Setting Scott Dunn up for long term success

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Audio Transcript

Tim Smallbone

Hello and welcome to Inflexion Point, the podcast that explores those crucial moments in a company's journey that change the trajectory of success. Through conversations with business founders and entrepreneurs, we'll explore what those moments look like and how to recognise and harness them. And in this episode, we'll speak to the chief executive of luxury travel company Scott Dunn, who had only been in her role for a year before the pandemic hit, and the travel industry was plunged into turmoil.

Sonia Davis

The team was scared. This is their livelihood.

Catherine Richards

We did the best that we could with what we had.

Sonia Davis

It was really hard for the people who went through that. I will never, ever, ever forget that day.

Catherine Richards

This is where we are and this is what we have to do, and we come up with a plan and work through it together, but the partnership for me worked incredibly well.

Tim Smallbone

I'm Tim Smallbone and in my 20 years as a partner at Inflexion, I have been lucky enough to witness a huge number of those transformational moments that are part of every success story. The Scott Dunn tale is one of both agility and resilience, how moving fast and making smart decisions in challenging times set the business up for long-term success. So I'm delighted to welcome Chief Executive Sonia Davis, who's been with the company since 2018, and Catherine Richards, an Inflexion partner who sat on the board and worked closely with the Scott Dunn team during the last few years of our partnership. Welcome to you both and thanks for joining us. So Sonia, if I could start with you. Scott Dunn is a business that sends people on exciting journeys. What was your journey that led you to the door of Scott Dunn's head office?

Sonia Davis

Oh, that's a good question. So my background is change and transformation. I'm a bit of a jack of all trades, master of none, but what I really enjoy is looking at and understanding all parts of a business and working out how to make it better and joining the dots. I'd been working in change and transformation in the very similar industry of food distribution, so bananas going up and down the A1, and then had a call asking me if I was interested in travel. And I said, well, I'd like to go on holiday, but I don't want to do a lot of travel for my job. I like living in London and it turned out there was an opportunity to join Scott Dunn as a potential CEO successor. And I thought, given I spend my disposable income on going on holidays, drinking nice wine and eating good food, I thought, why not? So I made the move.

Tim Smallbone

So were you a customer?

Sonia Davis

No, I'm not a typical Scott Dunn customer. My favourite types of holidays are active walking holidays with some nice hotels at either end. So at either end of the holiday I'm probably a Scott Dunn guest, but right in the middle I've got a backpack on, my hiking boots and I'm exploring different parts of the world.

Tim Smallbone

So Scott Dunn was part of the Inflexion family, but Catherine, if you got involved, it obviously wasn't necessarily making its numbers. Scott Dunn had run into some choppy waters.

Catherine Richards

It had a few challenges and I think I was sent in to work with Sonia to see what could we do. You know, had a great brand, great offering. But would it be fair to say, Sonia, we didn't quite know kind of where we were making money, necessarily why we were making money in some places, and it just needed a fresh look. So I got involved. And actually, we got off to a really good start, didn't we? Was it must have been August 19? And we had these great plans of actually: let's delve into our business, let's see where we can, we rationalise our product, can we actually look at better deals with our suppliers? can we just be more aware of where the business is making money and why. We were going through our budget and we'd hit our first quarter numbers, hadn't we? We're like, actually, this is not that hard. You know, we know what we're doing here. And then COVID hit.

Tim Smallbone

Might be worth just, Sonia, if you just, tell us just a little bit about what the business does, because it's not an ordinary travel company.

Sonia Davis

Correct. So I like to think we're quite unique, as I would being CEO of the business. So we work with our guests, we call them guests rather than customers, to really understand what it is you're looking for when you're about to take that family vacation or that trip with a special person or going out on your own? And we will listen to you, understand what it is you want to do, and then we'll match that with our carefully curated collection of product and making sure that the service is seamless at every touchpoint. So one time in the year you could say I want to go skiing, but then you might want to do a relaxing holiday to the beach, or you might want to do an Antarctic cruise. We can offer you all of those things, which makes us quite unique as a travel company.

