Adam Schwab: I can go to Lush Escapes whenever I want and I'm going to get the best value hotel to almost any destination in the world. Businesses grow too fast too quickly, generally crash for a reason, because there isn't a solid foundation. One of the things we've certainly had to struggle with post opening is we've seen our demographics change.
[Voiceover]: Welcome to Add to Cart, Australia's leading e commerce podcast that Express delivers all you need to know in the fast moving world of online retail. Every week, Nathan Bush from E Suite and an e commerce industry expert will share the news, research and insights that you need to know to keep you at the top of your game and of course, keep your customers Adding to Cart.
Nathan Bush: Hello and welcome to Add to Cart. My name is Nathan Bush, host of Add to Cart and Director at e commerce talent agency Esweep. Now, as much as I love my work and I love having these conversations every week, I do like to escape now and again. My next holiday is actually Fiji next year and I can't wait. Even though I very foolishly booked it over the top of retail global on the Gold Coast. It's normally where we have our Add to Cart meetup, but we've got something else in store and we will still be there.
Nathan Bush: At least me in spirit.
Nathan Bush: The rest of the team will be there. My guest today is someone who actually knows more than most about escaping the daily grind and he took the daily deals model and merged it with travel to produce a new way to book vacations. Adam Schwab is the co founder and the CEO of Luxury Escapes, the travel brand which you must all know, offering highly curated, easily bookable holidays with exclusive discounts and inclusions. What began in Melbourne as a small startup in 2013 now has, get this, over 4.2 million global members and major offices in Australia, India, New Zealand, the US and the uk. In this chat, Adam shares why content creation is so important for luxury escapes. He shares his tips for developing enduring partnerships and he tells us where the travel market sits now, after what's fair to say, a rocky few years and now this episode. This is a bit special because we actually have our first listener question and it's a listener who you will all know if you've been listening. It's actually one of our past guests who've lobbed in an Instagram question via voicemail DM and I put it to Adam in the chat. So have a listen. Listen out for that person. And if you want to put your question to our guest, go check out our Instagram attecartshow and in there you will see the upcoming guest in our pinned stories. Shoot me a voicemail and we'll see. We'll feature a few for our upcoming guests and there's some very good guests coming up. All right, let's get into today's episode. Thanks to our partners Shopify plus and Paclio. Here's our conversation with Adam Schwab, co founder and CEO of Luxury Escapes. Adam, welcome to Add to Cart.
Adam Schwab: Thanks, Nathan. Great to be here.
Nathan Bush: Really great to be here. Now you've recently started your own podcast as well. So you've been on both sides of the mic.
Adam Schwab: I have. It's actually been probably 18 months now, but. But hopefully can emulate your success one day.
Nathan Bush: No, I think you surpassed it already. How's it going for you? Give it a plug.
Adam Schwab: It's called From Zero. We actually started during the pandemic, so it was slightly. And I actually wasn't. That was during my mini retirement from. From Luxury Escapes. Had a bit more time then, so sort of try and get to one, maybe two eps a week. But it's. It's been harder since I've been back full time.
Nathan Bush: It's a slog, isn't it? It's not as easy as people think. When you go, I'll just start a
Adam Schwab: podcast as you know. Yeah, especially the podcast. Unfortunately the listener gu helpful so they've been good. But yeah, it is, it is, I think do a quality podcast. Everyone wants to be full time, so it's hard to do it as a bit of a side hustle. It's been great fun and a great experience. But yeah, it's a lot tougher being back full time.
Nathan Bush: Absolutely. All right, well that full time gig that we're talking about is of course as the founder and CEO of Luxury Escapes now, you started Luxury Escapes as a deal of the day site way back in 2013. The world's changed a lot since then and so has Luxury Escapes. You've expanded the offering significantly, changed it a fair bit. You've got a lot of competitors in the market. How do you describe Luxury Escape's differentiator today?
Adam Schwab: We've got a lot of competitors. We've got no competitors. So in a sense we compete with every single person that sells travel from the booking.com, the MMBS to the corner store. So anybody sells travel, self travel. So we're competing in a way. In a sense. The podcast compete with tv, theme parks, footy, whatever. It's table. Depends how you find your market, I guess to use that sort of ACCC parlance. But so, but in terms of what we do a couple of things. But essentially we're a curated, experiential, impulse driven travel site. So we differ from other, other travel businesses in a couple of ways. The main way is most travel businesses and when you think of OTAs or online travel agents or even Main street travel agents generally sell everything. So they'll whether you go to booking or Expedia bookings on every, every single hotel on earth, pretty much anyone you want to go to. Airbnb's on every villa, flight center's got pretty much every hotel. So generally what most travel businesses do is here's everything, go and buy what you want. Guys, you're going to get minimal help from me, but just choose one. It's the world sort of moved that way a bit like index funds in the last few years, what we've always done. And we grew from the opposite. We grew saying here's one or two great offers, then it became seven or eight great offers, then it became 40 or 50 great offers. And then the pandemic came and we were really looking to pivot the model a bit like the catch of the day guys did back in 2017 and coconut in a sense as well. From sort of a highly curated to a less highly curated. We didn't want to create a paradox of choice and we knew we're not going to be a better business than booking.com and doing what they do. There's no point trying to fight a booking and Expedia which have tens of millions of dollars of profits and as well as legacy as well, lots of connections, all that kind of stuff. So what we thought we can do well is what we do do well is we provide great inspiration and curation to our customers and great value. So we thought we can do that but extend it. So instead of running 40 or 50 deals to your valleys, Thailand, Maldives, etc, we will now have product in pretty much every destination on earth. But Dubai for example's got a thousand five star hotels. 5,000 hotels, we might have 25 or 30 of them on the site, so we'll pick 25 or 30 hotels offer great value, could be free, inclusions could be whatever it is and we'll curate them for the customer. So instead of having to wade through a thousand hotels like on booking.com which can be good, can be bad, we say here customer, here's the 30 great properties in Dubai and you get some bonus, bonus inclusions to give you extra value exclusive to luxury escapes. Choose from these and we're doing the same thing across different verticals. So we'll have cruise coming up soon, villa coming up soon. We've got tours there already, obviously. Hotels, flights and experiences. I'm sort of called six main. Six main verticals of travel. We'll cover all them online. Easily bookable, highly curated, brilliant.
