Profile: How Lowcost goes to market fast – and why it matters

After taking Rising Brand of the Year at the Travolution Awards, Lowcost Holiday Group is going from strength to strength. Lee Hayhurst finds out what is behind its success

After taking Rising Brand of the Year at the Travolution Awards 2010, Lowcost Travel Group is going from strength to strength. Lee Hayhurst finds out what is behind its success

Lowcost Travel Group chief executive Paul Evans

Anyone of a certain age will understand what it means to “do a Victor Kiam”.

He was the US entrepreneur and 1980s spokesman for Remington electric shavers who famously declared “I liked the shaver so much I bought the company”.

Something along those lines happened in travel technology: the Lowcost Travel Group was so impressed with its new technology provider Intuitive it took a stake in it.

According to Patricia Rossello-Evans, Lowcost commercial director, the company’s ‘Kiam moment’ had a lot to do with speed. While speed of searching for and returning results is a given in today’s fast-paced online travel industry, Lowcost believes it is also its ability to contract and control its marketing channels quickly that sets it apart.

Rossello-Evans said: “We are good at the way we buy and the speed we can get products to market.”

Intuitive’s iVector system is not exclusive to Lowcost – it is also used by Youtravel.com, Getabed.co.uk and Travelbubble.com, among others – but Lowcost enjoys all the advantages of being its lead development partner.

In terms of what iVector offers over rivals using other systems, it is speed to market that Lowcost picks out as the key factor. And this focus on speed starts at the coalface of travel tour operating, from the buyers actually doing the deals with the hoteliers in resort. Buyers are equipped with laptops so any new deals can be uploaded immediately and be on sale, literally, in seconds.

The product and marketing teams working as a unit in the UK can intervene before any deal goes to market to tweak margins on its various distribution channels, but in theory it can go live direct from the buyers’ laptop.

And hoteliers have also been provided with an extranet so they too can manipulate price, or add a pre-selected range of special offers such as a tactical discount or free child places, all the while monitoring how this changes their ranking on Lowcost’s website.

Rossello-Evans said: “The whole contracting system is very slick. We encourage the hoteliers to go on the extranet, to reduce their rate and to watch the Lowcost website to see how that affects their price compared to other hotels.

Buyers in resort have their own laptops that link into the system. Within five minutes of the buyer doing the deal, it can be on sale

“Buyers in resort have their own laptops that link into the system and they are able to take a digital signature and that contract goes on our system. If there is no human intervention, within five minutes of the buyer doing the deal, it’s on sale.”

Building the system from the contract up means Lowcost and its suppliers can be incredibly sensitive to changes in the market using price and mixing up the marketing channels to maximise returns.

A constant buying and marketing cycle allows Lowcost to obtain and scrutinise relevant data such as competitor prices, conversion rates and popular search terms to assess how deals are being received in the market and to alert hoteliers to make necessary changes.

This highlights any errors that may have been made loading data, and can see prices changing up to two or three times a day as suppliers and Lowcost react to market trends.

Rosello-Evans said: “It’s not like the old days when operators used to send pieces of paper for hoteliers to sign and then send a contract the following year to agree the renewal. It’s very fluid because it’s not constrained.”

The latest test of this flexibility came this year when the uprisings in Egypt and Tunisia left operators and agents that have commitments in these countries with a real headache. Not so Lowcost.

“In the dynamic packaging arena, we do not take commitments so we were able to move very quickly to switch to Majorca and the Canaries,” said Rossello-Evans.

“It was sad to lose the traffic to Sharm el-Sheikh because it was selling well, but we reacted that weekend and we just moved the expenditure elsewhere.”

Since the revolution in Egypt, Lowcost has been able to promote the destination again, due to the extremely low prices from hoteliers and ground-handlers, and the Russian airport bombing that hit one of its other main source markets.

Lowcost says the iVector system has the potential to scale up quickly, hence its moves into European markets; Italy was the latest, joining Germany, Austria, Sweden, Switzerland, Spain and Ireland.

It also allows Lowcost to take on potentially huge strategic partnerships like the one it agreed with easyJet for its easyJet Holidays venture. This is unlikely to be the last such deal.

The new venture, backed by a deal with accommodation wholesaler GTA, has been ‘a breath of fresh air’ for hoteliers, according to Lowcost.

This is because pricing, in contrast to traditional dynamic packaging, is opaque as the accommodation is pre-packaged with the air seat. Hoteliers have been “very supportive” and more likely to give better rates as a result.

Lowcost’s easyJet Holidays team is constantly monitoring what people are searching for on Google and with the flexibility of the carrier’s flying programme can promote product to match this ever-changing demand. The venture got off to a good start, launching with Teletext Holidays in March. Lowcost says it is achieving higher average selling prices than other parts of the business, and there are plans to take it into Europe.

Rossello-Evans said that after a period of rapid growth by acquisition – since 2009 Lowcost added Resorthoppa and Ideal Cruising to its portfolio – the company was entering a period of consolidation in a difficult trading environment.

“We have been buying businesses and it’s about consolidating what we have got and investing in the core. We are about 50% up year on year and the return on investment is good.

“This month our return on investment and marketing has been one of the highest we have seen; however, it’s all about the effort you put in. We have managed to spread our risk in terms of the product areas and resort and marketing channels, and because we have such a flexible system, if something happens in one channel or area we can react quickly and move things around.”

Despite its name, and possibly reputation, Lowcost offers a range of accommodation. “Two of our best suppliers are five-star hotels in the Canaries. They are amazing properties and offer great value,” Rosello-Evans said.

“What we offer is good value. When you come to us, you know you are going to get a deal. On our site, you can find anything from five-star to three-star, all-inclusive to self-catering, from a weekend in Barcelona to 14 nights in the Maldives.

“We know we can’t be good at doing everything on our own, that’s why we have done deals with airlines and other bed suppliers.”

With just seven of its own contractors actually on the road, Lowcost is at the heart of a dynamic packaging sector that has become hugely inter-reliant, with everyone selling each other’s product.

So standing out when it comes to marketing and presenting that product to the consumer will increasingly determine who wins, and Lowcost believes this is where it is up to speed. To assist in this, Lowcost is investing in both its content and social media teams. It hopes to add 200 videos to the 70 currently on its YouTube channel this year to showcase key product, and is using students to write copy for its website including hotel and resort guides.

Catherine Power, its head of SEO, said YouTube and Facebook’s rise to rival Google as a search tool make them powerful channels that cannot be ignored. “From an SEO perspective, they are valuable but hoteliers tell us it helps consumers make a decision. Hoteliers are happy to contribute towards video,” she said.

Fact file: Lowcost Travel Group

 > Founded in 2004 by Paul Evans, former managing director of First Choice Holidays and purchasing director of Airtours Holidays

 > The group reported an increase in isales to £240 million in 2009-10

 > The group is backed by Albion Ventures, a leading independent venture capital investor, which manages over £200 million of investment across a wide range of businesses

 > The Lowcost Travel Group has teamed up with easyJet to supply product to the easyJet Holidays brand, which is tipped to become the third-biggest UK package holiday player

 > Having been based in East Grinstead since its launch, the company moved all of its businesses this year into Gatwick’s Beehive building

 > The group says it is on track to achieve its target of being a £1 billion business

The group also consists of:

 > Lowcostholidays.com: the consumer-facing website
 > Lowcostbeds.com: the trade accommodation supplier
 > Resorthoppa.com: the resort transfers company founded in 2004 and brought into the group in 2009
 > Ideal Cruising: the specialist website brought into the group in 2010