Ron Kalifa, managing director, WorldPay:
Industry statistics show that, increasingly, holidaymakers want to create their own travel itineraries using the internet, so Steve Keay and Platon Loizou should invest in and develop their web marketing.
First, early deals, limited offers and last-minute bargains are vital, time-critical products and should be intensively promoted. This can be done by ‘optimising’ the website, ensuring that it always appears high up in search-engine results, by e-mail campaigns or by advertising on other websites.
Second, an online booking and information service, built into the Jewel in the Crown website but accessible only by agents, could help to cement relationships with high-street travel firms.
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Finally, the firm should provide an experience that brings online customers back time and again. This could be helped along with chat rooms, games and competitions. Also, the firm should identify customers’ interests and preferences and ensure that the website’s content and structure meet these requirements.
Extract the £3m reserve
Toby Stephenson, partner, PKF accountants and business advisers:
Keeping £3m as a cash reserve does not make sound business sense given the unstable history of the company.
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If Jewel in the Crown goes into another slump, the founders may find it hard to extract the money. Also, if Steve Keay and Platon Loizou ever want to sell the company, such reserves may increase the amount of capital-gains tax that has to be paid.
The duo have to decide how much cash they need to fund the business, including growth plans and any bonding requirements, and take out the rest to secure their personal wealth. The cash could be drip-fed back into the company, if required, by way of loans, but this would be at the shareholders’ discretion.
Pension contributions are often a tax-efficient way of extracting funds, although this ties up the money until the duo are 50. If they want to use the cash now, they will have to take the income-tax hit, but this is still safer than keeping it in the company.
Sell more holidays in advance
Keith Farmer, area manager, Business Link, Berkshire and Wiltshire:
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A well thought-out business strategy is needed to prepare for possible setbacks. The risks in the travel industry cannot be underestimated.
The easiest way to make a quick profit is to sell holidays early. The commissions charged by the big chains are high, but it would be worth investing money here. Increasing the number of long-haul destinations would be a good idea because short-haul holidays are often bought at the last minute.
Jewel in the Crown’s strong relationships with independent travel agencies are an advantage. Developing these partnerships would be wise, and so would targeting its specialist customer base more actively through marketing and public relations.
Steve Keay and Platon Loizou need to devise a realistic strategy and concentrate on improving their relationships with customers and travel agencies. They could then look at selling more holidays in advance, which would allow them to increase profits.
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Target existing customers
James Radford, vice-president, SME business development, American Express:
Competing on price with the big boys is not a battle that Jewel in the Crown will win, nor does it play to its strengths.
Steve Keay and Platon Loizou need to concentrate on service and ease of doing business. This will mean using their cash better and introducing cheaper and faster distribution channels such as the internet. It would give them flexiblility and speed — things that their larger rivals do not have.
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Their competitors also cannot segment their databases and offer tailored and targeted holidays to existing customers. Older travellers often have more disposable income, tend to travel in groups and are perhaps easier to attract for repeat business and more holidays.
Jewel in the Crown also needs to look at the cost of sales. This would help it to develop a strategy for retaining customers. It is far cheaper in the long run to hold on to customers by giving away some margin than constantly acquiring new ones.
Pick China as a holiday destination
Jewel in the Crown’s expansion needs to be handled in a structured and focused way. It has built a strong foundation with India and Turkey and should capitalise on this by expanding eastwards. China should be one of its new destinations as this market will be one of the biggest in the next 10 years.
To differentiate itself from competitors, it should continue to focus on a select number of destinations and turn itself into an expert on these. Building an attractive and effective website should be a priority because this would allow the company to broaden its distribution channels and sell direct.
Jewel in the Crown should also start other short-term sales and marketing activities to raise its profile and boost sales. These activities could include third-party promotions with magazines, classified advertisements and e-mailing existing customers.
Buying a customer relations management system that analyses purchasing behaviour would be a sound investment.
More routes will insure against disaster
Peter Tomkins, international vice-chairman, Chartered Institute of Marketing:
By adding more holiday destinations Jewel in the Crown would be able to minimise the effects of another travel-industry disaster such as the events of September 11.
Such catastrophes prompt many people to rethink their holiday plans. Many simply opt to fly to a less-troubled destination or delay their holiday until the situation has stabilised. Firms that can offer holidays in several parts of the world are better placed to deal with uncertainty.
A recognised and trusted brand name also helps to reassure the anxious traveller in turbulent times. In a business where many operators focus on low costs and give little in the way of guarantees, Steve Keay and Platon Loizou should build up their company’s reputation as an established and respected player.
Not having an effective web presence, either directly or through partnerships, is a key omission given the substantial growth of this medium.