CityAM’s Tom Welsh asks Richard Downs how this online travel agent plans to take on the world:
The internet has turned the travel industry on its head, giving ordinary people unprecedented opportunities to create bespoke holidays that were once the preserve of the rich. But it’s not just online travel warehouses like Airbnb and Expedia that have pushed the traditional agent off our high streets. The internet has enabled specialist providers to thrive too.
“The high street was a mile wide but an inch deep. It was structurally flawed,” says Richard Downs, chief executive of Iglu.com, which caters to the cruise, skiing and Lapland holiday markets. “It offered limited choice delivered through a shop network, largely through brochures that were out of date and by people who didn’t understand specialist travel products. We, on the other hand, are an inch wide but a mile deep.”
Downs founded Iglu.com in 1998 as his final year project while studying for an MBA at London Business School. Having spent a few years in the City at PwC and Salomon Brothers, he got the entrepreneurial urge but didn’t know where to apply it.
As an avid skiier, and lucky enough to be starting up when the internet was just going mainstream, he saw an opportunity in the skiing market where the high street agents were letting down consumers. “As a skiier, you were seen as a problem. The agents didn’t know enough about the product to help you.”
Iglu, however, would use the efficiency of the internet to bring together the whole skiing market, giving consumers radically more choice by putting all the operators in one place, with much more information, comparative pricing, and a sales team behind the website that actually knew what it was talking about.
Seventeen years later, Iglu.com has sales in excess of £200m a year and is now the UK’s largest independent agent of both ski holidays and cruises, following the acquisition of Planet Cruise in 2013. It operates through four specialist websites, Iglucruise.com, Planetcruise.com Igluski.com, and Iglulapland.com (which retails Lapland holidays).
There are similarities between skiing and cruises, says Downs. “As the cruise market grows [the industry reported a 9 per cent rise in UK and Ireland passenger numbers in 2015], knowing which cruise to go on is vital knowledge for a customer. There are cruises where everyone is 80, and cruises where everyone is 40. You’re living on board, so the right choices make or break a holiday.”
As with skiing, Iglucruise.com allows consumers to search, compare and book cruises, while providing useful insight on what different cruise lines and even ships have to offer. The Fred Olsen Balmoral is known as a traditional ship, for example, serving fine wines with dinner and entertaining guests with cabaret and themed nights afterwards. The high-octane 4,650 capacity Ovation of the Seas, meanwhile, includes an on-board skydiving experience. With cruises becoming increasingly popular among younger customers and families, Iglu believes that providing such comparable information is a critical competitive advantage, while also enabling customers to book more tailor-made holidays.
But Downs doesn’t see the industry sitting still. “The digitalisation will continue with gay abandon,” he says, with customers increasingly booking via mobile or tablet, and providers’ systems needing to be device agnostic.
And the money required to keep Iglu growing in a marketplace in which the use of data (both big and small) can make offerings even more relevant, provide more insight and more value, and can help consumers better visualise their holidays was one of the reasons why Downs accepted investment from Lloyds Banking Group’s private equity arm LDC in June 2015 for a significant minority shareholding. The likes of Amazon, says Downs, with their advanced data techniques, are the “ultimate living organisations. And we can live off the same innovations to better understand our customers, and serve our suppliers… The pace of growth is going to get quicker but it needs a lot more investment.”
Aside from digitalisation, Downs’s other focus for the future is internationalisation – supporting new currencies, offering a wider range of products, and accommodating the different regulations of new overseas markets.
A crucial element to this strategy was the addition of Greg Wills, co-founder of Rentalcars.com, to the Iglu board as a non-executive director. “An integral part of the deal with LDC was that we would take on a new non-exec to help accelerate our growth,” says Downs. “Who we chose was a joint process.”
And Wills, says Downs, has been the perfect addition. “He has been on that [internationalisation] journey before with Rental Cars, one of the best performing companies in the tech travel space. To have Greg on our board, advising, challenging, comforting, it’s everything you’d want from a value-adding non-exec because he’s walked that path.” The LDC investment saw the private equity firm’s chief executive Chris Hurley join Iglu.com’s board too.
STAYING ON BOARD
After 17 years in charge, and having been through several private equity deals that could have allowed Downs to exit the company with a sizeable pay cheque, why has he decided to stay on board the company he founded? “The temptations have been there. If we were in a steady state, probably 17 years would be… I’d be having that Arsene Wenger question,” he says. “But if you continue to win and go forward and evolve, as the travel sector is such a fun and dynamic place to be, to be growing in that environment is hugely rewarding.”
He credits the LDC deal with keeping him interested too. “It’s really helped challenge our thinking. How can we help grow the business faster? How can we bring forward some of our ambitions? What are the blockers to growth? After 17 years, working with other people with intellect and experience, it can really broaden your radar.”