The Australian - The Deal - - Briefing -

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.’”

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.