Tim Smallbone

So it's a luxury travel company, a high touch travel company.

Sonia Davis

High touch, high service, and that typically means high budget as well.

Tim Smallbone

And that had been a very successful business for a long time. So why was the business starting to struggle?

Sonia Davis

It all comes down to how you measure success. So when I joined, the top line, the revenue had been growing very strongly, but it hadn't been dropping through to the bottom line in terms of that bottom right hand number, which is always key, which is that profit. So we'd seen strong top line growth. We had expanded, the business had been expanded into multiple geographies, opened in the US, opened in Asia, and then just made an acquisition to broaden its footprint in Asia. But it wasn't dropping through to the bottom line. And I think there was some frustration from our board members that we kept talking a good game as a business, but the results just simply weren't there. So as Cath mentioned, we needed to really look at what was our strategy to grow. It's not good enough just to grow the top line, you've got to drive that bottom right hand corner number as well. So it involved simplification of the business, exiting non-core product lines, non-core geographies, which wasn't easy as a lot of emotion attached in some of those decisions, quite rightly given the heritage of the business, whilst maintaining that focus on service and on guest. Unlocking new marketing channels, being really focused on what products make money, what customer types make money, and then ruthless execution.

Catherine Richards

But sorry, you took a tough decision, didn't you, because you actually decided to close down part of the business that had been the heritage of Scott Dunn. Is it worth just talking a little bit more about the chalet business because that's what Scott Dunn was renowned for? But when we were looking about what do our guests want, they don't want to go on a ski holiday three times a year.

Sonia Davis

You're right, it was a challenging decision because of the heritage of the business and the emotion tied up in that's how the business was founded and what it had always been known for. But I have a consulting background and I worked very, very closely with another of the Inflexion team, Alex Mathers, on using your classic consultant toolkit going: does this product line make money? What are the guests saying? What's the feedback? What's the competitor landscape? And what are the market forces against us? It was a product line that whilst it had historically been profitable, that profitability had drained away and was then loss making. With Brexit coming in, that had increased costs further, made it more complex to operate. And also through our guest analysis, we saw guests weren't cross-shopping into the other product ranges. So they were coming in, booking a chalet holiday and they weren't cycling into our other product ranges. So when you looked at it across all of those components, we made the difficult decision, but the right business decision, to exit that part of the business, navigate the people change, the guest communication, the marketing change, and move forwards. And it was a bit of a weight off the shoulders of the organisation.

Tim Smallbone

Catherine, when you get involved with looking at businesses, you often find that they're not looking in the right place. I remember that we used to have a huge focus with the management of Scott Dunn before Sonia's time on the productivity of the advisors. It was always felt to be the key KPI because nobody bought a holiday without an advisor, and how many holidays could the advisors sell? Were they looking in the wrong place?

Catherine Richards

No, I think that is absolutely the right place to look at. But I think, again, with growth, sometimes you do take your eye off the ball. And the things that you had always been so laser focused on, you sort of take for granted a little bit as a business grows. So I think what we did was have another look at that and we were quite surprised, weren't we, Sonia, when we did drill down, you know, perhaps 18 months after they'd stopped measuring it, to realise that people had become a little bit complacent, if we're being honest, the workforce had become complacent. So we had to instil, in the right way, accountability, I think throughout the organisation and demonstrating to people, if I do this, this is what it means for the business and we flourish and therefore it's a better opportunity for you. But without the information, I don't think people can make the right sorts of decisions. I think the productivity worked really well when people could understand their contribution. And you turned that into a really good incentivisation tool for them.

