Just eight years ago, 99.9% of Flight Centre’s business in South Africa was made up of leisure travel, according to Stark.
Today that spread is roughly 60-40 in favour of leisure versus corporate, and Stark is a happy man, with fewer of his eggs all in one basket.
“We’ve diversified nicely and our corporate brands are doing exceptionally well,” he says. “That being said, margins are under the pump across both business and leisure, you’ve got be speedy with your responses to enquiries, and pricing is paramount, as is the uniqueness of what you’re offering. If you get those three things right, you’re growing.”
Easier said than done, and Stark is well aware that he and his team need to keep innovating, if they are to steal a march on their rivals in the TMC space. Hence the philosophy that “no idea is a stupid idea, and everything is on the table”, with traditional models flipped on their heads or thrown out the window.
As Stark and I chat over a coffee at Melrose Arch in Johannesburg, it’s minutes after I’ve dragged him out of a Flight Centre product launch, where the MD and his team have been discussing their Price Drop Protection and Local Breaks products. The former addresses the volatility of the Rand and says: “if you’ve booked and paid for something with Flight Centre online, and you’re travelling in three months’ time and find something cheaper, you will have the difference paid back to you.”
It’s the sort of simple innovation that Stark is looking for.
“You’ve got to be nimble in today’s environment,” he says, whilst admitting that Flight Centre has to go even further than that and tap into the specific needs of its customers, particularly in a price-sensitive environment.
“What is telling right now is credit,” he says. “If you can offer credit with 30 or 60-day terms, you will have an edge in the market. Likewise, if you’ve got some sort of technology, coupled with, in the corporate market, competitive pricing.”
The Flight Centre corporate brands Stark spoke of earlier are Flight Centre Business Travel, Corporate Traveller, and FCM Travel Solutions.
FCM is a global brand, Corporate Traveller focuses on the SMME market, and FCBT is made up of ex-retail consultants who have longstanding relationships with customers who have grown their businesses and want to retain a bespoke service. Flight Centre has shared services, in terms of finance, marketing etc, but the rest is separate, in terms of sales forces and value propositions.
According to Stark, these brands operate independently and compete with another, but that the group’s interests are always put first, and if a customer looks a better fit for a different brand or wants to move, they are moved.
“All these brands started through the conveyor belt of Flight Centre, and as we saw a need for a different revenue stream or a need from our people, so did new revenue streams come to life,” says Stark. “That’s where we are today. We should do around 6.1 billion Rand in travel sales this year, with a very diversified travel business.”
Altogether, Flight Centre operates eight brands across leisure and business travel, and I put it to Stark that it must be a challenge to manage so many brands and, potentially, conflicting and competing offerings.
“We’ve got to be very aware as to what our brand DNA is per brand,” says Stark. “I’m well aware that we don’t want this ‘grey’ across the different offerings. They have to be distinct, so you don’t confuse the market, the sales team and the operational people. You need to understand who you are and don’t be all things to all people. That’s where a lot of TMCs come unstuck.”
So, how does Stark plan to avoid coming unstuck and to stay ‘ahead’?
“Conventional today is not conventional tomorrow,” he says. “That’s what we’re really good at as a company. I’m entrepreneurial and so is my team, and out of 15 new initiatives, maybe two or three have merit.”