The secret to riding out the recession in the UK has been the ability to identify consumers’ “sweet spot”, according to lastminute.com chief executive Ian McCaig.
Addressing the Captains of Industry lunch yesterday at World Travel Market, McCaig said the key to getting people to spend was to offer them the right deal at the right time.
He said: “We’ve been working closely with suppliers on sweet spots for UK consumers, which have been very price led. Deals where you ‘buy now and get it for this price’ will fly off the shelves.”
He added: “We’re managing our product mix relentlessly because in some areas margins are better.
“Look at the product lines that are most profitable for you, and focus on developing and promoting them – then push the price promotion hard.”
McCaig recently sold 5,000 hotel nights in less than 90 minutes using the principle of WIGIG – ‘when it’s gone
it’s gone’.
He said that hotels were “the most under-penetrated category” of lastminute.com’s travel categories.
“It’s the fastest growing [sector] from an online point of view, and the yields are pretty darned good.
“Hotels will continue to be a big category for us, and dynamic packaging will be a complement to that.”
However, McCaig added that selling airline seats didn’t make the same profits, adding: “You have to sell them because customers want to buy them”.
He argued that companies either have to differentiate themselves as specialists, or become large enough to leverage economies of scale.
“To be caught in the middle is an untenable position,”
said McCaig.
He also warned travel businesses against pinning their hopes on an upturn next year.
“It will be 2011 before we see consumer caution start to lift. If you’re banking on recovery as part of your business plan for 2010, you’re in trouble – you should go back into the boardroom and have a wee think about it,” he said.