Sonia Davis

Yeah, we'd ended up in a place where our sales teams were remunerated on how the team performed. So it was a very collaborative working environment, but our top performers weren't necessarily earning at the levels they should have been as everything was targeted as a team. So bringing back that measurement around individual travel consultant performance, both gross profit as well as volume, was another big learning for us was not just volume but think about margins, was then putting in place an incentive scheme that really supported creating that performance-orientated culture, which in travel is not always what you see. You've almost got two types of travel businesses. You have the very large ones owned by big corporates which are always about performance. And then you've got the small founder-led businesses where it's more about the travel experience. And Scott Dunn's sitting right in the middle of those two. So we have to create that balance of creating that performance-orientated culture while still ensuring the teams have that passion for travel and can experience the product. So we've tried to ensure that we've got both components in there and that I think has been part of how we've managed to improve our performance over the last few years.

Tim Smallbone

And if you think back to the first two decades of this century, there were so many changes that impacted upon the travel industry. And of course, Catherine, you led the investment in On the Beach for Inflexion, which took advantage of those changes. Did you see as part of the problem that was around Scott Dunn, was it changes in consumer behaviour? Were there changes in technology that had an impact?

Catherine Richards

I think people were able to compare. So if you were doing a trip that had single dimension, it's very easy now to benchmark it against a whole host of other travel operators. And if somebody is just looking online, they don't understand what they're getting with a Scott Dunn holiday. You need to be able to engage with the guest and see that the service offering that we're bringing. So I think we were really focused on experiences. And I think that was a big thing that you did, Sonia, was make the guest the centre of everything we do. And it was actually, how can we demonstrate to the guests the breadth of offering? Because remember, we want them to take their summer holiday with us, but we want them to take the other three or four breaks that they have a year with Scott Dunn.

Sonia Davis

And I think it's an interesting question, Tim, and I'd love to say I can remember the first two decades of this century in the travel industry, but that'd be a lie. So what I think was interesting is we have got really small market share. So we can often get lost in what's happening in the macro and the OTAs and all of those wider facts in the industry, but there were so many things that were within our control. We'd become very, almost snobbish. Scott Dunn believed it knew what the right things were and it knew what the guests wanted. We'd become too internally looking, and we'd stopped asking our guests and looking at our guest feedback. We hadn't done any guest research for a long time. So it was a mix of just looking outwards, understanding what our guests want and why people weren't choosing Scott Dunn, why they didn't know what we offered and then unlocking the things that Cath’s just talked about in terms of making sure they were aware of the full portfolio of what we had available to us. And there's been, even in my tenure in travel, I've heard of the rise of the OTAs, is it the death of the travel advisor or the travel agent? And I don't believe that at all. And now you've got AI coming in and ChatGPT. What we've seen through the most recent years with the pandemic especially is you can see an awful lot of information online, but you can't lose the benefit of the human. So I'm sure many people listening to this podcast or even the two of you sitting here today will have had something booked that you had to try and cancel and you couldn't get hold of a human. And when you try and read all that information on the internet about where to go in Vietnam or which boat to choose for your Antarctic cruise, there's so much information out there. How do you know what is real? Whereas you talk to a travel advisor and that's what we bring to the party. So I firmly believe that our sector is here to stay and has absolutely weathered the rise of the OTAs, the pandemic, and now what we've got coming with AI and ChatGPT.

Tim Smallbone

When we appraise the businesses at Inflexion, we do lots of work, working out risk of how the revenue might go up and down. We never do risk profiles for the business when we invest where we assume the revenue goes to zero. And yet that happened to Scott Dunn. And it was the most extraordinary time. How did the business respond to that?

Sonia Davis

I will never forget that board meeting.

Tim Smallbone

It must have been a pretty scary situation.

