Question: How did you turn your idea for Sherman’s Travel into reality?
James Sherman: Well, it is interesting that it never started as a pure business plan, a 20 or 30-page business plan. It really came about through happenstance when I was taking a trip to go to Whistler Ski Week and I had booked the ticket, the air flight, on Orbitz. And Orbitz did not send me any information on the destination. And I'm very much a travel enthusiast; I've traveled all my life, having lived or worked overseas on many different occasions. And I thought that it was strange that there was no information provided by the online travel agency, so actually decided to get into this business initially by publishing a series of online travel guides. And we started out by partnering with an airline, America West Airlines, with the thought of adding on additional partnerships over time. Eventually, by stepping in with the online guides, that led to my exploring other areas of opportunity in the travel industry, particularly with travel deals publishing, which really is our core business these days. So we migrated from being a publisher of pure online travel guides to being one of being a rather large publisher of travel deals today.
Question: How is the company different from traditional online travel agencies?
James Sherman: Shermanstravel.com is a publisher of travel deals and destination advice. We're very different from the OTAs, the online travel agencies like Expedia, Priceline and Travelocity and Orbitz. In fact, many of those are clients of ours. But we are a pure publisher, so we're advertising-supported. We publish thousands of deals, and they're hand-picked by our editors every day and published on the Web site as well as through our e-mail products. We have our Sherman's Top 25 Travel Deals newsletter that comes out every Wednesday. That is received by over four million subscribers. The Web site has a host of other resources, including over 300 travel guides, videos, 101s, slide shows -- a lot of great resources there. Hotel reviews, of course, and a travel search tool. We also publish a magazine which is more upscale. While the Web site is more mass-market, reaching the broad audience of leisure travelers, the magazine skews more upscale, and it's positioned around what we call smart luxury. So it's a combination of luxury, but still a good value. And our brand positioning overall is about value, whether it's on the lower end, what we call a smart bargain, or the higher end in terms of a smart luxury.
The magazine does cover some deals. We have a section there called the Luxe List, which is the best values of the season that are the best in four and five-star vacations. But the magazine is not necessarily always looking for a deal per se. The magazine will cover destinations and talk about places to stay that are upscale but are worth the money. So we may talk about an $800-a-night resort in St. Bart's, but at the same time we'll highlight one that's $300 or $400, that's less expensive; it's still luxury, but it's going to be a little more affordable for what we view as a significant portion of the population; that is, those that we call the mass affluent. Not necessarily the ultra rich that are willing to pay any price, which may be .01 percent of the population, but rather a larger segment that want a more affordable but still a luxurious experience.
Question: How does your company fit in during the recession?
James Sherman: Well, certainly anyone that is in the deals business is in a good position these days, given the recession that we’re in. And that is true both on the high end, in terms of our luxury value positioning with the magazine, as well as for the Web site and our e-mail products that provide great overall deals and bargains. So we do find that a lot of suppliers are price-cutting; there’s no doubt about that. Hotels need to do that to fill up their rooms and to decrease their vacancy rates. The same with the airlines. So it’s a great time as a traveler to find amazing deals out there. Unfortunately for us as a business, though, the suppliers and the agencies, because they’re making less money, means they have less money to spend on advertising. So the ad budgets have been certainly very tight this year.
Question: What are some hot-spot vacations during the economic downturn?
James Sherman: In terms of hot-spot vacations, certainly for American travelers, the Caribbean is doing incredibly well. I think that may be because people have been a little bit scared off of Mexico, given the flu and then crime and some other issues there. So I know a number of travelers have changed plans, have shifted perhaps to the Caribbean. In terms of other hot spots, certainly Americans are going to any value destinations, London, for example. Visit Britain's been doing an amazing job in promoting London as a destination. It's always been relatively low-cost to get to in terms of the airfare, but now the hotels are quite affordable as well. There's been a lot of price competition there. There are also great values in terms of sort of second-tier destinations, places like Budapest, for example, or even Ljubljana -- some other destinations in central and Eastern Europe that are very affordable for travelers these days.
Recorded on October 30, 2009