief executive Maria Whiteman has revealed.

The company already has separate flight-only, hotels, cruise, ski and city break websites in addition to its main holiday site. It is in the process of adding content and functionality, including new layouts and price tools to change mark-ups on products.

The new areas will be served by dedicated websites and offer a mix of tour operator and dynamically packaged product.

Whiteman, drafted in by co-founders Tony Bradley and Matthew Flint three months ago, said the new products will ensure improved year-round margins. She said: “At the moment we have a real peak in the summer because we sell the Mediterranean. The areas we are trying to grow will help fill the troughs from October to April.”

She added: “We see a real market in long-haul holidays. The first stage is getting more suppliers on our main site. We have talked to Virgin Holidays and Kuoni to put new deals in place and we are talking to Gold Medal and the Holiday Team for flights. The only ones we haven’t started discussions with yet are the global distribution systems.”

The long-haul site should be live by early November, while the luxury and UK sites will not be live until next year. The luxury site may also have to have a different brand and is likely to take bookings through a call centre rather than online.

Whiteman admitted: “It may be that Directline doesn’t stretch as far as luxury and it could be we have a completely different brand for luxury holidays. We will look to launch it next year and we are debating whether to outsource the fulfilment of bookings.”

Meanwhile, discussions are already progressing with domestic operators such as Hoseasons, English Country Cottages and Superbreak to sell their products.

Whiteman said the company is focused on margins rather than volumes. “We are making decent margins but in terms of trying to compete on volumes, we want to improve conversions by offering new product,” she added.

The company also hopes to start contracting accommodation in core destinations longer term. “We will look at our core destinations to see if it makes more sense to buy direct or go through third-party suppliers,” said Whiteman.

In preparation for further expansion, the company has secured extra space in its existing building to double the amount currently available. The group is offering permanent contracts to staff on temporary contracts.

The company, an Advantage member, predicts its turnover this year will be £60 million. The business has grown by 60% year on year, largely as a result of traffic through natural searches online, rather than as a result of pay-per-click (PPC) advertising, according to Whiteman.

About 85% of business coming to the site is from natural searches, and the remaining 15% from PPC. Its sites receive about 2.5 million visits a month. “The biggest opportunity is sustaining that traffic,” she said. Rivals received more traffic from paid searches, much of which has been hit because of marketing cutbacks, claimed Whiteman.

More information:

*Directline Holidays reports rise in bookings on pay day (Travel Weekly, August 13 2009)

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