Sonia Davis

It was April, we were all at home and myself and Carolyn, our CFO, we presented a couple of options, one of which was to put the business into hibernation, which we knew a lot of other travel businesses were doing, which was to strip everything out and hide. The alternative proposal was to redesign the organisation to keep it going, to focus on what we knew we needed to do, things around rebranding, working on SEO, working on technology that we could do whilst we had some capacity, shall we say. But that would mean a higher cost base during a period where we had no money coming in and needing to look for support from regulators, banks, shareholders and suppliers. And I remember Cath and our chairman Simon saying to us, we're going with the option that isn't to hibernate because we believe that you can do what is needed and we can bring the business back stronger. I will never, ever, ever forget that day.

Tim Smallbone

A really unique opportunity. Could you have made the changes that you made without the pandemic?

Sonia Davis

It would have taken longer. One of the things that we wrestled with during the pandemic is we had two brands in our UK business and one brand was significantly stronger, which was Scott Dunn, and we had a sister brand, Imagine Travel, which was hugely loved by the guests and the staff were so passionate about it. But it was a brand that would have needed a lot more investment to make it truly flourish. And we had to make some tough decisions in the pandemic and we knew that it would be a very emotional decision because the team was so passionate about the brand. But with the backdrop of the pandemic, everyone came together and it didn't matter what brand it was, it didn't matter whose guest it was, it was one team and it enabled us to navigate what outside of a pandemic would have been a very challenging situation and I'm delighted that we retained the majority of that sales team because they were excellent and they're still with us and a number of those guests are now booking holidays with Scott Dunn because Imagine Travel isn't a brand anymore. So things like that, some of those decisions were never easy but some of the emotion was able to come out of it because everyone was focused on just doing the right thing to ensure that we were still there.

Tim Smallbone

So the people were more amenable to change in the circumstance

Sonia Davis

You need to remember that the travel industry is not a highly paid industry for its team members. They're in the industry for the love of travel and being able to travel. They couldn't travel. And the industry was not an industry that was thriving; jobs weren't there and so the team was scared. This is their livelihood and they're not sitting on necessarily a big savings account to be able to support themselves through an unknown length of time. So we did the best that we could with what we had to support the team and just again explain why. It was all about communication but it was tough. It was really hard for the people who went through that, navigated any travel business during the pandemic.

Tim Smallbone

And for you, was there a moment where you started to feel, we've cracked this now, this is really going to work? Or were you sort of holding your breath waiting for the pandemic to end?

Catherine Richards

There was a few false starts, weren't there, where we thought we've done it and actually we thought things were going back to normal and then there'd be another lockdown. So wasn't it three we had to navigate?

Sonia Davis

Yeah, we had to navigate. As the CEO, you design the plan, so you're ahead on the classic change curve. You've gone through the ‘oh crap’ moment, the ‘why me?’ moment, the ‘oh my goodness, it's never going to work’ moment, and you pop out the other side just as you're trying to take the organisation through the start of all of that. So I think I went through the ‘how on earth is this possible?’ in the March and April, and then I was out the other side. Yes, there were some very difficult bits, but every hurdle that we overcame, we learnt from. So when something else came and slapped us in the face, which it did regularly, be it the pandemic itself, be it at the banks, be it suppliers, be it guests, whoever it was, we knew we could do it. We'd find a way. So I don't think, there was never a point where I thought we cracked it because there's always an opportunity for the business to keep improving. And that's still our mentality, it's how do I keep improving our SEO scores? How do I improve guest experience? But the darkest days were probably in that early April, where we hadn't got that fully formed plan yet and we were just going, right, how do we make it work? And one of the things I'll be hugely grateful to Cath for in particular is she mobilised her network of experts. Without that help – I'd not been in a distressed business situation before – that made a massive, massive difference to us, to us navigating this and coming out fighting.

Tim Smallbone

In this Inflexion Point story, you've turned the business around, everything you've talked about is changing how people work and what they do. There's no need for a massive investment, no massive technological change, it was just doing things differently.

