April 2018, San Francisco
Holiday Pirates: too good to be true?
Revenue and profits might still be under wraps, and it may not always be great news for suppliers, but the editorially led and content driven travel deals firm is swashbuckling ahead
It is not just the consumer travel deals on Holiday Pirates that seem too good to be true – so does the business model!
In an interview with CEO David Armstrong back in September 2017, the company was not spending a penny in Google, or any other traditional paid media. Traffic may have grown over 40% since January last year, but when it comes to customer acquisition nothing has changed.
“We still do not spend anything on Google ads and we have no plans to this year, or even the following year,” says Armstrong, who will be speaking in both San Francisco and Europe.
Where the company is still investing energy is in social media. It is doing this by improving the relevance of posts, and growing its direct communication channels.
“How we target our audience and the more relevant things are, the better our social media reach,” Armstrong says.
‘Being relevant’ might roll easily off the tongue but it’s much tougher to accomplish – in fact, it’s unachievable. “There is no point in saying that now we have got it [become relevant]. It is a constant process of trying to enrich the data we get from users,” he says.
From several sources including Facebook, WhatsApp, Pinterest, and even in face-to-face meetings, the team is on a mission to glean as much information as possible - from which departure airports and destinations are most coveted to what time of year they want to travel, where they want to stay and more.
In addition to pure social channels, the firm is building on its strategy for direct communication. Followers who don’t want to miss out on any deal can opt in to receive messages via WhatsApp or Facebook Messenger. Followers can also receive push notifications via the app.
With 9.4 million Facebook fans but just 250,000 subscribers to Facebook Messenger – and that is just in the US - Armstrong says there is a huge opportunity to convert more users to the social giant messaging platform.
AI, chatbots and handling ‘spoken data’
Technology is clearly a crucial piece of Holiday Pirates’ content strategy.
“In general artificial intelligence is very important to us. You could argue that the algorithms and software we have developed is a sort of AI because it learns, from the editors that use it, what is a good deal and what is not,” he Armstrong explains.
Chatbots, another buzzword, are also the focus but unlike many companies, the focus is not on customer service. “Instead, we are looking into how a chatbot can really help someone find the best travel for money deal,” Armstrong says.
You really have to be able to handle spoken data
Looking ahead, Holiday Pirates has identified voice as a major priority for the coming year. Millennials, the company’s biggest demographic, and, even more so, the younger Gen Z, tend not to type – they speak into phones and mics. So, you really have to be able to handle spoken data,” he says.
It’s still early days but to prepare for what Armstrong believes is coming, a small team of engineers has been tasked with working on a concept and strategy for voice search. “It’s often a question of whether to make or buy, and right now we are looking into what pieces we would need to service our users,” Armstrong explains.
What the firm is currently building in house is a front-end product for its own website that will show different results aggregated from multiple sources. As it stands, customers today are forwarded to a white-label solutions developed by Kayak, for example, with which the German company has a strong partnership.
So, is this a move into meta?
“Some people will argue this but no, there is no need for another meta. However, we don’t want to rely on a single source for the results that people request from us. We don’t do that when we push deals – we look everywhere to find the best. But when people look at our website, to find something on their own, we also want them to be able to find the best deal themselves.”
Technological innovation may be essential, but Holiday Pirates remains strongly driven by content that is vetted by humans.
“The important bit here is that we don’t automatically push things through technology or an algorithm. We always have a step through an editor who approves or declines a deal that the tech has recommended,’ says Armstrong.
We always have a step through an editor who approves or declines a deal that the tech has recommended
It is one thing finding a deal, it is another curating content around it, and editors are there to find the right wording for a headline in the context of different target groups and channels of communication.
For example, a headline for Pinterest headline, whose users tend to be women aged +-35 to 40, will always be very different to one written for SnapChat, whose users tend to be teenagers.
When Holiday Pirates spots what internally they refer to as ‘Wow Deals’ – something that is way below market average – then they publish immediately, regardless of whether there is a commercial return.
These so-called ‘DIY deals’ help “to solidify our position as an ‘inspiration’ source, helping users to visit travel locations that may have seemed unreachable on a low budget”.
Having said that, around 90% of deals that the company promotes are commercially driven, including those that come from partners, as well as from various databases and metasearch partners.
Although Armstrong is remaining shtum on revenues, transactions volumes continue to grow year-on-year.
For the year ahead, a priority is to continue to build strong affiliate partnerships in other markets. Today, in Europe, it is a fairly large and well-known brand in Germany, German speaking countries and the UK. The aim now is to achieve similar status in France, Spain and Italy.
In the US, which it entered two years ago, it “is growing like crazy” at between 200 and 300 % year-on-year, surpassing growth rates in many parts of Europe.
So with this success, is there a plan for further expansion? Not right now. “It is really very dynamic and exciting in the US, but it is a huge market, so there is a lot of work to do before we reach out to others,” he says.
Still, Armstrong says additional geographies are not off the cards, and there could some movement towards the end of this year, or early in 2019. But he won’t be going for small fry. With experience in the large US market, the sights are set on geographies like South America or Asia.
So, too good to be true?
What we can say is that companies like Holiday Pirates probably aren’t so good for travel suppliers. On this, Armstrong is candid: “Sometimes airlines are happy to receive the massive amount of traffic we send them, when they make a pricing mistake. But when we send so many users to a page that it crashes their site, it can upset them”.
No surprise there then.
Some deals-led firms like Secret Escapes will argue that the inventory they promote is incremental revenue for hotels – rooms that would otherwise have gone unsold, which make them a willing partners. Well that is their line.
To the question, are these deals that would otherwise not have been sold, again Armstrong admits to a mixed bag. Sometimes suppliers contact Holiday Pirates to push spots on low priced deals, in order to reach its substantial customer base. On the other hand, since their goal is to scour the web for great deals, sometimes the team simply finds these and forwards them to users to book as fast as they can, while there is still availability.
Of course, there will be negative feedback, both from suppliers and users of the site. Sometimes eager bookers will find that the deal has sold out, and all is not quite a rosy as has been depicted.
We attempt to be the mediator between customer and supplier, and will very often do this publicly via Facebook
When this happens via social media, transparency is the name of the game. “We attempt to be the mediator between customer and supplier, and will very often do this publicly via Facebook, so that other users can see what happened,” Armstrong explains.
In each market, there are numerous community managers who are experienced with dealing with disgruntled people – both travellers and the third parties responsible for the trip.
What is clear though is that their target audience – predominantly millennials but also Gen X and the up-and-coming Gen Z – love an inspiring, heavily discounted deal. Without knowing revenues and profit margins, however, it is hard to know if Holiday Pirates really has struck gold, but there is surely a lesson here in this company’s ability to drive organic traffic.