Nathan Bush: And what's your process or criteria when you're curating what's included on Luxury Escapes?
Adam Schwab: It's really a combination of quality and or relevance to the customer. So it's no point us choosing the top 20 hotels in London that all cost 2000 Australian dollars a night because there's only a small cohort of people that can pay for that. So what we're trying to do is curate a selection of great properties across a price range and a geographic range as well. So you want to get a 200 quid a night place in London as you want to have a thousand quid a night, because it's different, people want different things. We don't want all or one or the other. So what booking does is they have heaps of properties in every category, but they have so many that becomes really hard to know what to choose versus what we want to do is say, well, there's 45 star properties in Mayfair, we'll choose two for you. And these are the two really good ones that give you bonus inclusions as well. So it's a combination, it's very manually curated. So every property that's appearing has been typically signed off by someone from Luxury Escapes and usually a seniorish person. So we tend to take the curation really seriously.
Nathan Bush: And do you have people on the ground around the world doing that or is it all done centrally?
Adam Schwab: There's a couple of different, what we call levels of deals. We've got our legacy deal, we should call that sort of flash deal. So these are the deals that run for two weeks at a time. And these are the really great sort of packages or offers, often 30 to 50% off value. Everyone else, we've got a team of 30 people, 25, 30 people that are all around the world getting these deals. And this can take a year to negotiate, two years can take two weeks. But these are heavily negotiated, exclusive deals. You won't find these deals anywhere else. And this could be, we've got Raffles Maldives, for example, live on the site. Now, for $8,909, you pay 15 grand on booking.com, so you got a sort of selection of, call it 100 of these on the side at one time. And These are global but really focused on our strength is probably Australia, Asia and there's sort of heavy hitter markets in the us, uk but but we're really strong in Southeast Asia. So Bali, Thailand, Vietnam, Malaysia, Maldives, obviously Australia itself, Hawaii is pretty good for us and those sort of flop and drop this notion.
Nathan Bush: Part of the criteria behind that, that people can actually book these holidays on a whim without too much pre planning if they're kind of in the backyard 100%.
Adam Schwab: So 96% of our customers who bought a hotel package were planning on going to that hotel till we told about it. So it's property's holidays are very homogeneous. So 70%, just under 70% of customers weren't even going to the country until we told them about it. So you might think I want to go on a holiday to Bali and then we send you this great Thailand deal to Barney and K. You know what, that looks even better, I'm going to go there. So because they're largely a beach holiday in Asia is substitutable between Hoi an to Nusa DOA to Phuket, they're largely homogeneous in many ways. Some people do want to go somewhere in particular and that's why we created the marketplace. But in many cases people just happen to get a great package at a great hotel in a great destination and that substitutable. So there's sort of called our flash deals and that was what the business was based on and still is a really important part of business. And then we created this marketplace of initially hotels and now building out other parts of the marketplace. What we've essentially done is we've got a team of sort of, I don't know, another team of 10, 15 people who are signing up marketplace deals with hotels around the world. So this package is always on 24, 7, 365 days a year. So a flash deal that's super, super duper deal to Moolia and Bali which went live yesterday, they've got to be available for two weeks or even less if it sells out, versus we've got a moolier always on deal, not quite as fantastic a deal, still a really good deal, still better than Expedia booking everyone else. But it's only, it's about all the time. So you might get on the super duper deal, it's live now, you might get extra dinners or whatever, the one you can buy all the time, you could get a slightly better price, slightly worse price, headline price, but you get maybe breakfast and two dinners. But it's always on. So you know, I can go to Lush Escapes whenever I want and I'm going to get the best value hotel, almost any destination in the world. Whereas previously we were really pigeonholed on what we do. And we've also got this long tail bed bank third party fee which we fill out the long tail which is same as sort of expedient booking, but we will highly curate that. So instead of saying a thousand properties in Dubai or say yeah, 20 or 30 and we'll have curated that. So if you want to know, you want to go buy but you're not sure where to go, you're much better off coming to like your escapes and booking.com because we'll tell you, here's the best places. And by the way, you're also getting this extra stuff.
Nathan Bush: Phew.
Nathan Bush: I bet you're breathing a sigh of relief now that Black Friday is over for another year, right? Well, according to our friends at Shopify customers, they haven't stopped looking for bargains and they are going to keep chasing them all the way through 2023 as the cost of living takes its toll.
Nathan Bush: Yes, that old chestnut.
Nathan Bush: But Shopify have surveyed 2000 Australian customers and they found that 3 in 4 Australians are already reducing their discretionary spending and 84% of customers are comparing prices with price and value. Such a hot point for for customers, it is worth considering how you are going to continually send price messages throughout 2023 to keep your customers interested. The battle for the wallet is going to be fierce. To view more resources to help with your 2023 planning and see how Shopify can take your E commerce business to the next level, visit shopify.com a today.
Nathan Bush: It feels to me that this is much more of a traditional retail model business than it would be a travel or tourism kind of model where you do have a limited inventory that you can't actually stock everything that there are promotional periods. Was that your inspiration at the start? How did you get the idea for luxury escapes?
