Can a luxury travel company survive another recession?

Andrew Dunn's luxury travel company, Scott Dunn, survived one recession by tempting would-be shareholders with free holidays. How is he preparing this time round?

Andrew Dunn admits that the coming months are going to be challenging for his travel business. But he hopes that he is better prepared than during the last recession, in 1992: "Fuel went through the roof, the pound crashed and Simon Clarke [his brother-in-law and finance director] was sailing in the Southern Ocean. It was very tough."



Dunn's solution then was to bring in 12 shareholders, each of whom paid £5,000 for a 1 per cent stake in what was then Ski Scott Dunn, plus a free holiday each for the next five years. The input of cash helped stabilise the company that had only begun trading in 1986, and the business not only survived but soon expanded beyond its roots in the Swiss Alps to offer upmarket holidays around the world.

In 1996, it began offering non-skiing holidays, first in Africa, then in oceans and islands around the world, and then in the Mediterranean. By 1999, the worldwide offering was sufficiently strong that the company was rebranded as simply Scott Dunn. Skiing still represents 30 per cent of the business, with Mediterranean villas accounting for 10 per cent and tailor-made trips throughout the world the rest.

Buoyed by the economic boom and the growing wealth of its core market of middle-aged middle-class families, Scott Dunn has over the past decade seen turnover grow by 20 per cent a year, to the point that in the year to last June it hit £22m.

What the future will hold, Dunn does not know. The next few weeks will be critical since January and February are traditionally the most important selling months for holiday companies. But so far, things don't look too bad. He says that the ski business has proved "remarkably robust", with January sales the best ever. "It doesn't make an awful lot of sense," he adds, pointing out that the Alps have seen some excellent snow in recent years. He also believes that people who are still in work are maintaining their commitments to family holidays.

They are more likely to forego the short breaks that have become a feature of the travel industry in recent years. This, along with the declining value of sterling against the euro, have contributed to a falling off in bookings of its "European escapes" trips, he adds.

Dunn expects customers to do what they do in every walk of life and seek to renegotiate prices. In some areas this will be difficult because his costs are rising, too, because of the exchange rate. And he will be making his own effort to protect profits. "It's good for business to analyse and sensitise everything," he says, adding that he is asking all his staff to "think about everything we buy".

Having said that, he feels that the business model is "relatively robust" on all sides. As a privately owned company, Dunn and his colleagues (many of whom have worked together for several years) are free to make decisions without outside share holders "breathing down their necks". They are also free of debt. In addition, the company's portfolio of ski chalets and holiday villas gives it a strength in that customers cannot gain access to them anywhere else. "They have got to come to us," he says. And it is perhaps worth noting that with the drop in the value of the pound making the price of meals and drinks in the Alps ruinously expensive, the chalets in which Scott Dunn specialises could be a more attractive option than a hotel.

It is also Dunn's hope that the downturn and the inevitable shaking out of some of the supply in the industry will benefit an operation that has always prided itself on the quality of its service. Indeed, Dunn got into the business because he was convinced it could all be done so much better.

That was back in the mid-Eighties. When he skied for the first time he'd been a poor student visiting his sister, who was working as a chalet host in Verbier in the Swiss Alps. He fell in love with the sport. Fired up with the idea of starting his own ski company, he spent a year doing research in the Alps before offering his first holidays in Champery, Switzerland, in the winter of 1987 with the help of a £5,000 bank loan and a lot of family support.

For this first season, he and several friends, including his future wife and two people who are still with the company, set themselves up in little more than a tin hut and set about looking after their first guests. Dunn himself did everything, from ferrying people from the airport through to looking after the accounts, and acting as a ski guide despite his limited time on skis. It was a classic learning experience, he says: the business managed to lose £7,000.

Nevertheless, the team felt it was on to something and the following year sales reached £67,000. The company offered more properties in Champery and then branched out to such resorts as Zermatt in Switzerland and Courchevel and Val d'Isère in France.

Providing the level of service Dunn demands is not easy. In the early days, he would ensure that British skiers could have the bacon they craved for breakfast by driving a load of it out at the start of each season, while the company claims to have been the first to offer chalet guests tea in bed, and to replace sheets and blankets with duvets. The same approach has been applied to the holidays it offers elsewhere.

"What I was always interested in was ensuring that everybody had a fabulous holiday. I didn't want there to be penny-pinching," says Dunn.

To make this a reality, Scott Dunn obviously puts a lot of effort into planning. But it can also react to events, as with the tsunami of Boxing Day 2004. As soon as he heard about it, Dunn marshalled a team in the company's office in South-west London and got all Scott Dunn guests on flights home.

It all helps the company's reputation, but Dunn is taking nothing for granted, particularly in the current economic climate. What used to be "a lovely lifestyle business" has now grown up, to the point where it has systems in place to track trends, and has learned to be more careful about such things as whether to accept more properties. The coming months are likely to put them to the test.

At the same time, though, Dunn is hoping that those people who still have jobs will feel sufficiently well-off to continue to go on holiday. With repeat business at the company historically at about 60 per cent, there is a good chance that all that attention to detail will pay off with continued bookings for breaks away from the gloom.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat