City Insider: What Goldtrail and Dorset beach huts can tell us

City Insider - A City perspective on the travel industry from FT journalist David Stevenson

Getting the social component and the kids’ component right is crucial. Goldtrail may not have understood that, says David Stevenson

It’s unlikely that you’ll see anyone else link the fallen travel firm Goldtrail with beach huts in Mudeford, Dorset, but this week I’m going to try.

My thoughts on beach huts are based on immediate experience – only this weekend my family attempted to survive for a whole three days in a small chalet on the south coast, without killing each other or freezing to death in those brisk Solent winds.

And survive we did. In fact it was great fun, particularly for the kids.

The reason why is neglected by much of the travel industry. Particular holiday experiences attract particular groups of people – and the more niche the idea, the more focused the customer.

In this case it was the moderately well-off family customer who knew that this would be a largely ‘chav-free’ experience with lots of like-minded people huddled together in the freezing evening winds.

Crucially, the kids simply buggered off and did their thing with other kids of the same age and inclination. In fact we hardly saw the charming little blighters for duration of the holiday – a result in my book.

There are countless variations on the same theme, many strongly orientated towards cheaper holidays with no poncey southern middle class types in sight. But even those holidays share the same family ethos.

There’s no magic formula to this and a great many very different companies offer their own solutions. Disney for instance is radically increasing its UK footprint for cruises because it has got the family experience down to a T.

Ditto Holidaybreak and its super-successful PGL division, which is fast moving its base business model away from ‘parents get lost’ to one where mum and dad also spend a week getting wet and exhausted.

Over the next few months I’ll be looking at both in greater detail. On a wider level the success of diverse outfits such as Saga (for older customers) and Sandals (for younger customers) also testifies to the desire to socialise and meet like-minded people on holiday.

That said, it is crucial that we applaud the successful mass market tour operators when they do a good job. The smart packages have been built around proper infrastructure that:

> Aligns supply with particular groups of people, letting you socialise where appropriate 
> Looks after the children in a professional and thought-through way

Infrastructure for children and families needs to be considered as carefully as infrastructure for air travel and accommodation. Great kids clubs make great holidays. Crap ones spoil holidays.

And this is where Goldtrail comes in. I have a few friends who have had the experience, and the best they could say is that Goldtrail was OK but ‘cheap’.

Very few of the other adjectives used in this column came up, and certainly nothing about kids having fun. Clearly as a business model it wasn’t extraordinarily successful either, and typifies why the focus on low cost won’t work moving on.

Economists talk about something called the Pareto principle, which suggests that between 80% and 90% of your business profit is made from between 10% and 20% of your customers.

Travel is no different. As the sector gets better at analysing and segmenting the market, travel operators and agents will realise that the most successful and profitable clients are those willing to spend the most money for the best experience.

In my opinion that is likely to mean a great kids, experience, plus the chance to meet some moderately interesting people who you might try and keep in contact with.

This doesn’t have to be a simple function of wealth – my hunch is that slightly less wealthy middle or lower-income consumers could be even more profitable than wealthier home counties types who will be superserved by luxury travel outfits.

The trick will be to build logistics, people and IT infrastructures that allow mass scale but personal service, delivered around compelling group dynamics and a superb children’s holiday experience.

Remember that happy parents make happy customers.

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