Adam Schwab: I can't remember the exact trade events. We recently had a daily deals business. So it stemmed from that. So the notion of daily deals is the opposite of marketplace. Marketplace. And of course Jeff Bezos really perfected this is when you think of it and your analogy is a good one. The retail store. So retail stores have limited number of SKUs. That's why supermarkets charge for SKUs. If you want to be eye level in the cereal oil, you're paying a supermarket X dollars. So they've got limited shelf space because there's real Estate costs. What Jeff Bezos realized in 2002 is hold on. Online's got unlimited, pretty much unlimited shelf space, maybe not really, but virtually. And then obviously booking up common, expanding the orbits and all those obviously OTAs followed suit. But yeah, so our business is much more like a traditional retailer. We've got limited shelf space on our EDMs, on our. Well, we'll put on our. On our destination pages. So we want to make sure we maximize that. So we're looking for the highest converting deals, the best offers, etc. Etc. And we work with the best quality partners. So we know that we might have a package to a property like Shangri La in Singapore, that it's such a great property, we don't discount it that much. It's basically the same prices on every other website. We like it very small inclusion still sells really well because people really want to go there and it's a great property and we're still better off than anyone else versus maybe a less known, maybe an independent hotel in a less known location. We need to get lots of inclusions to incentivize somebody to travel there. So, yeah, so we sort of came up with it. It really grew out of the, what was the daily deals model, but we really refined that model, made it much nicer. We know hotels want to be in a really lovely environment because they obviously got very strong brands. So we spent a lot of effort and time and money on making sure that our partners are portrayed in the best possible light. We do lots of content, lots of video. And part of the benefit of the electric Scape campaign for a hotel partner or tour partner is we provide this great billboard effect and we'll send tens and hundreds of thousands of visitors to their site as well as our site and really put a brand or a hotel up in lights, which very few do. So there's lots of good things that our model does. It's a hard model in many ways because it's a lot of work and it's a lot of cost, but it's a low margin. But for our partners, we can create incredible amount of value.
Nathan Bush: And did you know Gabby and Hezzy from Catch back in the day when you're starting it up?
Adam Schwab: They started Scoopon almost exactly the same time we started, so they had Catch of the day. Obviously. We registered our original business, which called Zoopon on 14 January 2010. I think Gabby registered Scoopon on 15 January. So it was almost that same day. They ended up at one point suing us because our name was so similar. We then obviously changed the name and we always became great friends with the guys. Had a business call Eat Now Together part of Menulog and obviously they had big shareholders and luxury escapes and Gabby sits on the board and Hezzy is an advisor. So we sort of went from not we were ever really enemies because we were always sort of too small and they were even big back then. But certainly they probably considered us a bit of a gadfly. We probably copied them, copied their new rest a little bit. And then obviously now great friends and great mentors of ours.
Nathan Bush: Amazing. And I could imagine in those early days was it hard getting travel partners involved because you've got a great name in the industry now, very well known. I can imagine you've got more trav partners coming to you asking to be featured. But in those early days, was it a struggle to get people to give you those great deals?
Adam Schwab: People rarely ask to be fe. Well, everybody's happy to go on a market price but we always want a better price. So that's always a bit of a negotiation. But yeah, it certainly gets and I'm sure you to David or Ruslan from Kogan, they'll tell you the same story when you start. It's super hard to get anyone to come on like it's the odd rogue or the really far like board thinking hotel brand, but generally it's hard. And Mark, one of our early shareholders, original main sort of sales negotiator, he was just amazing at going and getting great hotels, great brands. Even though we had no real credibility back then, he really allowed us to get our flywheel spinning. But yeah, it certainly gets easy, but it's never easy. But now if you look at the brands we work with, we've worked with everyone from sort of Ritz Carlton to Rosewood to Park Height to Mandarin Oriental to Shanghala to hopefully Suneva will be working with us soon to some of the Tacoma which we recently signed. It should go live soon. So I've got some. Obviously IHG is great partner. So we've got some incredible brand partners that we've worked with for a number of years and some that have come on more recently as other great partners have come on. So we probably work with more luxury hotel brands despite being sort of our legacy being in sort of in that. In that one space where they wouldn't work in now because we've got a really curated marketplace, we curate a lot of the sort of not so nice properties as opposed to booking Expedia who you can be next to Ibis Styles. If you're a park, it doesn't really work. But we're launching a new part of the site called we call Lux Ultra. And Lux Ultra would be super heavily curated to be two, probably 200 of the best hotels in the world. Not necessarily 200 the best, but 200 top thousand. So think of Ultra leap ground culturally Property is generally $1,000 plus a night, separate ring fast ring fence part of the site. Hotels coming on there, brands coming in there. No, they're only around other incredible hotels. There's no risk of brand diminishing. In fact there's the reverse. You get brand halo because only great hotels, the types of likes of luxury lodges and obviously your neighbors, Comos and Mandarin Orientals, et cetera. So a great suite of brands that yet 10 years ago would have no chance of getting. But we've done a lot of work, a lot of work with our partners, likes of Qantas and Singapore Airlines, tourism boards we work with to really ensure that we place our hotel partners in incredible light. We've got a TV show on Channel 10 that showcases the great luxury hotels this world. We had a magazine which will relaunch soon. So we spent a lot of time on content curation that really no one else does because that's not what their focus is. So that's allowed us to speak to and engage with really the best brands in the world.
Nathan Bush: Yeah, amazing. If we've got people listening to this, whether they're starting their own retail businesses, they're in a partnerships role. Do you have any tips? You mentioned content there, anything else that you go look when you are trying to develop those partnerships for the first time, this is critical.
