Interviews

The travel business born out of a recession and now backed by Google

12 min read

29 February 2016

Former deputy editor

With the latest instalment of our annual Everline Future 50 initiative now only days away, Real Business goes back to its first year and finds out how Secret Escapes, a company billed as "hotel porn", has gone from a disruptive idea to one with a multi-million pound turnover and big plans to further shake up the travel industry.

Founded by entrepreneurial duo Alex Saint and Tom Valentine, Secret Escapes has built up a dedicated following of 27m users across 13 territories. It connects travellers looking for both luxury and a bargain with hotels looking to make sure no beds go unused.

On the back of a prolific 2015 when it closed its biggest fundraising round to date and further demonstrated the potential of British technology companies, we sat down with Valentine to provide you with the full growth story.

(1) Talk us through the original concept – what prompted the idea for Secret Escapes?

In 2010, we spotted a gap in the market to fulfil demand for luxury travel deals in the UK. We wanted to inspire people to see the world by making luxury travel accessible and making the process of booking a getaway an enjoyable one. 

We’d realised that similar models were successful elsewhere and we tapped into the fact that even the best hotels didn’t want empty beds. By selling these potentially missed opportunities at a discount of up to 70 per cent off, we created revenue for these businesses and provided an inspiring platform for our members to book holidays through.

(2) The business was listed in our Everline Future 50 of disruptive companies back in September 2011 – what qualities do you feel secured your position?

Born out of the recession, Secret Escapes went where no travel brand had gone before – it made luxury travel accessible by combining the best of flash sales with four and five-star hotels and holidays.

Flash sales in the market place was a relatively new concept, so since our launch in 2010, we were disrupting the traditional ways in which people in the UK were booking getaways. In our first two years, we had over a million members, had launched our first TV advert and had secured two rounds of funding.

(3) Is disruption still important for the company now it’s older and more established?

Whilst the company has expanded over the past five years, we maintain our initial desire to inspire people to escape. We’re now operational in 13 territories with over 25m members globally and over 100 strategic partnerships with brands across the world; yet we’re still always looking for new ways to develop and make our mark on the travel industry.

For example, understanding that the same customer will book a hugely luxurious break and a value for money three-star city base in the same year, we extended our product range in 2015 to include Smart Stays, a collection of simple, purse-friendly and hand-picked stays for the savvy traveller.

(4) In the beginning, you described the emails that subscribers receive as “hotel porn” – is that still ideal still held in the company?

Absolutely – our main aim is still to inspire our members to see the world! Nine out of ten Secret Escapes bookers say they weren’t planning their trip until they saw it advertised with us. All of our hotels and holidays are hand-picked by our team of travel experts, who curate and negotiate exclusive offers to guarantee high quality, stress-free getaways for members. 

As well as providing luxury places to stay at a price that won’t be beaten anywhere else, our team secure additional perks too; from room upgrades and five-course dinners, to spa treatments and tickets to sporting events, such as the Grand Prix. In order to maintain our high level of service, we have a dedicated quality assurance team who research and investigate hotel’s ratings and reviews, as well as checking that we’re sticking to our best-in-market price guarantee.

(5) Google led a $60m investment in the business in July – how did that partnership come about?

In July, we had reached a particularly exciting point in our brand’s development, operating in 13 territories and having sold nearly two million room nights, and it felt like the right time to look forward. The investment enabled Secret Escapes to continue making strides to replicate the success of UK business across the world, ultimately helping to bring us closer to our ambition of becoming the number one destination for those looking to book their holidays. We had great chemistry with the Google Ventures team right from the start, they are a really exciting addition to the European scene, and they bring a really interesting perspective to the company.

(6) How have you used the capital so far, and what can be expected in the coming months?

This new round of investment will allow us to accelerate our brand and expansion into the USA, Asia and the rest of Europe.

Read more on the travel industry:

(7) Typically, long-term partner Octopus invests in early-stage companies. Are there any particular innovations that interest you?

We get a lot of benefit from other companies in the Octopus gang. YPlan have given us tons of great mobile advice and we’ve got a lot to talk about with other membership businesses like Tails and Property Partner.

(8) You had 4m users in January 2014, which had grown to 19m in 18 months – how did you achieve that fivefold growth?

We’re now operational in 13 different territories. Since January 2014, we developed our brand in our existing markets; the UK, Germany and Sweden. We also launched in Poland (after acquiring Warsaw-based Travelist), Norway, Denmark and the USA in 2014, as well as Switzerland, Belgium, Spain, Italy and the Netherlands in 2015.

We run a pretty disciplined marketing organisation, and believe we’ve built a great team focussed on growing our business quickly and smartly using digital and TV as key channels.

(9) As a company born in London, you now operate in 13 territories – what lessons did you learn from moving overseas?

Our UK business operation is sustainable, scalable and profitable and our international territories, launched since 2013, are just a step behind and following the same path of managed growth. We learnt very quickly that although our values and mission remain the same, we needed to adjust our product to fit in with the different behaviours of each territory, instead of a one-size fits all approach.

For example, we quickly realised that we needed to treat each state in the US in the same way we would treat a new European territory, with different preferences and spending habits.

The Netherlands, Belgium, Spain and Italy were some of the markets you entered this year, so how do you decide when (and where) it’s the right time to enter a new market?
When entering a new market, it is imperative to establish the “drive-to product” – these are easy destinations that take two hours or less to reach. It is also important to assess the demographic of the market, using your experience to establish the ways in which you can tailor your business plan to fit the market you are entering. 

There are still some territories in Europe that are untapped by Secret Escapes and these are key markets that we want to approach in the future. It is all about assessing whether there is a desire for the product in that territory and taking a strategic approach when entering the new destination.

(10) Now you’ve grown up, which companies are you competing with for market share?

We still feel like we have a unique product, so while we have competitors who may offer flash sales, or curated luxury travel product, there are few who combine both like we do. 
We feel our best-in-market price guarantee, variety of product, range of dates available and highly tailored emails have kept our business model unique enough to maintain our position in the travel sphere. We’re proud of our focus on inspiring our members to escape and don’t think anyone else does that better.

(11) With so much capital behind you and so many clients enlisted, what are the biggest challenges the business faces?

As with any company that grows quickly, our biggest challenge is ensuring cohesion within the business as it grows – ensuring that communication stays strong and that everyone who works at Secret Escapes shares our passion and mission to inspire the world to escape. We’ve just moved into our new London HQ and we feel very excited about where 2016 is going to take us.

(12) What tips would you give young companies, perhaps ones that were in your shoes back in 2011, to stay on track and get where you are now?

The current tech scene in the UK is thriving and there are many opportunities for entrepreneurs to secure the funding and support to make their company a success. 

Our approach has always been to have a sensible business model that acknowledges the need to spend money to acquire customers and we have never underestimated the importance of testing everything we do. We have stuck to our business plan closely over the past five years, growing our team at a gradual rate to meet the needs of our business and we’re in a strong position to continue our international expansion in future. 

If you want to read about some other rapidly growing businesses then check out our piece on the evolution of five British trailblazers.

Zopa, Secret Escapes and Deliveroo helped UK tech sector win record $3.6bn in 2015