Qantas, Expedia and Others Eye This Australian Luxury Online Travel Agency: Here's Why

Since its launch six years ago, Australia’s Luxury Escapes has defied the notion that well-heeled clients will not buy holidays off the shelves online because these customers require a high level of personalization and personal touch.

In the time, however, it has built a database of more than 3.2 million travelers, according to its CEO Cameron Holland. Half of its customers are repeaters, with some having done more than 10 trips with the company.

The Melbourne-based company’s revenue is around $239 million (A$350 million) this year, from serving more than 500,000 travelers with 260,000 trips sold, Holland told Skift in an interview. This generates more than two million room nights for hotel partners.

All this is also generating interest from suitors to acquire the fast-growing company, with Qantas Airways, Webjet and Expedia Group among those speculated to be interested.

Australia's Financial Review recently reported that Qantas had tapped investment bank Citi for due diligence and financing towards making an offer for a full or partial stake of Luxury Escapes.

This came after its earlier report that Luxury Escapes’ parent company itself, Lux Group, was testing the waters for a sale, and potential suitors included Expedia and Webjet. Lux Group owns other e-commerce businesses including Cudo and Scoopon, which offer lifestyle deals including travel, shopping, dining and wellness.

The airline couldn’t be reached for comment at press time. Holland would neither confirm nor deny that talks are going on with Qantas.

“We’re a rapidly growing business, and we recognize that as a privately-held company we are subject to a lot of interest and speculation in the market from time to time,” said Holland.

“We do regularly assess the market and consider strategic options but we are focused on growing our leadership position and on doing right by our shareholders and customers.”

Qantas seems the most plausible buyer, as it is already in a frequent traveler partnership with Luxury Escapes that allows consumers to earn Qantas points when buying from Luxury Escapes or redeem their points on Luxury Escapes.

As well, Qantas, whose profit dropped 6.5 percent last year to $891 million — blamed on higher fuel cost and weakening travel demand — has said it aims to diversify earnings.

Rapidly Growing

Luxury Escapes is targeting a $500 million revenue in 2020 as it keeps expanding in international markets. After entering Asia with offices in Singapore and India in 2017, expansion in China and the U.S. are next.

In China, Luxury Escapes has just inked a joint venture with Zanadu, China’s premium travel agency, to launch the Luxury Escapes website in Mandarin, which will be called “Yidu.” Zanadu owns 51 percent of the joint venture to target upmarket Chinese travelers.

In the U.S. it has a small team in San Francisco. “We’re only at the beginning our journey in tackling the U.S. market, with 200,000 members in our database now,” said Holland.

Luxury Escapes is now sold in 29 countries in the world. Overall, international markets now comprise 40 percent of bookers, and the rest are Australians.

So how does Luxury Escapes change the way rich holiday makers book travel?

Unlike online travel agencies, its main focus is around curating three, five, seven or 10-night stays at classy hotels and campaigning them online to its 3.2 million traveler database for a period of time, usually two weeks, upon which the hotels won’t be featured again for six to 12 months.

Instead of selling just rooms, it throws in VIP and other perks such as gourmet dining, unlimited drinks, lounge access, spa, cooking class, return transfers, et cetera, depending on the hotel.

“Because these short and sharp campaigns generate a high volume of roomnights for the hotels, we are able to get fantastic deals with inclusions from hotels. So everybody wins,” said Holland.

Giving an example of how fantastic the deals could be, he said Hawaii’s newest luxury hotel, Halepuna Waikiki by Halekulani, currently featured on Luxury Escapes, is priced at A$2,999 ($2,045) per room for a six-night stay. “The same hotel on Booking.com or another OTA will cost on average A$5,500 ($3,750) for six nights — with less inclusions,” said Holland.

“We are usually 40 to 45 percent cheaper, with more inclusions.”

At the time of writing, other campaigns include plush properties such as Fairmont Maldives, Jumeirah Dubai, Lord Howe Island New South Wales, and Hotel Wailea Maui, a member of Relais & Chateaux. At any one time, Luxury Escapes features 80 to 100 deals, and add 30 to 40 new ones each week.

It also now sells homes and villas, small group tours of no more than 16 people, ocean cruising, in-destination experiences and recently added flights. Luxury hotels however remains its focus.

“The biggest thing we did is to make the buying process for luxury travelers clean, clear, simple with cutting edge digital technology. We cut through the noise by curating 80 to 100 luxury deals on our site, whereas OTAs feature thousands, which is fine for them as they target the bulk [of travelers],” said Holland.

“We target the mass affluent — people who would like to experience the VIP treatment without breaking the bank.”