By many accounts, boutique hotel booking platform Mr & Mrs Smith has had an interesting year.
In April, it announced its step into the experiences space with the acquisition of UK-based tours and activities company, SideStory. Then, it announced plans to raise funds, albeit in an unconventional manner – a crowdfunding campaign, opening up investment opportunities to the public in September.
After that, Mr & Mrs Smith went back to its roots as a printed travel guide with the release of its coffee table book, World’s Sexiest Bedrooms, on bookstore shelves now.
Between the book’s pages lies a Mr & Mrs Smith voucher for £25 off their next booking, with five ‘golden tickets’ worth £1000. “I hope that everyone gets this as a Christmas present and then by January, they’ll start planning their trips… if you book with us, then the cost of the book is free,” said CEO and co-founder James Lohan.
“As much as we all love social media, I just felt we should do something we could touch and feel again… and I’ve found that [people] tend to respond better. It gives another level of connection,” said Lohan. “We’ve become so digital as a business, worrying about the UX, UI, all this backend stuff… it’s very hard to be individual in that way.”
The decision to create a book is also Mr & Mrs Smith’s way to paying tribute to its origins as a traditional travel guidebook, tipping its hat to the beauty of print publishing and its staunch belief in the power of storytelling.
“If you have been around long enough, you’re going to come back into vogue… whether it’s clothing or books, there’s always a slight tweak on design but it’s hard to reinvent the wheel.”
While book sales are a slower, more traditional way to reach new customers, Lohan emphasised that it is just one channel through which the company is building awareness of its brand.
Mr & Mrs Smith still employs social media and influencer marketing to develop its outreach, though Lohan asserts that it is “pretty cut-throat” about those it chooses to affiliate with.
“The influencers have got to be credible… we tend to work with influencers where we genuinely respect their points of view or the businesses they run… We’re looking for people who are doing other interesting things beyond their Instagram account. It really isn’t about [the number of their followers].”
Ett Hem, one of the hotels featured in Mr & Mrs Smith’s World’s Sexiest Bedrooms
A different kind of customer support
In total, the company raised £6.1 million its crowd-funding campaign on Crowdcube in September.
In the first day alone, the campaign raised over £1 million. By the end of the campaign (ended 10 days early, to take advantage of the UK’s Enterprise Investment Scheme (EIS) that grants investors tax relief, subject to a limit of £8 million for investment), over 2,000 people had contributed. Investments could be made at £125 per share, of which £5 could be spent on a Mr & Mrs Smith booking.
“We had people putting in from £250k and up (the average was £3,000)… If you were one of the big bookers, you’re getting £10,000 worth of villa holidays… and all sorts of extras.”
Lohan said there were three key reasons why Mr & Mrs Smith chose not to go the traditional route of raising private equity,
First, the company was resistant to the idea of sacrificing any autonomy for the sake of raising capital. “We’re doing all the things anyway [that PE firms would recommend], we’re not perfect but we’re not stupid… I think a lot of the advice that we would’ve got, we were already doing,” explained Lohan.
Secondly, raising funds via crowdfunding had the added benefit of letting Mr & Mrs Smith re-tell their story and refresh their image in the eyes of old and new customers, making for a powerful branding exercise.
“Thirdly, we’ve got 2,000 customers now that are going to spend their dollars with us, which private equity can’t bring.”
This fundraising method helped to cultivate customer loyalty too, by getting people to put a financial stake in a product they enjoy using and a brand they associate with.
“I like the idea that we’re sharing the success of the company and the future with the people that make it successful… to see that level of support from a base of people who don’t know me or Tamara [Lohan, co-founder and CTO] is great validation of what we’re trying to do.
“Our vision has always been that if we have the best hotels… and you get a little extra on arrival (like a bottle of champagne) and exclusive offers, then why would you go anywhere else? So it’s not a pushy loyalty system.”
Cap Rocat, Islas Baleares, Spain
Choosing people over private equity
The intent behind the crowdfunding campaign was also three-fold, said Lohan, but it really came down to the company’s rumbling appetite for growth. “We were growing fine and growing organically but we felt the opportunity in front of us was much bigger… [Funding] would help us move a lot quicker.”
First, it is moving into the experience space, given the growing customer appetite for services beyond hotel bookings. Moving into the experiences space would not only satisfy that appetite, but it would also allow Mr & Mrs Smith to create more touch points with customers on their trips.
In April, