TLabs Showcase on travel startups featuring UK-based public sector travel web service PublicSectorDirect.
Who and what are you (including personnel and backgrounds)?
PublicSectorDirect was borne out of a two-year consultancy project with a leading London university – special discounts were arranged on a number of airlines culminating in a demonstrated actual saving in excess of £500,000 for the university.
With this concept in mind, extensive airline contracts were negotiated specifically for the public sector, with many airfares offered lower than the Government’s own air programme.
PublicSectorDirect.com is the only travel company operating exclusively for the public sector.
It is wholly owned by Barringtons International whose directors are:
What financial support did you have to launch the business?
- Mark O’Brien, CEO and co-founder - ex-director of Rosenbluth, Expotel and The Travel Company.
- James Drew, chairman and co-founder - pioneered leading global companies including Barringtons International & Fuzzy Brush.
- Luke McNeice, technical director - led the development of Priceline.com and most recently Universal Studios.
PublicSectorDirect is wholly financed by Barringtons International and has no private or bank equity investment
What problem are you trying to solve?
Significant savings need to be made throughout the public sector and with the imminent spending review, budget holders will be looking to reduce key items of discretionary spend, of which travel is a main part.
In fact, as a whole, the public sector has a combined travel spend of £3.43 billion, so this really is a significant sector.
Describe the business, core products and services?
PublicSectorDirect has negotiated airline and hotel contracts specifically for the public sector. A number of these contracts are exclusive to us and can only be purchased when a traveller undertakes the registration process on our website.
More airlines and hotel companies are being negotiated each week to increase the savings for the public sector. Additional products for the public sector such as ferry, rail, virtual conferencing and carbon offset are in continuous development.
Many of these products, such as our free carbon calculator, have already been launched.
We have outsourced the customer fulfilment for the website to a travel management company who are specialists in the public sector. We also have a dedicated call centre in Manchester for those clients who are more comfortable enquiring by phone.
Furthermore, PublicSectorDirect has a dedicated personal holiday service for public sector employees which is also run from the website. This service offers additional discounts to bona-fide public sector employees – it has a dedicated team based in Warrington.
Who are your key customers and users at launch?
Our key customers are: central government, NHS, the emergency services, schools and higher education Institutions, local government/councils and consultants working inside the public sector.
Did you have customers validate your idea before investors?
We needed to see if the business model could be implemented within the public sector and after an investment of two years this was validated and demonstrated with a leading London university.
We also worked with a core group of 2,000 public sector employees developing the website to ensure it was user friendly and had the products/services that the public sector need.
What is the business AND revenue model, strategy for profitability?
Traditional travel agents make a high mark-up to their clients and with this in mind we set a standard transaction fee for all our services which are very clearly identified on our website.
Our fulfilment agent is only allowed to levy a nominal transaction fee. We also benchmarked our prices against leading online agencies and found, in a survey of 130 different airfare types, we were on average 8% cheaper.
PublicSectorDirect does not have any airline commission or override agreements, this means we are completely independent of the suppliers and are available to offer the lowest deals to our customers.
The revenue model is built through the number of transactions, and as we only incur the cost at the time of sale this means our cash-flow remains positive and we have a negligible bad debt risk.
Our strategy over the next 12 months is to continue to add travel content for the public sector which in turn will produce the profitability to re-invest in new products to benefit the public sector.
SWOT analysis – strengths, weaknesses, opportunities and threats?
- The only exclusive travel company for the public sector.
- Specifically negotiated rates – lower than the government air programme.
- No high travel agent fees.
- Right time right place.
- New to market.
- Traditional travel agents whose profit margins we will erode.
- A new and innovative approach to purchasing travel for the public sector.
- Timing of the government spending review.
- Lowest logical cost strategy.
Who advised you your idea isn't going to be successful and why didn't you listen to them?
- Continued EU red tape in regards to public sector purchasing.
- Government not offering best travel price alternatives.
In a time of economic downturn we invested heavily in our company. As we are sure your readers will know already, there were many people who thought our timing was questionable.
We believed in our product and our customer’s belief in our product due to the demonstrated results from our consultancy project. We took on board the negative comments but ultimately our timing in producing a cost-saving service for the public sector is exactly what we planned two years ago.
What is your success metric 12 months from now?
To continue to add products and services for the entire public sector and to ensure that we effectively communicate the cost saving opportunities that all public sector employees can take advantage of.
We have been delighted with the response from airlines and travel sector suppliers who also believe in offering, through PublicSectorDirect.com, the lowest rates available. Our role is to continually monitor the suppliers to ensure we improve and enhance our role in travel procurement.
NB: TLabs Showcase is part of the wider TLabs project from Tnooz.