Interview with Justin Montgomery – MD Creative Holidays
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The Mole: Tell us about 2005, how did that work for Creative Holidays?
JM: 2005, I think for the whole market was great. We run on a calendar financial year, Jan to Dec, so for us it was very successful. considering we had the whole Bali issue towards the end of the last quarter, and then we had the Air Paradise collapse, and we definitely got caught in that, but we had a good year.
2004 was a good year, 2005 was better, and 2006 was shaping up to be even better again, but then the Bali thing has certainly knocked that for six.
The Mole: Where do you see Bali fitting in now, what’s the future there?
JM: In any situation like that, be it 9/11 or bombings, people have their bookings, they’ve planned their holidays, they want to travel. So they change destination and the usual places benefit e.g.: Fiji, Thailand, lots of domestic stuff. People will still spend the money.
The problem for Bali now, is there’s no Air Paradise to kick start it again, and that’s what will hold it back now. I was more optimistic after the first bombing then this one.
The Mole: So if not Bali, where will they go?
JM: The same old places I think, although we’ve certainly seen domestic spike lately. Then you get a rumour of a coup in Fiji, and Bali suddenly gets interest again. I think Hawaii has a lot of potential this year, they’re doing some good things, and we’ve seen a renewed interest in Singapore again, because of Star Cruises. The WA market really like it, the east coast market really like it.
The Mole: You talk about places like Hawaii, Singapore, Fiji. Are their NTO’s doing enough in this market to support their destinations and assist the trade?
JM: I think Fiji was very pro-active during the recent coup scare because they saw what happened in 2000, they recognized the threat.
Hawaii has been very good over the last 12 months with Helen Williams and her team, prior to that there was no one. Hawaiian Airlines launched the market and there was nothing to really substantiate it, but now they’re very good.
There are some really good NTO’s to work with, those two, Singapore,Thailand, Hong Kong, some really good ones. The countries that miss out are the ones who don’t have a presence here or don’t work the connections.
The Mole: Rob Gurney talked about “constant shock syndrome” for this industry over the last few years. What’s your take on that?
JM: No doubt, this industry has been shell shocked. I talk to a lot of recruitment companies and they tell me that people talk about the recurring dramas in the industry and whether or not they want to go through that again. 2002 / 03 were hard, a roller coaster ride. 2004/ 05 I think a lot of that disappeared because things kind of got back to normal, but heaven forbid we get something else soon.
The Mole: You talk about good years but there is a concern that the industry is losing its profit margin. Mike Hatton talked about “Joe Public” wanting everything cheap. Have you had to change your pricing substantially over the last couple of years to adjust to that mentality?
JM: We have. One of the things this industry has always done is sell on price, but we’ve had to become more professional, in fact the airlines are forcing that on us. I think price will always be a hook, but we’ve identified other ways to grab people. More and more people are now going for shorter periods, so we have to upsell them, that’s our job, to tell them what they can get for an extra $20 bucks a night, an ocean room etc.
There is definitely pressure on margins, through retailer agreements, airlines etc. There are certain perceptions from Joe Public, you know, Bali is $999, for instance. But it’s about finding the point where they say, that’s what I want. People want good value, it doesn’t have to be cheap, but they must perceive value.
80% of our Bali business used to go to Kuta, it’s probably 30% now. People will recognise a good deal if it’s professionally presented to them. The quality of product has changed up there for sure, but we’ve concentrated on showing people good product and upselling them.
The Mole: What about distribution channels? How has the internet affected peoples buying patterns?
JM: It’s still very difficult to book a good package on line. Sure there’s been a change in people’s behaviour, the airlines have upgraded their websites, the Wotifs of the world are here, but people still want someone to present them with a complete package. The fact that we can package air, car hire, accommodation on one system is a big plus for the agent. We provide alternative airlines, we’re impartial, we’re a one-stop shop.
35% of our business is done on line by travel agents. Our research tells us that people are using the internet to do their homework, their own research. What they then want is to go to a professional agent and have the booking done simply and quickly.
They’re also going to the travel agent for re-enforcement, to tell them that they’ve made the right decision and to stand behind them if something goes wrong. They still want the glossy brochure, they still want to look at the pictures, they still want the agent to do the work.
The Mole: So what is the Creative Holidays message to the agent community? Why should they support you?
JM: Well, over the last three years, we’ve increased our staff levels to ensure that we can service that community, by over 90%, in both reservations and sales, and we’ve done that so that people can get hold of us as quickly as possible. Because everyone who walks through an agents door is potentially a sale, and we want them to make that sale.
Our wait times on phones are down, our speed on-line is great, they earn more commission by doing it on line, and we’re not out there doing it direct. So the key message is we have a huge service team here waiting to take your calls. We’re not the cheapest, but we are good value. We’re about making sure we provide the tools for them to sell us.
The Mole: What do you see in store for 2006.
JM: People selling Bali, like us, will need to find somewhere else to drive, to fill the gap, until Bali bounces back. Our job is to create demand, and that means harassing carriers to jump start markets. Our message is very clearly that we are trying to provide agents alternatives that are appealing and cost effective.
We are 100% trade, 100%trade. We are about creating a brand to drive business. People don’t understand where wholesalers fit in. We are about getting consumers to see a package to Bali or Fiji or wherever, get excited about it, and then go and buy it from an agent. We are upgrading our website to educate consumers about destinations.
We are going to do a lot more consumer advertising in 2006, colour press ads, but it will all be designed to drive people in to agencies.
The Mole: So agents shouldn’t feel threatened that Creative will go direct?
JM: No, not at all. We don’t do retail, we don’t understand it. So why do it? I think in tough times, if you stick to what you know best, you’ll come through. I’ve seen an airline once say “let’s go and buy five resorts”, didn’t work. So we’ll stick with what we know and do well.
The Mole: Thank you Justin.
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