Adam Schwab: Yeah, it's Tama. I think obviously you need to have a really good negotiation sales skill because you've got to ensure that your partners trust you to make sure their brand is looked after. So you've got to build that slowly and start slowly. So you're not going to go from zero to hundred. You're not going to start working with the world's best brands in day one. I think you sort of slowly climb the ladder of luxury ladder in a way that's what you want to do, that's the kind of business you're doing. But even swinging of Kogan, like they didn't deal with the likes of Sony and Samsung for many years, took them a decade plus to get to the credibility to work with big brands that often it just comes with scale. So just keep at it, make sure your economics are right and then gradually invest More and more as you see those unit economics playing out. But there's no, there's no silver bullet magic beans. You see, with crypto, businesses grow too fast, too quickly, generally crash for a reason because there isn't a solid foundation if you build slow. We've been around like Rushmore 2013, but we started 2010. That's a 13 year journey and we're still got a long way to go, but a 13 year journey to get to where we've got to. And we've still got a heap of work to do, but it's taken this long to get sort of where we are. Maybe a 3 out of 10 so far if you think about where our journey, where we want to get to. So there's no shortcuts. I think it's just doing the hard work, treating a bad brand partners well, keeping your word, treating your customers really well. If your customers really well, they're more likely to treat your client partners very well. So ultimately we always take a really long term view and we try and take a long term view at every decision. So if we can make a quick buck or sacrifice that dollar now for a relationship in five years, we'll always do the ladder. So it's how do you sort of. That's obviously being founder led and private, you know, maybe I'd have that luxury in the public markets.
Nathan Bush: Yeah. You strike me as someone who's incredibly energetic and driven and a really strong vision. Is it sometimes hard to take that step back and go, no, we've got to get the foundations right rather than going at growth at all costs?
Adam Schwab: Yeah, both, Jeremy, myself aren't. We're bootstrapped guys. So yeah, we heavily growth orientated but we're also, because we were never venture funded, we never spent more than we earned. So you're always tempered in how much you spend by how much cash you have in the bank or how much cash, how much profit you have coming in or cash flow you got coming in. So that's very different mentality. I'm true speaking lots of venture back people, guy and girl founders and that's a very different mentality. Just because if you got 10 million bucks in your bank account and you got no revenue, we got to spend the 10 million to get to profitability, to get to cash flow back. But for us we had our own money originally which wasn't that much, we spent that, then we paid ourselves back and then we had to invest our own profits. So till last year we never raised any capital and that was really more Secondary raise was really primary. So we generally aren't those sort of growth in any cost kind of guys. We're very sort of measured. Let's grow profit as quickly as we can, but not at the expense of just betting the farm on unprofitable marketing.
Nathan Bush: Makes a lot of sense and it's really refreshing to hear. Now, I can't believe we've got 15, 20 minutes into our chat and the C word has only come up once or twice. Obviously, talking about travel, Covid goes hand in hand. I actually don't have the question for you. It's the very first time it's happened. I've got a question from one of our audience members, Natalie, from Mr. Poolman, who's actually been a guest on the show before, but she sent in a question for us and if you don't mind, I'll play her question and I think it'll be something that resonates with you.
Speaker E: Adam, in a nutshell, I'd be really interested to know what changes that you saw in the space itself going from COVID So obviously no one was having luxury escapes to now after Covid there's been a massive boom. Have you seen a difference in the actual consumer basis itself and the way they're interacting with luxury escapes, or has there been something that has really pivoted the business and you've had to make a big change to provide the service? You know, in this new type of world that we're living in post Covid, that would be my question to you because we've definitely seen that in the ecom space and I'm interested to see how that looks in the luxury escapes space as well.
Adam Schwab: It's a really interesting question. I think one of the great and Natalie's like the 100% to sort of make this observation is everybody thought during COVID we didn't sell a single dollar of travel and then. And post Covid you're selling a billion dollars a year when reality during COVID there was obviously during lockdowns, for example, it also dropped off. But we had some great months during COVID when June 2020 was a record profitability month. So it was October 2021. So had some great months, temporary bites, terrible months obviously. And then post Covid we're obviously had a nice increased trajectory, but it hasn't been. We still haven't beaten our October 2021 month, I don't think. Or maybe we did in May, but maybe once we beat it.
Nathan Bush: But so October 21st, that was. When did Melbourne just come out yeah.
Adam Schwab: Melbourne and Sydney were coming out and Fiji opened. It's been crazy. And we outsold booking, Expedia and Python everyone, which was fantastic. But I think the question is really interesting though, because I didn't speak for luxury escapes. I can't speak very common generally. But one of the things we're certainly had to struggle with post opening is we've seen our demographics change. So pre Covid we were really strong. That 65 to 80 demo. Lots of money, lots of time, no dependence. We travel once, maybe twice a year. And since COVID there's a couple things. One, there's still this great fear of COVID just because of the media and because like the ABC and the nine papers which is. That's targeted as that demo have just been so created this great paranoia. That's. That's sort of one reason. And the other reason is just this often as you get older, this creatures of habit. So because no one people 65 to 80, 85 haven't traveled for two years, they kind of just stopped doing it because they were used to traveling. Every year they stopped and now they're used to stopping. So there's been this, this change and it's slowly coming back. But I try and speak to as many sort of 65 plus people as I, as I can and easily 50%, possibly more, maybe 60%. I'm not traveling at the moment. Maybe next year or maybe never again. It's probably about 30, 40% that are traveling, but 34 is probably on the high side. It's probably less.
Nathan Bush: And is that from fear of COVID itself or is that a fear of things getting canceled or disruptions?
