TLabs Showcase on travel startups featuring US-based Spire, a new hotel flash sale site from the backers of PerfectEscapes and TravelIntelligence.
Who and what are you (including personnel and backgrounds)?
Alan Josephs, CEO of Perfect Escapes Inc, a collection of luxury travel sites, including our new startup – Spire.
I recently packed my family up and moved back from London to San Francisco after spending nearly five years leading Travel Intelligence and Ebookers, one of Europe’s largest online travel agencies. Travel Intelligence merged with Perfect Escapes in mid-2010.
Now, most of my time is devoted to getting Spire off the ground and turning it into a profitable venture, but I also oversee several other brands under the Perfect Escapes umbrella including: Perfect Escapes, Travel Intelligence, Chic Retreats and Suzanne’s Files.
What financial support did you have to launch the business?
Spire is part of the Perfect Escapes collection of luxury travel sites and is funded by several venture capital firms, the biggest of those being Saints Capital, Trident Capital and Big Bang Ventures.
What problem are you trying to solve?
When we set out to create Spire, we wanted to build the most consumer friendly flash sale travel site yet – the next generation flash sale travel site if you will.
The sites that preceded Spire put all the focus on the deal and no focus on customer service. We wanted to fill that gap and directly address the customer pain points associated with purchasing on a flash-sale travel site.
There are two glaring areas where many sites fail their customers: Often times, the deal isn’t way they say it is, and there is no flexibility in terms of cancellations.
We set out to address these issues above all others and launched as the only flash-sale travel site to offer a Best Deal Guarantee and the only to offer a 72-hour cancellation policy should a traveler decide that their purchase was an impulsive one.
Describe the business, core products and services?
Spire’s history is rooted in the travel industry. Through our sister brands, Perfectescapes.com and Travelintelligence.com, we’ve built relationships with luxury hotels around the world and have successfully delivered high-value clientele to these hotel partners.
We’ve channeled those already existing relationships to create Spire’s core product – luxury flash sales. These limited-time hotel deals are at least 30% off the lowest deal found anywhere else.
Our in-house team of travel editors vets each and every hotel that we feature to make sure it meets our standards of luxury. Only the very best are included in Spire’s lineup, and we also include valuable perks with most offers.
Right now, we’re featuring a beachfront hotel in Costalegre, Mexico for $190 per night including discounted airport transfers, daily breakfast, early check-in and late check-out.
We’ve also featured metropolitan properties such as a chic boutique hotel in Chicago for $124 per night and a boutique hotel in Paris for $169 per night that included a bottle of champagne on arrival and in-room breakfast daily.
As I mentioned before, we back our savings with our Best Deal Guarantee, which is different than others in the travel space.
Here’s how it works: Say you book a deal on Spire for $100 per night then you find the deal somewhere else for $110 per night. Even though our deal is still better, we’ll give you a $100 travel credit just because it wasn’t 30% off as we promised.
Because we negotiate such deep discounts with our hotel partners, travelers do have to become a member of Spire to book these exclusive deals. (Membership is free, and no credit card is required to be a member.)
Who are your key customers and users at launch?
Spire launched with a base of more than 550k customers through Perfect Escapes. These are high-income travelers who spend an average of $265 per night on luxury hotel stays – much higher than the industry average.
However, most of Spire’s deals are less than $200 per night, so this will naturally broaden the luxury travel audience and make upscale hotel stays possible for a younger consumer who may not be able to spend as much on a hotel room.
Did you have customers validate your idea before investors?
Yes and no. Because our background is in travel and because we follow travel trends closely, we knew that the flash-sale travel space came with its own set of customer issues and complaints.
We also knew that we could address those concerns and create a flash-sale travel site that was more consumer friendly than others in the space. Our investors were already in place through our parent company, so we presented our findings around the flash-sale travel space to get their blessing on moving forward with Spire.
What is the business AND revenue model, strategy for profitability?
Our model with hotels is strictly on a revenue share basis, so we both are rewarded based on the reservations we drive for our partners.
Our goal therefore is to drive as many reservations as possible.
SWOT analysis – strengths, weaknesses, opportunities and threats?
Strengths:
- Since Spire was born from a luxury travel brand with a strong proprietary back-end technology platform called Starfish, we have the right relationships and the right infrastructure in place to make our business successful. We have a strong team with all the right connections, and now it’s time to execute.
Weaknesses:
- The travel industry has been slow to recover. While demand is on the rebound, it’s still not as strong as it was five or six years ago.
Opportunities:
- Deals will entice more people to travel and rise in demand will give way to higher hotel rates – a good thing for the health of the hotel industry. Limited-time sales are one way travelers will still be able to find great deals, even as the economy and travel demand rebounds.
Threats:
- We’re in a cluttered space. The need to spur travel demand has given rise to the popularity of flash-sale travel sites – at least 10 of them. We know we need to continue to innovate to provide the best customer experience to become of the leaders in this space.
Who advised you your idea isn’t going to be successful and why didn’t you listen to them?
Several of our competitors!  Anytime you take a risk to create something new, you’re met with opposition.
In fact, I’m quite thankful for everyone who played devil’s advocate along the way. They forced me to think of the business from different points-of-view, which eventually led to the launch of a site that really is the most consumer friendly flash-sale travel site yet.
What is your success metric 12 months from now?
We’re focused on building our membership into the millions over the next year so that we can successfully drive more and more bookings during need periods for hotels.
We also want to see more deals on Spire at all times and are working with our hotel partners to achieve that.
NB: TLabs Showcase is part of the wider TLabs project from Tnooz.
The few properties listed on the site now are impressive but requiring registration to view details and pricing is what I call a “barrier to transacting”. Lose that and maybe I’d be more inclined to check back.
Hi Anson! Jennifer Gaines here, senior travel editor for Spire. It’s completely understandable that many consumers are reluctant to give up their email address to access a site. But let me explain why we have to do it this way. It all comes down to our contractual agreement with our hotel partners. The only reason that they give us these deep discounts is because we feature them as private sales that are only visible to members. This enables them to give us deals that are far below the actual value of the room night without diminishing their brand value or alienating other partners who do not get the same deal. Basically, putting the deal behind a closed wall makes it an exclusive special offer available to a smaller audience, which is far more appealing for the hotel. Hope this clears up some of the reasons why we feature deals in a private sale environment. Happy travels!
I thnk that it is hard to compete with other that are in the market but it seems like they have a great strategy to do it good luck.