Big Interview: Saga trumpets return to trade as travel arm profits from growth
Just two years on from returning to the trade, agents account for almost a 10% slice of the rapidly growing sales pie of over-50s cruise and escorted tours specialist Saga.
Third-party agents were always able to access Saga product through the group’s Titan Travel escorted tours brand but in 2015 the parent brand came back to the trade.
This followed a successful float of the 68-year-old company on the FTSE, since which it has issued seven successive sets of results showing it is delivering on ambitious plans for growth.
Jeannette Linfoot, the former Tui managing director of emerging markets who was appointed head of Saga’s tour operating division in October 2015, says agents can share in this success.
“The trade, from a commercial point of view, is important for us,” Linfoot said, following a six-month trading update at which Saga confirmed a second new ship, Spirit of Adventure, would debut in 2020.
“Agents are able to explain our offering in that face-to-face relationship that they have, and that’s important because we feel we are very unique in what we offer.
“We have incredibly strong and longstanding relationships with the trade through Titan and the proportion of business through the trade is consistently over 30%; for Saga, it’s not far off 10%.
“There is a portion of the demographic who wants to book with their travel agent and we see consistently strong year-on-year growth in that channel. You have to listen to your customers.
“We have invested in the trade team and do a lot of targeted marketing campaigns with trade partners. I would say generally the trade has been really receptive.
“It’s a win-win in terms of the customer demographic, loyalty and differentiation we offer. That’s great for travel agents trying to differentiate their offering.”
Almost two out of three (65%) bookings by agents are for customers new to the brand, so with Saga’s 70% repeat rate – a figure Linfoot said she had “never seen in 20 years in travel” – the long-term value of each third-party booking is considerable.
To build on this, last week’s trading update also saw Saga announce a new membership programme called ‘Possibilities’ to further drive up loyalty.
Linfoot said this should be seen by agents as an exciting development because it would encourage loyalty, with the operator pledging to respect its customers’ relations with their agents.
Possibilities offers members special deals with the likes of Apple, Nuffield Health, wine retailer Majestic and restaurant chain Prezzo, with enhancements in the pipeline.
“We are, across the organisation, incredibly proud of the travel business and we are growing really strongly,” said Linfoot.
“But we are part of a large organisation and want to share the benefits of that. We have 2.1 million customers who buy something from us each year. We have not had a loyalty scheme before but when you talk to customers they already consider themselves members.”
For the six months to July 31, Saga’s travel division was the standout performer, growing profits by 63% to £11.8 million and revenues by 9.7% to £228.2 million.
This was on the back of increased spend per passenger due to the impact of a weak sterling but also as the product mix shifted towards long-haul and river cruise.
In the six-month period, Saga reported a 1.1% rise in the number of holiday passengers to 96,000 and an 18.2% rise in ocean cruise customers to 13,000.
The order for a second 999-passenger ocean cruise ship to be delivered a year earlier than planned is significant because it underlines Saga’s committed to a still vibrant traditional cruise audience.
The operator has recognised it must keep pace with an increasingly ‘young at heart’ 50-plus audience, hence its recent ‘Keep Doing’ rebrand.
It is also one of few mainstream cruise operators building new small ships – proving these remain extremely popular with the older market as rival lines prefer to operate much larger vessels.
Pre-sale registrations for its first new-build, Spirit of Discovery, due to debut in 2019, hit 17,000, 80% of which have been converted and the inaugural sailing has sold out.
“These are big investments for us,” said Linfoot. “But we are investing for growth to take the combined travel business to a very different place.
“We have to make sure we are really relevant for the consumer and the Keep Doing rebrand is really a reflection of the reality of what we offer.
“People are living longer, enjoying healthier lives, and they have a real appetite to learn and discover new things; age, almost, has become irrelevant.
“We are known for over-50s but the logic behind the rebrand is that is translates whether you are in your 50s, 60s, 70s, 80s or 90s.
“Age is just a number but we want people to travel with a company that offers great holiday experiences that fit their needs and that will be there backing you up when you need us.”
A key example of this revolves around one of the main practicalities of catering for an older demographic – travel insurance.
Because Saga is also a financial services firm, travel insurance is included in all of its holidays, and due to its travel specialism it is “very generous” in terms of its pre-existing conditions clauses.
“For people of a certain age that can be quite a blocker for travelling, so that’s great for the agent and gives them something unique,” said Linfoot.
“Because we understand customers’ needs, we are able to offer a very good product.”
For many independent agents price parity, and the fact that Saga does not have its own competing retail network, have ensured its return to the trade has been warmly received.
“We have agreements in place with most of the big guys; for us it’s about where there is a good match,” added Linfoot.
“We have really aggressive plans to grow our business and there’s certainly a piece of the pie for everyone.
“If there are independent agents not currently working with us, we are open to that and happy to sit down with our trade team to see how we can work together in a more individualised way.
“We see us going from strength to strength in the trade.”
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