Adam Schwab: It's probably multiple reasons. They probably all accumulate. There's certainly people who would be scared of COVID but I think that's probably lesser now because everybody's had it to an extent. There's definitely caution. I think the second, the probably the bigger one is just fear of just the disruption. People think they're going to lose their bags. It's one in a thousand people's bags get lost. It's less than pre Covid, but because there was 20 newspaper articles about it three months ago, both things on my basically get lost. So there's that there's obviously cost. So flight costs is way up, which is sort of impacted. So it's post Covid hasn't normalized. There's a bunch of. Everybody thinks that we're back to normal better than ever. Yeah. For certain cohorts, only people your age, people my age are traveling probably we're selling more to them than we used to. We're selling less of the older generations. Hopefully comes back in the next sort of year. But we haven't seen great speed of comeback. Much slower than we expected. And we didn't expect that behavior. It kind of makes sense now I talk about it. But we didn't expect that behavior six months ago. So it's frustrating because travel is safer than ever. But there's sort of the media. Every time there's someone gets Covid that's still on front pages of Australian page. Australian media is a disgrace. And their last desperate attempts to cling to relevance by what they do so which is pretty frustrating for us. I know Screw from Fighters has similar views. We've talked about it. It's pretty hard to look at the media that is. And with politicians. I think the new government's been good. But certainly the previous government was disastrous. Even now in Australia many hotels are running at 70% occupancy. So we can't run Australian hotel campaigns because they just have nothing to sell. So we're still. And that's because Scott Norris and told people to go home. Like we're still dealing with the incompetence of the previous government. I think the new government's been a lot better. Fixed the passport situation. There's a bunch of stuff that done well. But we're still behind the eight ball. The airlines are making record profits. Billion $2 billion a year that's coming straight out of the pockets of travelers who now won't travel. So it's pretty frustrating this paradigm. And we should be flying and we're doing all right. We're profitable and certainly a lot better than pre Covid. But we should be really flying. And it. But we're not. It's airlines that are. Yeah.
Nathan Bush: It must feel like you're not in control of the narrative.
Adam Schwab: There's a lot of existential stuff that's frustrating. We're certainly doing a lot better than pre Covid. We came back nicely and you've seen that with flighties and we've got back to profitability as well. But what's frustrating is there's a lack of confidence and then you've got to overlay the macro which obviously everybody deals with. So that's not exclusive to us in any way. But you've got intra wobbles and strand all this kind of stuff that makes travel harder as well. So dealing with those headwinds that to Natalie's question that nothing's ever as bad. It seems different Nothing's ever as good as it seems. They're probably in the latter now. Well it definitely wasn't as bad as everybody said during COVID Probably not as good as it as people think it is now we're somewhere in the middle overall the business is relatively healthy but we certainly want to be doing better and it's frustrating in terms of how we change and we just launched our first or opened our first retail pop up store which will become our permanent store in a few months time in Chadstone. So that's been so far it's open. We haven't really told many people about it. It's been really good. So people walking in buying transacting. So we think we can do pretty well from retail but it's a big learning curve for us.
Nathan Bush: What did screw think when you said that you're opening up your first retail store?
Adam Schwab: He actually sent me a message saying about time. I think it works that effect so which is great. He's also a great guy and and clearly we're a fraction of flighty so I doubt with someone they worry about too much. But even them us to them is we consider our big channels growth US UK and Singapore, Hong Kong. We don't really consider sort of the flights into markets be it corporate, be it sort of Australian leisure. They're obviously the markets we make corporate might go to one day and obviously leisure is a market we're in but our big growth is going to come out of US UK less so as a leisure market less sort of Australia. So our bigger competition really is a bookings and expedies as well in terms of how do we get to that next level.
Nathan Bush: Yeah that makes a lot of sense. Now I read that you're and you just said it before actually is that you're expecting $1 billion in sales. So that's a big number right in 2023 financial year when it comes to E commerce. So literally transacting a billion dollars through a website and I'm assuming most of it comes through the website. What's the biggest challenge for you in making sure that that transacts in a really seamless reliable way?
Adam Schwab: We probably won't hit the billion just for the reason that billion was done that forecast probably six months ago and just due to those headwinds we thought we'd get there. So we'll between somewhere between 700 a billion I expect and probably close to 700 but which is still a decent amount and certainly a lot more pre Covid we were sort of below 500 so it's certainly a lot bigger than pre Covid which is good but we certainly have a lot of work to do to get to the billion and to get to the two plus. But we spent a lot of time on the customer experience, on the UX UI experience. We've got a big phone team so yeah, not everything's transacted over the Internet. People do call up now we've got a in store team so we want to be Omni. We don't think online only is necessarily the way of the future. We think an Omni experience is a good one, especially for travel. We're never going to open 700 stores like Lighties or we think there can be a sort of concept store per city potentially if we can get it right. So we'll see how that goes. But and we need to expand our call center just to scale with the business. So we have a big focus on customer service. Generally we probably over invest over indexing customer service both pre and post sale NPS of about 70, give or take 69, 71 but it tends to sort of really oscillate around that 70 mark. Best reviews probably one of the best reviews in the world in terms of travel, certainly in terms of travel sellers that you might get the odd tour operators higher but travel sellers in terms of trustpilot product review we're pretty much number one, number two, number three in our sort of section out of thousands of sites. So we do spend a lot, invest a lot in customer service. We want customers to have a great experience. Travel is inherently a risky purchase, obviously expensive and it's also overseas you're relying on third parties to fulfill. So there's a bunch of sort of difficulties around travel that we need to make sure we get right. But we think we get it right 97, 98 of the time with customers. There's always times where we don't get it perfectly right. But I think in most cases our customer service team's super empathetic really takes the time to understand the issue. Tend to be sort of if we have an Australian customer, we want Australian customer service person to help whether if it's New Zealand, it's New Zealand. If it's India, it's India, it's us. We try and match up the culture. So obviously that comes at more of a cost but it's also a much better customer experience.
Nathan Bush: And with an NPS of 70 and focus on customer service, how do you get the voice of the customer from your team on the phones, on the emails, on the Live chat and filter that through to you and your leadership team so you can make decisions based on what customers are saying.