Sonia Davis

Yes, I think that's fair to say. But I'm not going to lie, we did need some extra investment, Tim. I think pretty much every travel company did through the pandemic. We did need support and Inflexion were there, as were our banks and our suppliers and our other stakeholders. So that was hugely, hugely supported. But we haven't changed what Scott Dunn stands for. We've tried to use technology as an enabler, and keeping the guest at the centre. So using technology to deliver better guest experience, but also support our teams to be more effective, more efficient, to lift their performance, productivity, error reduction and overall that means lifting the profit as well.

Tim Smallbone

Mistakes along the way.

Sonia Davis

Would I have done anything differently, any mistakes along the way? My philosophy is we'll always just keep learning. Are there things we could have done better? Yes. Do I wish that we could have supported our team more? Yes, but at the time we did the best that we could with what we knew. And I always feel if I look back too often and I reflect too much on what I could have done better or could have done differently, I don't move forward. So I try and go, what can I learn? How can I apply it to make sure we do it better next time?

Catherine Richards

We went into the pandemic with a good business and it was making about 19% margins. Sonia came out of the pandemic with a business making 39% margins. I mean, to me, that just demonstrates how effective the change was that you put in place. So you grew your top line during that time and massively improved the efficiency, the productivity of the business. And that just became a sort of a virtuous circle for our employees. They could see that we were one of the winners coming out of the pandemic.

Tim Smallbone

And has the business changed? Has consumer behaviour changed, customer behaviour changed post-pandemic?

Sonia Davis

We've got a lovely little trend at the moment where mums and daughters are wanting to go away, just the two of them, or dads and sons. So there's little things like that. So I think that's pandemic-related. Maybe people are feeling like they missed out on some of those special holidays. But I think people just value time. And I hope that we all hold on to that because it's so easy to drop back into the old days where you forget about the importance of time with the people you want to be with.

Tim Smallbone

Catherine, you move from business to business with Inflexion. What would you reflect back on? What did you learn that you may apply elsewhere?

Catherine Richards

I think to be bold, actually, because it is really tough when you go through something like this. And I think we've always had this relationship, haven't we, Sonia, where we just speak very openly about the situation that we find ourselves in. So we tend not to sugarcoat it. We tend to be really clear as to this is where we are and this is what we have to do and we come up with a plan and work through it together. But we hold each other to account, don't we? I think the partnership for me worked incredibly well. And that's what I look for in other businesses is just to make sure that we're aligned on what we've got to do. But go hard, I think is the key message, you know, be committed. and just really work with your team and you get the results.

Sonia Davis

The other thing Cath learnt was the importance of a luxury travel advisor when booking her own personal vacations. I'm delighted to say that Cath is a regular customer.

Tim Smallbone

You offer a high-touch service.

Sonia Davis

We do, and when things go wrong, like a volcano erupting, we're there for her.

Tim Smallbone

It's been fantastic. Thank you both for sharing your thoughts. That's it for this episode. My thanks to Sonia and Cath for joining me. Remember to subscribe to Inflexion Point wherever you get your podcasts so you don't miss an episode, including a discussion with Simon and John, Inflexion's founders. And check out the Inflexion website if you would like to learn more about how we back ambitious business owners and help them to accelerate sustainable growth. Thanks for listening.

Setting Scott Dunn up for long term success

In this episode, Inflexion Point tells the story of Scott Dunn, the luxury travel company that watched its revenue fall to zero when the pandemic shut travel down, and how it came back stronger. Host Tim Smallbone is joined by Chief Executive Sonia Davis, who had been in the role only a year when the pandemic hit, and Catherine Richards, the Inflexion partner who sat on the board through the turnaround. They reflect on the moments that shaped it: the April board meeting where the choice was to put the business into hibernation or redesign it and keep going, the tough decision to exit the chalet business that Scott Dunn was founded on, the discipline of understanding where the company actually made money, and the shift to a performance culture without losing the passion for travel. Along the way, they talk brand consolidation, keeping the guest at the centre, why the human travel advisor still matters in the age of AI, and how the business came out of the pandemic with its margins transformed.