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Travelmole e-Wire Q&A with Steve Endacott, CEO of On Holiday Group, Aldi Travel’s UK partner
Tuesday, 30 Jan, 2009
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Q: Now is the perfect time to be launching a value travel site. What are your projections for the site in its first year?
A: The enormous consumer and PR interest in the launch of Aldi Travel has shown how Aldi’s brand proposition, of delivering exceptional value for money, by focusing demand on a narrower range of products is perfectly positioned to exploit the current economic downturn. It is estimated that their will be over 10 million empty hotel rooms across Europe this year, as hotels are experiencing reduced demand from all major source markets. Aldi Travel via its partnership with On Holiday Group and Eurotours International is perfectly positioned to negotiate exclusive deals to fill some of these rooms at exceptionally low prices. This means that even during the credit crunch Aldi’s customers will be able to travel on holiday to high quality hotels at a fraction of the usual cost. Aldi Travel already has experience in the sector – in 2003 Aldi Travel launched in Austria where it has grown to be the number one operator and has seen 1 million passengers go on holiday since its launch, similarly Aldi Travel launched in Germany in 2007.
Q: In these straightened times when no company is safe, do you think people will have faith in a new arrival on the travel scene?
A: Aldi Travel is backed by the Aldi group which has 5,000 stores worldwide. Aldi is not a “virtual” proposition but is supporting its online sales tool with heavy weight promotion via is 394 UK store network. It is therefore primarily marketing to its existing customer base that is highly loyal and trusting of its brand. In addition, Aldi Travel is supported by its partners Eurotours International who operate Aldi Travel in Austria, and the On-Holiday Group – who combined have over 50 years experience in the industry.
Q: As the crunch has brought a new, usually more affluent spender to the Aldi supermarkets, do you see the same thing happening with Aldi Travel?
A: Absolutely. More than ever UK customers need to shop around for value and Aldi Travels product range has been deliberately targeted to cover the 3-5 star holiday market, ensuring it has a product suitable for every customer type. The key difference however is that instead of offering ten different five star hotels per destination, Aldi has selected the one that has provided it with the best value for money offering, which in turn allows it to give meaningful booking volumes to these elite partners.
Q: How do you see general online travel sales progressing during the crunch?
A: The key problem faced by most online retailers is the cost of customer acquisition. Click costs for well known destinations such as Tenerife often exceed 60p per click, with which the industry average conversion ratio of 1% gives a marketing cost of over £60 per booking that must be built into prices. Aldi Travel has focused its marketing on persuading the existing customers who visit its 394 UK stores every week to go online to its travel site, giving it a dramatically lower per passenger marketing cost, which in turn allows it to offer lower prices and enjoy higher conversion levels since customers know that they will not get a better deal anywhere else. Aldi Travel will be supporting its offline marketing with online activity but only where we feel it is cost effective and allows us to emphasise Aldi Travels market leading prices.
Q: What is the secret of creating a site that people will keep coming back to?
A: We obviously have worked very hard to produce a simple to use and well laid out website, however at the end of the day the key factor has to be price and value for money. Aldi Travel believes that it can provide exceptional booking volumes to partner hotels by focusing demand and in return can provide exceptional prices to its customers which simply cannot be matched elsewhere. It’s this win-win approach to retailing that has allowed Aldi to buck the economic downturn and expand its sales rapidly, as customers focus more on value for money rather than choice for the sake of choice. Aldi Travel believes that this same model will turn travel on its head and force many online travel sites to completely rethink their customer proposition and how they market to customers who simply want somebody to tell them where to find the best holiday deal.
Q: How do you see social networking impacting Aldi’s site?
A: Aldi Travels launch clearly demonstrated how important word of mouth and PR is, as the website managed to break into the Hitwise top 10 sites largely through the extensive media coverage and in-store noise created. Aldi Travel is looking at how it can harness social networking tools to promote its travel proposition within its own and third party sites – however this is a longer term development.
Q: What advice would you give to anyone setting up a travel website in this economic climate?
A: Be cautious. Unless you have a low cost distribution network already in place and the ability to persuade hotel or airline partners to offer lower rates, then you are unlikely to be able to produce market leading prices that differentiate you in what is clearly an already saturated market place. Aldi Travel went through an extensive market evaluation and partner selection process before deciding to extend its already successful travel operation in other parts of Europe into the UK market place, because when you have such a clearly positioned brand with defined values then all activities within a country must be able to deliver that proposition.
by Dinah Hatch
Dinah
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