Adam Schwab: Yeah, it's probably something we don't do as well as we used to. Obviously as you get bigger. When I was doing customer service four or five years, you're speaking to customers, you can tell more clearly. But our head of contact center directly reports to me. So we have a pretty close line. We get a sort of weekly report on customer insights. We see all the reviews that come. Every review that comes through, positive or negative, I see on public site. So we've got pretty good exposure to that sort of stuff. It's the kind of thing that you probably can't get to. There's no such thing as being too close to a customer. The more customers we speak to. I'm always trying to ask our customers when I see them for feedback. We have various different types of engagement events in person, be it Leon Tour, be it Platinum event. So there's a bunch of stuff we do with our customers. And ultimately you're beholden to your customer. As a CEO, your boss is the customer. Obviously your boss is the chairman as well, but your boss essentially is our customers. And if our customers aren't being treated well, they'll tell us pretty quickly.
Nathan Bush: Yeah, I love that philosophy. And in terms of talking to your customer, have you found that the ways to acquire customers, especially new customers, has that changed significantly since COVID What are your channels that are really standing out for you at the moment?
Adam Schwab: Channels pre and post haven't changed that much. So digital was always the major channel pre Covid. It's remained so that it's probably dropped off a little bit in some parts, but SEM still remains dominant. Social's obviously dropped off as with the Apple privacy changes, but Facebook's still partly relevant. Our affiliate program here is to grow. We've recently hired ahead of influencers so we're investing more in certain types of more partnership marketing. And in terms of the lodging bit, from TV show to newspapers to radio to podcast, that mix hasn't really changed that much. And that's not novel. Everybody can see where we are. We always try to experimental bit more sponsorship, that sort of stuff. But we still tend to be. We're highly attributable. We want QR codes have really helped there because QR codes, the great attributor in the other line media. So we can certainly tell which. Which newspapers perform better and worse and how much sessions leads to and how many purchases and all that kind of stuff. So when our meeting to be highly attributable, that hasn't changed. Covid hasn't been backed about that much and our media spend is, is pretty consistent in terms of percentage of revenue as well pre or post.
Nathan Bush: And do you hold those traditional media channels accountable for some of the results that you're now seeing through QR codes that I guess a lot of advertisers are just kind of saying oh, newspaper, tv, the rest we just don't know. We know they work at some level, but we.
Adam Schwab: Yeah, I think the bootstrapness of our business means we've never really trusted that. So we tend to be highly skeptical. We've done TV stuff in the past. We tried to our best to attribute it through this is pre QR codes, but through sort of timeline, through sort of analytics and that sort of stuff. But I'm always skeptical that it works particularly well. Writing is obviously really hard. Out of home is pretty much impossible. That's what I tell you. Podcasts obviously more attributable because you can use a code usually newspapers much more because of QR code. So we'll always err to an attributable form of media than non attributable if we can. That's just typical online. Sure. Everybody you speak to has a similar viewpoint. But yeah, I'm certainly leaning more towards doing stuff that is a bit different though in terms of us. So it's a little bit more sponsorship, partnership, influencer. So still hopefully attributable but a bit different because ultimately your channels change from year to year.
Nathan Bush: And is that leaning more into your content strategy rather than just throwing ads up there? It's like partnering with people who can create content and create value for your customers first and foremost.
Adam Schwab: Yeah, exactly. And that's creating our own content as well. Getting sponsored like TV shows, classic examples. Or we produce a TV show, it's on Channel 10 or this year on the last four years on Channel 10. Great partners. And we'll produce the show, we'll get the corporate backers and the sponsors and we'll cover a chunk, not all the cost, but a chunk of that cost. We'll cover a chunk of the cost and it goes live as a great branding partnership and way great way to engage customers and 5,7% of customers who have watched the show buy. So we actually get a pretty good chunk of customers from there. Great to work with. Just put our partners in lights and obviously great to have corporate sponsors who we can give great value to.
Nathan Bush: You've refreshed your website the New range
Nathan Bush: is about to drop.
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Adam Schwab: what
Nathan Bush: about from photography aspect of your hotels and your partners on the website? In the traditional e commerce business, obviously product photography is key and a lot of people have style guides and it's kind of just go through the steps because we've got all the products. You're in a different situation. Where are you relying on great content from your partners or do you go out and reshoot it?
Adam Schwab: A bit of both. We try and reshoot as much as we can. We certainly try and reshoot the videos as much as we can. We've got a media team, a video team of sort of a team. Sometimes you can't get there. It's a remote Maldives island. It's harder than some of the Maldives island for 20 grand like so sometimes it can't be done but a few
Nathan Bush: people put their hands up.
Adam Schwab: If you would, you would. It's hard work actually but we can take. We got teams around the world so we certainly in Asia we try and take our own photography and video especially but we know someone can't get to it.
Nathan Bush: And looking at the site you wouldn't know because I think you've got curated partners. But it also feels curated content as well.
Adam Schwab: The content is often very curated. Often it's just that we take the images ourselves. We certainly do the video ourselves. The videos you see you wouldn't see anywhere else. We got two or three absolute garden videographers, video editors who put them together and do an incredible job. So we do invest a lot in content. It's great for conversion, it's great for our partners. We don't always get a return on that, but we know it's great for our partners to have this great video content as well.
Nathan Bush: Yeah, from a technology side, your website isn't the standard E commerce site. Obviously not off the shelf. What's your approach to technology for luxury escapes?
