A string of investment deals involving UK-based online travel firms is a significant endorsement of the strength of the sector, according to the boss of the latest firm to secure a new backer.
Wimbledon-based ski and cruise specialist retailer Iglu secured £19 million of new funding from Growth Capital Partners (GCP) in exchange for a significant minority stake to fund expansion overseas.
The agreement comes on the back of other recent deals including dnata’s purchase of Travel Republic and investment by Equistone Partners Europe in Audley Travel.
Richard Downs, chief executive and founder of Iglu, said: “They are all a great endorsement of the travel sector generally and for the online market.
“What investors are seeing in the travel space is a two speed economy with the high street struggling where if you are keeping your head above water you are doing well, whereas in the online space it’s a different world.
“It’s offline versus online and they [investors] can see that being played out in travel. Travel Republic was a nice deal to come on the back of.”
Downs said discussions with GCP started in January just after the Travel Republic deal was announced.
The deal saw previous backers Matrix exit the company as well as a small number of private investors.
Iglu was established in 1998 and initially focused on the ski market, but it has successfully moved into the fast-growing cruise sector, the market in which it intends to develop internationally.
Downs said Iglu’s success was down to honing its online retail skills as a pioneer in the ski market.
“We were probably one of the first players in the ski market that has been relatively flat in terms of passengers and we have gained a market leadership position.
“We have a lot of scars on our back and have brought that learning into the cruise sector.
Downs said the key to Iglu’s philosophy was understanding that in specialist sectors like cruise and ski the same principles apply off or on line.
“The customer expectation is the same; that I would like to speak to someone who understands the product and can work on my behalf really hard to get me the dream holiday.
“It’s a back to basics approach, having focused people that understand our suppliers’ needs and the product and having people that can deliver for the customer.
“It’s horses for courses but we are selling a specialist product which is a non-commodity with lots of differentiation.
“Explaining to people the difference between each cruise, and brand, and the itineraries on top is something that is more effectively done person-to-person than online.”
Downs added that while the strength of Iglu’s technological knowhow was important in attracting the new investment, it was not the be all and end all.
“We would not want to rely on technology alone – that would be a mistake because our strength has been in knowledge and service.
“Anyone who thinks you can get a quick win on a specialist product with technology would be mistaken. People want that reassurance and knowledge which you cannot get booking online.”
While Iglu has been eyeing international expansion for some time, although detailed plans have yet to be agreed.
But Germany, Europe’s second largest cruise market that is tipped to overtake the UK which last year saw 1.7 million people take a holiday on a cruise ship, is likely to be the first market it enters.