The corporate division of Flight Centre Travel Group is outperforming the company’s leisure travel bookings, pointing to a comeback for a sector that has suffered significant cutbacks during the pandemic.
How Travel Agency Flight Centre Is Building Luxury Revenue
25.08.2023 - 14:22 / skift.com / Selene Brophy / Scott Dunn / Flight Centre
Flight Centre, the Australian-based travel agency well known for its mass-market brands, is firmly fixed on tapping into the rising demand for luxury experiences with an expected 15 percent growth in revenue for the segment.
The firm recently acquired UK-based tour operator Scott Dunn for $150 million toward this end. The luxury-focused brand, founded in 1986 as a luxury ski operator, will now act as an “entry point into the U.K. and U.S. luxury market where Flight Centre is underrepresented.
The luxury travel segment has seen a business boom coming out of the pandemic. Globally it was valued at $638.2 billion in 2021 and is projected to reach $1,650 billion by 2031. It continues to be the pandemic anomaly with no signs of a luxury bubble bursting soon.
The move kickstarts the group’s pre-Covid plans to elevate and grow its luxury collection, together with its only other luxury offering, Travel Associates, in Australia and New Zealand.
James Kavanagh, Flight Centre Global Leisure Travel CEO, believes the economics are quite favorable, stating that expected “growth rates in the U.K. and the U.S. are between 9 to 11 percent.”
“Luxury accounted for about 7 percent of our sales volume in the leisure segment. Scott Dunn will bring it to about 9 percent. So the uplift is not too significant from a sales volume but will lift revenues to 15 percent. This end of the market has good, attractive financials, and we’ve got a great value proposition to win more share.”
Kavanagh described the Scott Dunn customers as typically “cash-rich and time-poor guests looking for an exceptional experience that makes up quite complex trips,with an average of about eight components in a trip.
According to Scott Dunn, it sees an average U.S. booking value of $40,000 per trip. This is in contrast to Flight Centre’s average trip spend of $3,000 and its other premium offering Travel Associates’ average trip value of $10,500.
“So we know they’re willing to pay for these services, and this segment is unlikely to be commoditized,” added Kavanagh.
Both companies have significantly evaluated their business models following the tough Covid period, according to Kavanagh.
Scott Dunn exited one of their brands, Imagine Travel, and it has also exited its chalets and Villa product. Flight Center, in turn, offloaded a couple of the brands running in different markets, notably Universal Traveler. The companies would not be looking to exit any underperforming brands, he added.
“Underperforming brands within our companies have reasonably been addressed for now.”
Sonia Davies, CEO of Scott Dunn, said the company was excited about joining a big global organization like the Flight Centre Group as it would significantly improve its
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