Adam Schwab: Yeah, we've got our own tech stack that we build. We just sort of have to. So it's, it's been built. We built our new platform 2017, obviously microservices and continue to evolve. And as we went to Marketplace it was a lot of rebuild. But we have to do a lot of work around that to allow Marketplace to happen. We have to facilitate a lot of connections via what we call channel managers which allows an OTA to connect to a property. So you probably go to site. Mind Art is another one. Darbyshop's another one. So we use those partners to connect to the hotels and there's a bunch of work that goes. And the same with Cruises tours. There's a whole bunch of connections we're building out or have built out and that's a big part of what we do. So we've got a supply team that works on all the stuff, getting the stuff live on the site and the demand team working on great tools like Trip Planner which is our trip itinerary tool and our marketing staff and all stuff. So we've got decent sized development team now. So 125 across the world. So it's certainly grown a lot over the last 30 pre Covid.
Nathan Bush: Yeah. Do you use anything off the shelf or build everything from scratch?
Adam Schwab: We use heaps of third party products within the platform but generally the platform itself is all built from scratch.
Nathan Bush: Yeah, gotcha. And I saw recently that you bought into a B2B platform, pay.com no doubt you've had a lot of experience with payment luxury escapes, especially international payments and multiple currencies. What was the reasoning of getting into into that?
Adam Schwab: Yeah, that's an Adam Schwab investment, not a Luxury Escapes investment. And I've known Ed CEO and founder for a number of years. He ran Point Tax exerciseelect. We work with the Point Tax guys as a media partner and sort of mentioned the pay business. I thought it sounds like a good business and it's super entrepreneurs. So more I tend to back founders now rather than sort of businesses. Obviously one actually a business is stupid but generally if there's a good founder they'll probably pivot five times eventually anyway. So what we're looking for is really good gritty smart founders. Ed fix every box, incredible guy and had no real sort of worries about that business. Done really well valuation wise. I'm sure to grow because he's a great product.
Nathan Bush: What do you look for in a gritty smart founder? Like what's the giveaway that they've got what you Need.
Adam Schwab: There's probably no dead giveaway. You can sort of tell by what someone's done, their attitude, speaking to them. It'd be like, what's that? Louis Brandis, the US Supreme Court judge, talking about in pornography. And he says, oh, I know when I say it, it's a bit the same with a founder. You sort of know, ultimately that's for so many VCs, that founders become VCs. They sort of have. You can absolutely tell. Great founders. Sometimes you get it wrong, but they are more and funny. When I picked this main investment based on a business, or maybe I was less confident about a founder, more of the business, they almost always go badly. When you pick a great founder, male or female, whatever, young, older, young, they almost will always find a way.
Nathan Bush: Yeah. And I suppose too, if you show that faith in them, especially, you know, from the early stages where they might not have the full idea fleshed out, then you've got that partnership going forward.
Adam Schwab: Yeah, exactly. Exactly.
Nathan Bush: You've written your fair share of business articles and I've really enjoyed your comments on the media before, having written in the media for the likes of Smart Company. And crikey, of all the businesses that you've now dived into, the chats that you're continually having with business leaders, both for luxury escapes and your investments. And also on the podcast, who do you look up to in Australian business? Where do you get your inspiration from?
Adam Schwab: I think of some great sort of operators that I know that I've been lucky enough to be friends with. So David Schaefer from Kogan's Incredible Operator, you know, Leffler, who's on my board, Incredible Operator. Number of great businesses. Gabby and Hezzy, as I mentioned before, great operators. Yeah, there's quite a few people who have done it before. Done a great job. Super humble. Blake, who used to work for me, now runs Flip Art. Great operator. There's lots of super talented people out there. I don't want to name too many names. I'm sure many people out. But yeah, there's a lot of people out there who just who've done an incredible job building businesses in Australia. It's a tough market. So if you build a business in Australia, the competitive market we have against some international incumbents, you're generally pretty good. So, yeah, there isn't sort of one or two specifically. I look to, obviously everybody loves Warren Buffett, so it's ridiculous, but I tend to be the contrarian sort of Jeremy as well in sort of everything we look at. So the big VCs who may have lots of big cash behind them don't always have that much dislike them. But those question that wisdom. Sometimes great venture capital is often someone who's a great salesperson raising money and selling the business. Not necessarily in terms of investing. It's a different sometimes people mistake the skill sets of VCs. VCs are really good investors. They're generally good fundraisers. They get biggest portfolio and spend but yeah we tend to be very contrarian. I've written a lot about Atlassian. Obviously those guys have done well but sometimes you can look past the bluster and the business isn't always as good as what everybody thinks. I think the Canva guy's done an incredible job on the on the flip side something that Mel and Cliff have done an unbelievable job building that business and a great product and a product that's got I think lots of room to grow still. So there is some, some great operators in Australia and we've had some great success on these national stage as well.
Nathan Bush: Yeah, brilliant. It sounds like you've got a great network of operators around you.
Adam Schwab: I think Melbourne especially, I don't know as many people in Sydney, but I think the Melbourne network is pretty good. Certainly the Melbourne E commerce marketplace network is pretty good. So everybody seems to work between South Melbourne and Richmond pretty much maybe Collingwood. So it's in sort of those three areas. It's a pretty tight knit community and lots of people have done really well for Melbourne especially in the e commerce marketplace space and even the likes Vendado and up in Darwin now but done incredible jobs. So got sportsman down here which is incredible. Operator, you've got some really great business. I think Melbourne is the home of e commerce marketplaces by a long way in Australia and Sydney is great at other stuff, a bit more better at software and some other stuff. But the Melbourne certainly in terms of commerce, e commerce in terms of your business and your podcast, it's very much I can't think of many successful businesses out of Sydney. They're done particularly well. Whereas you can think of a bunch
Nathan Bush: of Melbourne throwing the gauntlet out there. I love it. We better let you go Adam. It's been a brilliant chat. Loved it. I can't let you go without asking your tips when you're traveling. What do you look for in a great hotel room? How do you know what's good from what's rubbish?
