Luxury Escapes

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“Coming back into the business completely changed how I looked at the role of CEO.” – Adam Schwab, Luxury Escapes

“There have never been so many practice management solutions available in the Australian and New Zealand markets as there are today.”

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Story Christopher Niesche

During the past two decades the internet has spawned hundreds if not thousands of travel websites. Like most online businesses, the majority failed. One bucking the trend is Adam Schwab and Jeremy Same’s Luxury Escapes, which offers heavily discounted accommodation packages to selected hotels around the world – and which Schwab says is on track to earn A$1 billion in revenue in the current financial year.

From lawyer to entrepreneur to executive, Luxury Escapes’ Adam Schwab shares his business success story.

Escape to the internet: lessons from a travel entrepreneur

STRATEGY

Luxury Escapes is born

The secret to Luxury Escape’s success, according to Schwab, is that it solves a major problem for the customer: it offers only a handful of flash travel sales at any one time. Online travel agents such as Airbnb or Expedia create “the paradox of choice” – thousands of possible hotels and very little advice.

In the last decade, Schwab has moved on from the day-to-day operations – when he knew what was going on in every part of the business – to an executive role where he delegates to other executives.

Schwab believes a business developer needs to be both creative and a risk taker. Not everyone is cut out to be an entrepreneur, but for those who are, he has two key pieces of advice.

“We realised pretty quickly that travel was a much better part of the business.” – Adam Schwab, Luxury Escapes

Learning how to be an executive

Schwab was a lawyer at corporate law firm Herbert Smith Freehills and Same an investment banker at ANZ when they decided they wanted to work for themselves, and so quit their jobs in their mid-20s to start a backpacker accommodation business. After that seven-year ‘apprenticeship’ they started their first online business, a takeaway food ordering platform called My Table, which they eventually sold.

In 2010, the pair launched deals.com.au, an online experience marketplace selling services such as restaurant meals, day spas and travel. But with an average sale amounting to $50 or $60, there was too little revenue to pay back the customer acquisition cost, let alone turn a profit. The small businesses selling on the site were also very inconsistent in the way they did customer service.

The one exception was what they called travel flash sales – short-term specials for accommodation. Those basket sizes – or average sales – were larger so the sales were profitable. Plus, the hotel owners were very focused on customers. “We realised pretty quickly that travel was a much better part of the business,” Schwab says.

“We essentially provide really great inspiration and we solved that paradox of choice,” he says. “Because we're only doing 30 or 40 flash deals, we can give lots of great information to the customer.

“If you want to go to Maldives, well here's the place we've got,” he adds. “It's an amazing package. It's always 30% to 40% off so it's a great value deal.”

He clarifies that the discount might be 10% off the list price, topped up with extras such as breakfast, day spas, transfers, and so on, to increase the discount to up to 40%.

The discounts only last for a limited time, although customers can book for months ahead, which creates a strong impulse to purchase.

Schwab adds the discounts are usually larger than those on other travel sites because hotel operators like selling via Luxury Escapes: the site can provide them with a quick cash injection by selling a lot of inventory for the hotel very quickly – A$10 million in two weeks, for instance.

XPM, designed for small firms, is also missing bulk actions such as cloning jobs from one financial year to the next. This is critical in a firm the size of Perks, where 24 directors roll over 4,000 jobs every year.

Grieve exports the jobs to clone into a spreadsheet and sends it to Xero, which duplicates them directly in the database.

Grieve says he hopes automations in document management app FYI Docs will eventually solve some of these big-firm problems in XPM. In fact, FYI Docs could become a de facto front end for XPM, which would just function as a client database, Grieve says.

The extra work required for reporting and overcoming other limitations has been worth it, Grieve says. Staff are very familiar with the Xero interface and are happier with the improvement in usability, navigation and look and feel.

“I think it is more efficient. Bigger systems probably have a lot deeper functionality than Xero Practice Manager, but we found we weren't using half of that anyway,” Grieve says.

In fact, in 2019 he semi-retired and worked in a consultant role with the business. The 18 months off gave him the chance to chair a couple of other businesses, do some mentoring and play golf.

It also gave him a new perspective on the business. “I could see from the outside what was going really well and what was going really badly,” he says. “And coming back into the business completely changed how I looked at the role of CEO.”

While he is still quite hands-on, he has become a leader more focused on delegating. He recently hired 20 new managers. “It's understanding the importance of getting these really good people who can execute better than you,” he says.

It’s a long way from the days when he would get up at 6am on a Sunday to respond to customer service inquiries. And while he wouldn’t want to return to those days, it means he has a much better knowledge of the business than a recent hire.

“The first one is, create a business that solves a problem that's relevant to you. I'm not going to start a business that's creating vaccines for COVID because I'm not a biotech. Somebody is great at that stuff. It's not me,” he says.

“And rule two is, when you do find your problem or find your business, throw yourself into it fully. Don't side hustle it on weekends because you’ll never get there.”

Christopher Niesche is a business journalist and content writer with over two decades experience, including as deputy editor of the Australian Financial Review. He writes for business publications and corporate clients on topics including finance, trade, fintech, management, accounting, small business and human resources.

From lawyer to entrepreneur

“That's why founder-led businesses are preferred by investors because they actually have someone who really understands every element of the business,” he says.

What it takes to be a leader

Narrowing his focus

After he founded deals.com.au, Schwab says he made the mistake of not focusing solely on travel until five or six years ago, which held back the business. But it has made him intent on developing Luxury Escapes into the best travel platform it can be.

Adam Schwab’s biggest business lessons

Knowing when to let go of staff

With the benefit of hindsight, Schwab says he held on to people for too long who weren’t a good fit for the business. “It's always better to move quickly than to move slowly. You think you’re doing the right thing, keeping somebody on, but it's actually not doing the right thing at all. You're better off letting them move to a role that’s much more suitable for them.”

Learning to delegate

“We know what we don’t know,” he says. “How do we learn about what we're not good at and get us as competent as we can in areas we're not great at? We bring in talent.”

Abigail Murison is a freelance content strategist, editor and writer, who specialises in business, marketing and finance. Her work has appeared on websites and in magazines in the US, Australia, South Africa and New Zealand. She has a keen interest in entrepreneurship, human ingenuity and technology, and how they can transform the way we live and work.

REVIEWS ABIGAIL MURISON

Luxury Escapes is born

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