Travelist — Polish travel start-up makes it big
Only a few weeks ago Google Ventures invested $60 million into the Secret Escapes Group, in which the Polish travel club start-up Travelist plays an increasingly important role. How did it become the biggest travel club in Poland in two years and what is it up to?
Travelist was founded back in 2013 to introduce in Poland the relatively new type of travel portals that cooperate with hotels to sell vacant rooms for highly discounted price. No hotel, even the most luxurious one, wishes to have a single empty room and is willing to compromise the price just to find the customer. And in Poland a lot of hotels struggle to fill up even half of its space. Travelist supplies them with clients and profits from small provision on each transaction. Travelist is organized in the form of a club — one needs to register to some much as take a look at what it offers.
Travelist accelerated its growth in Poland largely with efficient online advertising and after just a year it was acquired by the Secret Escapes Group, which operates a similar UK-based web portal. Despite this, Travelist survived as a brand and now is an important and fast growing part of Secret Espaces that have already conquered the Polish market and eyes the Eastern and Mid Europe as a direction for further expansion. Ever since, it’s managed to increase its profits by a few hundred percent. We’re talking to Travelist’s CEO and founder Tomasz Nowiński about Travelist’s origins in Poland, its business model, investors and plans for further international expansion
Web.gov.pl: It’s been about two and a half year since Travelist debuted on the Polish market. The subsequent rise to popularity, month-to-month increase in the number of users and, finally, purchase by Secret Escapes, is an impressive feat. From today’s perspective, do you think that the conception of Travelist was a risky move? After all, it was the first of its kind in Poland and foreign ideas don’t always find fertile ground in Poland.
Tomasz Nowiński: As a matter of fact, at that time there was no such tourist service in Poland. On the other hand, travel market in Poland is still not developed enough and is growing at a fast pace. Booking.com — the biggest online booking platform — focused more on international deals and corporate clients, underestimating the potential of domestic luxury hotels. We spotted the niche. Following the business strategy of Samwer Brothers — the famous internet copyists from Germany (Zalando, eDarling), we looked at the best others abroad. We wanted to create an online travel club for those who would like to spend a few relaxing days in a nice hotel, not paying ridiculous amount of money for that pleasure. The boom of cheap airlines in Poland and rocketing interest in group shopping made us believe Travelist would also be a success.
Is there some sort of rule to Travelist users? What kind of people comprised the early adopters and the majority of users? How does it influence your marketing?
Travelist users are not anything unique or odd. Everybody looks for nice places to visit and expects high level of customer care. Additionally, if they could pay 50% of regular price for same service, who would not be interested? Poland is quickly chasing Eastern European countries in terms of Internet usage. According to CBOS research, over half of Polish population has the Internet access. 36% of them purchased something online in the last month. It started with fashion, then electronics and finally online shopping covered also the travel industry. Travelist presents mainly exclusive offers, often 4 and 5-star hotels. Therefore, our target are users in their 30s, who look for comfort and high level of service. Where to find them? We invest a lot in online marketing in Google and Polish news portals (some of the most traffic intense include onet.pl, interia.pl or gazeta.pl) — mainly because it gives us high reach and is easy to measure. Holidays is a time when we launch a TV commercial to spread our message even broader.
How do you manage to convince so many hotels to participate in your project? Do you spend a lot of time convincing them of the benefits or they come to you on their own?
The main claim of our mother company Secret Escapes says: “Even the best hotels don’t want empty rooms”. Same rule applies to Polish hotels. The average hotel room occupancy in Poland is at the level of 40%, which means that hotels are not using over a half of its potential. What can the managers do to reduce the gap? They start cooperation with portals such as Travelist. The benefit comes from the fact that we target other people than those the hotel is able to address themselves, so that the guests sent by Travelist do not cannibalize their core business. We do not only provide search option for potential customers already interested in visiting a place, but we are reaching people who do not have specific holiday plans. We present them a variety of offers, adjusted to their general preferences — sea, spa, family. At the moment we cooperate with the majority of big hotels in Poland and are trying to spot every new place that is to be opened soon.
What is the reason behind arranging the portal in the form of a club?
The benefit for users is an access to the best hotel offers at a very reduced prices, up to 70% down. We believe it is worth it to join the exclusive, as you said, club in order to rely on our expertise and experience. From our perspective, it is a tool to gather behavioral information about people travel preferences and activities on our portal. If we know people previously checked accommodation with extra bed for children, we suppose they may be interested in hotels with good children facilities — water parks, playgrounds, or offers with free children accommodation. Sending personalized newsletters, with offers picked individually for the user, we increase conversion rates and expect higher margin from our marketing actions.
You talked quite a lot about the personalization Travelist provides that allows users to easily find hotel offers relevant for them. Is this also a way for Travelist to make profit? After all, it’s everything that hotels may ever wish for — to reach just the kind of people that would actually book a room. How important is big data and analytics for Travelist?
Very important. Every tiniest thing that we do is a consequence of long and deep analysis. We have a number of factors that we take into consideration deciding what our website looks like, what offers are presented and where, how we do our newsletters and even organize internal processes. Doing acquisition marketing we also perform a lot of calculating, trying to balance significant reach of our campaigns with high profitability from users we acquire.
Considering all expenses Travelist caused since the beginning, how much traffic has it taken for Travelist to become profitable? Did you manage to do that within the limits of the Polish market?
Travelist is still a local business. We focus our marketing efforts only on Polish users. Travelist reached its break even point after only 9 months from the launch with user base 5 times smaller than today. Our user base is close to 2 million now and further growing.
In recent weeks you talked about the possibility of increasing Travelist’s presence on foreign markets. Was Travelist from the very beginning created with the global expansion in mind?
We planned many scenarios for long-term development of the company and international expansion was of course one of them. However, we realized that the first step to be done was to build successful brand locally. We needed to test our model, build effective booking platform and check how well we can actually be delivering our targets. For a first step of international expansion, we planned cooperation with foreign hotels, which we actually tested in the second year. Joining Secret Escapes in May 2014, which meant more investment for Travelist development, was a clear signal for us that our plans for real global expansion are very realistic.
What kind of foreign markets are you interested in and for what reasons?
Those close to us in terms of customer profile and its expectations. We see high potential in Mid and Eastern Europe: Slovakia, Czech Republic and Hungary. As soon as the political situation on the east soothes, Russia will be a very tasty piece for further expansion.
As part of the Secret Escapes group, Travelist may definitely use its experience in scaling. Based on that, do you think that growing Travelist in certain markets may look totally different than in others, or basic marketing methods and ways of cooperation with hotels stay the same no matter the market?
Secret Escapes has already started its expansion and today we have new offices in Germany, Nordics, Benelux, USA, Spain and Italy. Poland is so far the only country to run the business more autonomously. It’s been already 14 months since the buyout, so we are not yet fully integrated with the headquarters. Nevertheless, general assumptions for Travelist and Secret Escapes are similar — acquisition marketing methods are the same, so is Customer Relationship Management and cooperation model with the hotels. We will benefit from their experience in our expansion and the process will not differ significantly. However, we can surely contribute with better understanding of Eastern European markets. We believe these customers are closer to Poles in terms of online shopping and traveling habits, so probably it will be easier for us to provide them the right services.
In the travel business, the scale makes a great deal of difference. Large portals with millions of users may generate greater profit as the costs don’t increase proportionally. Now, that Travelist belongs to the Secret Escapes Group, is the possibility of being ‘devoured’ by it real?
If we were not good enough, Travelist would have turned into Secret Escapes brand from the day one. However, it did not make sense to disassemble something, which proved effective in responding to local market demands. Of course, we all realize the potential of economy of scale and we already started some integration in order to reduce the costs, but it refers more to areas unnoticed by the end customer — they still visit the same looking portal and do the booking the way they did before. We do a lot of IT optimization and we share best practices within all countries. It’s a mutual cooperation — Travelist had some helpful features that are now being copied within the whole group and we are launching all the good things we did not have before.
Only recently Google Ventures invested over $60 million into the Secret Escapes Group. Does this funding have any relevance to Travelist’s activity? Will this money be used to market Travelist in new countries?
We can expect a share proportional to Travelist contribution to the whole company’s revenue structure. The funding will support further acquisition marketing on the already existing market and indeed the territorial expansion.
Even some of the biggest online projects fade when they don’t keep on evolving. Is there a potential to diversify offerings for a travel club? Does Travelist have some new features/brand new kinds of offers in store for present and future members?
Currently, Travelist is all about Polish hotels, we’ve been only flirting with international deals for test, but did not expect significant margin out of it. This is changing now as we are starting the offer exchange with all other Secret Escapes branches. Soon Polish customers will be able to choose out of the best hotels all around the world. Next step will be to move broader than selling hotel rooms and launch full package offers, supported by tour operating companies. That means booking the whole trip with one button click.
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Originally published at www.web.gov.pl.