Adam Schwab: I've got a couple young kids now so I tend to be booking a different type of place. But yeah, there's so many Great review sites. Now you book them either way. You book them a booking or expanding or obviously a luxury escape. So you can sort of there should be enough between the TripAdvisors and the site you're booking from or other sites. There's so much information out there. Look at sort of impartial articles as well. Is always a really good one. And speak to friends and family people who have traveled. There's no better way to get information than somebody who's actually been there. So a lot of luxury scapes growth has been really referral based. So we've grown over the last 10 years just because someone's told someone who's told someone who's told someone because it's ultimately it was often people thought we were too good to be true. And then when somebody goes, your best mate goes and actually I want luxury escapes best trip my life. That's a pretty good way to encourage someone to go because they've heard it firsthand. So and we've got most travel agents have be us or anyone. We have people on the phone that if you don't know where to go people can call us and say Adam luxury scabs rep where it's good to go in Bali. And we'll know because a place that's great for a 25 year old couple is very different for a family six who's 50 and kids and very different to a 75 year old couple. So you sort of need to match the destination with who's traveling and how much the budget is. There's a bunch of different factors influence. So get as much info as you can from the right source without overwhelming yourself. I love it exactly about overwhelming.
Nathan Bush: All right, now you've given us a few things on what's coming up next for luxury escapes. We talked about the pop up stores, we've talked about marketplaces. What are you most excited about for the next say 12 months?
Adam Schwab: I'm really excited about Trip Planner which is a product revealed which we're releasing any day now. It's actually been released to if people contact our contact center. We're building trips for you on Trip Planner but it's a way to create an itinerary dynamically. So say you want to go to Europe. We can put the 10 stops, your flights to London, you stay in your hotel in London, your experiences while you're there. Then your flight to Barcelona, what you're doing in Barcelona, maybe do a tour or cruise that all goes in. It's all dynamic. So you can change things really as you can add things the day by day view. So I actually built a trip myself and I realized I did a bunch of stuff up to my flight bookings so I changed them. So without trip plan that wouldn't have I would have got there and realized the date was wrong or yeah cost. So it allows you to organize a triple up and obviously buy really easily. Then we're going to move on to new iterations where we start suggesting we already are start suggesting great experiences in London, great experiences in in Madrid and great stuff to do. And here's how you transfer between cities and here's how you buy your flights and you can buy your own flights and easily type it in or you can buy on us because it's all all the one sort of closed platform. So pretty excited about about that. I think it'd just be a great customer experience that even if you don't make much money from it, that's sort of in a way secondary. It's how do we create a great experience for our customers that no one else in the world is doing.
Nathan Bush: I reckon it is exciting. Much better than putting your trip together in a dirty word document or spreadsheet.
Adam Schwab: Excel spreadsheet which is what I always use.
Nathan Bush: Adam, obviously we you've got the podcast from Xero. How else can people get in touch and stay up to date with what you and the team at Luxury Escapes are doing?
Adam Schwab: I was LinkedIn and Twitter are probably the two most common socials we use. Obviously we're pretty big on Insta as well, but hit me up on LinkedIn on Twitter. Always sort of happy to have it. Have a yard.
Nathan Bush: Twitter's fun place at the moment, isn't it?
Adam Schwab: It's all happening on there.
Nathan Bush: Adam, thank you so much for joining us on Add to Cart.
Adam Schwab: Thanks Nick.
Nathan Bush: That new store that Adam spoke about, it's now live at Chadstone and it's great to see an online brand come to life. Feels like we've had a few of those this year, keeping the Westfield share price going up. Good on you. Online brands really helping those shopping malls. And how good was it hearing Nat's question? Love having those questions come from you. So again, if you want to lob your questions in for upcoming guests and you can see the upcoming guests, go add them over on our Instagram Add to Cart show. Shoot me a voice.
Nathan Bush: Dm.
Nathan Bush: Love to hear from you. All right, three lessons from our conversation with Adam. Number one, content for Dreaming. Now Adam knows there is a massive, massive disconnect between the computer screen and a holiday. I think we're all feeling that right they are at the polar opposite ends of what you'd like to be doing. But when it comes to curation, he and the team focus on content as well as product. It's no good getting one right without the other if you want to sell the dream. And I don't think this is unique to selling holidays either. So don't spend all time your your time curating product if you're not also curating content. Number 2 QR codes for attribution it's fair to say that Adam is a bit of a media skeptic, but that doesn't stop Luxury Escapes from advertising with them, but he wants them to be held accountable. So Luxury Escapes are using QR codes across all physical media to measure the impact on sales. Sure, it's not going to be perfect, but it'll be better to have your own attribution than rely on what media
Nathan Bush: outlets are telling you.
Nathan Bush: Think about where your brand is in a physical sense and think of whether QR codes can give you the data that you need to connect the experiences. Number three Sandbagging the walls I loved Nat's question about COVID and if I'm honest, Adam's response did surprise me. I was expecting more Covid painting, but they actually had their biggest month in
Nathan Bush: there and still their record month.
Nathan Bush: There was no doubt low moments, but the perspective from Adam and it came through the whole conversation was that he's in it for the long game. In Adam's words, if we can make a quick buck or sacrifice a dollar now for a relationship in five years, we'll do the latter. And I love that. And here he is on the other side of what many said was going to be the end for many travel.
Nathan Bush: And it's because he put the customer in the middle of it all.
Nathan Bush: To get the highlights of today's episode, head on over to add to cart.com and sign up for our free newsletter each Tuesday we will send Monday's episode summary links and discount codes for you to go next level on. And if you're looking to explore your next e Commerce opportunity, come and visit us at E Suite. We're a dedicated e commerce talent agency connecting the best e commerce talent with the fastest growing brands in Australia. Head on over to esweettalent.com where you can download the free E Commerce Salary guide and sign up to our weekly e Commerce job emails. Thanks for listening and until next time, keep those customers adding to Cart.
