PROPERTY DEALS NEAR IGNITION POINT
FOR GOLD COAST TOURISM ENTREPRENEUR RANDALL DEER, ACQUIRING RESORTS IN BALI AND THAILAND IS HIGH ON THE TO-DO LIST.
RANDALL DEER’S FATHER drilled into himthat financial security required plenty of hard work. A dutiful son, by age 25Deer was generalmanager of a large private resort group and three years later led the float of what became the integrated travel group Stella Hospitality, nowMantra Group.
Then it dawned on him that the only people getting ahead because of his ideas were his bosses. “I’d brought a lot of value,” Deer says. “But the nature of an entrepreneur is they don’t like to share credit. Otherwise, they’d have to payme a bonus.”
So he decided to keep his next idea to himself, and in 2005, aged 30, he started his first business – RewardsCorp, which is now one part of Deer’s IgniteTravelGroup, alongwithMyHolidayCentre and Group Buying Escapes.
Total group turnover reached $ 100 million in the 2011-12 financial year, with most of the profit being reinvested. “Our profitability as a percentage of turnover this year exceeded leading non-online [retail travel] industry averages and we expect to approach the profitability of leading online retailers this coming financial year.”
One strategy to improve the company’s balance sheet involves buying resorts; he’s negotiatingwith resorts inBali andThailand that range in size from 60 to 160 rooms. His plan is to buy one resort, then use his distribution channels to move the unsold stock and increase his profitability through better occupancy levels. The company would then raise capital to buy more properties.
Deer is alsomoving into wholesale, building a software capability that will allow travel agents to book a range of holidays easily.
When hewas starting RewardsCorp, Deer could see that loyalty schemes helped companies growto the next level, but for customers the points builtup too slowly. Deer’s idea, nowpatented inAustralia and in the US, was an instantly redeemable $500 travel voucher deposited in a customer’s online account. It allowed resorts to sell vast volumes of excess low-season stock without the need to offer discounts. Itwas a great idea foragrowingeconomyandwas adopted by major brands such as Optus, Retravision and LJHooker.
However, when the global financial crisis started in 2008, his clients started pulling out. At about this time, Deer was hit by the spectacular $ 2.5 billion collapse of the Gold Coast-based property groupMFS, then the owner of Mantra Group. “I wish that I’d seen the writing on the wall,” he says.
He lost a $2 million share portfolio and had to pay back $600,000 inmargin loans. “I learnt a lot. I was lucky it hit me then, whenI had only that much at stake.”
While Australians were tightening their belts, Deer knew that one of the last things people would giveupwas their holiday. Curious to find agapinthetravelmarket, heopenedanewspaper and saw plenty of FlightCentre ads aimed at the price-conscious customer. However, no one was appealing to themiddlemarket.
“Why assume that everyone wants the lowest price? Everyone wants a great deal and a great experience. We thought: Let’s create a package with generically appealing value- adds that is attractive to everybody at that destination.”
My Holiday Centre offers well-researched flights and accommodation deals that include a “wine, dine and spa” credit worth an average of $ 1000 at four and five- star resorts located in Queensland, Fiji, Bali, Thailand, Malaysia, Hawaii and the US mainland. It will expand to New Zealand in September.
Operating fromaGoldCoast call centrewith a staff of 120, the business has grownby between 50 per cent and 100 per cent in each of the past four years. Last year, BRWmagazine rankedMy HolidayCentreNo 21 on its list of Australia’s 100 fastest-growing small to mid-sized businesses. Deer’s success appears to hinge on examining a deal from every viewpoint. His formula is a win for the resort, which gets a huge lift in volume fromAustralia, and a win for the traveller, who gets a deal they couldn’t negotiate by themselves.
Ironically, the workaholic Deer had done little travel when he established the company; the first time he went to Bali was six months after start-up. Ayana Resort in Bali had been getting 1000 roomnights fromAustralia a year before Deer walked in.
“We gave themmore than 1000 roomnights in the first month. And we advertised Bali in the newspaper in Perth for $ 1790 per person; the nearest ad to us was $699 per person. But people will pay [more] if you educate them.”
For Deer, whowon theGoldCoastYoung Entrepreneur of the Year award in 2011 and last year, all this is just the beginning. “The guy who defeated me [in 2010] said you must pinch yourself for what you have achieved. I said: ‘Oh no, it’s like stepping stones in a pond. And I don’t knowwhere the end of that pond is.’”