Hitting Heights: Richard Downs
He started the company as a theoretical case study for part of his MBA — then hired a staff of dedicated skiers to ensure a real-life peak performance.
As stars of the dotcom era crashed and burned, one travel company bucked the trend to become one of Britain’s biggest online success stories.
Founded seven years ago by Richard Downs, Iglu.com — a skiing, villa and tropical holiday website — has grown from a small room at the London Business School into a 100-strong organisation.
At a time when larger online travel businesses, such as ebookers and lastminute, have yet to report profits, Iglu is turning over £22m a year with profits of more than £1m.
This year Iglu will carry more than 60,000 passengers worldwide and is responsible for one in 10 of all ski holidays booked in Britain.
Downs believes Iglu’s success is down to its highly motivated team, all of whom are passionate about skiing, he says: “Everyone at Iglu is an expert because they love skiing. We pride ourselves on customer care. Right from the start we made a point of loving our customers and finding out exactly what kind of service they wanted.
“The internet, with its capacity for speed, real time information and flexibility, has enabled us to raise the bar in terms of customer service.”
Downs explains that a customer will typically go into a high street travel agency, pick out four brochures, choose a holiday, get excited — and then discover that holiday is gone. Around 50 per cent of holidays are sold as soon as a brochure is printed, so for many people booking a trip can feel like Groundhog Day.
“Skiing only makes up around 5 per cent of high street business, so they are unlikely to understand your needs. At Iglu, we provide a one-stop, bespoke service and can advise on every aspect of skiing from technical questions to where to find the best bars and restaurants.
“Last year a major travel company spent £80m on a marketing campaign and only drew one-tenth of its customers back,” adds Downs: “We don’t waste money on broad-brush advertising and marketing. We take the view that if we provide a quality service, customers will return.”
Iglu’s attention to customer care has certainly paid off. Today the company boasts repeat business of around 40 per cent.
Downs’ route to success began in 1996 when he left the City to study a two-year MBA at London Business School.
“I was working with some very bright people but I didn’t want to get too comfortable. The City gave me a thorough understanding of finance and accounts, which proved invaluable in setting up a business.
“The entrepreneurial faculty at LBS is incredible — the lecturers are not boffins in ivory towers but real entrepreneurs who have made a success of their businesses. They taught me to differentiate between a good idea and a good business opportunity.”
Iglu.com was conceived as a case study in starting an online travel business as part of Downs’ MBA. The business plan was so persuasive that LBS decided to back it for real by putting it into its incubator with seed funding from its venture capital arm.
“Six months of my MBA was spent at Haas Business School in Berkeley, San Francisco,” explains Downs. “Dotcom mania was just starting in America and it was an opportunity for me to see the true innovators in action.”
Excited by the opportunities this new technology presented, Downs hit upon the idea of using the internet’s virtues of speed and real-time information to bring the diverse world of consumers together with the equally diverse world of tour operators. He calls this the “butterfly” model, with Iglu.com as the intelligent hub at the centre. “In the late 1990s, most people surfing the net were young professionals and it was the same group of people who were most likely to take up skiing,” he explains.
If they wanted to book a skiing holiday they would visit a high street travel agent and look at an old-fashioned brochure, with no snow information, no real-time information, no real-time pricing. They were looking at something that was instantly out of date and limited in its stock range.”
The internet was the ideal tool to capture this group of people and provide them with more choice and better customer service — and all from the comfort of an armchair. Having found a foothold in skiing, Iglu has since branched out into the even bigger markets of villa rentals, exotic holidays and corporate hospitality.
So why is it that Iglu has thrived and prospered when so many other dotcom heroes have by now faded to zeros?
“We were born in 1998 before the hype and frenzy of the dotcom boom,” explains Downs: “So Iglu did not have the luxury of a big marketing budget. It had to rely on its strengths — a thorough knowledge of the market and good customer care.
“When the pendulum swung against dotcoms in 2000 we were under the cosh from all angles but we were a solid and profitable company and that put us in control of our own destiny.”
With business booming, Downs acknowledges floating the business is on the cards. Iglu has just appointed Close Brothers Corporate Finance to advise on a possible AIM float at £50m.
He says: “Iglu is a transparent, easy-to-understand business. We have a three-year profit history and a proven track record that we can survive and prosper in difficult times. Our feedback from the City is that a flotation will be well received.”
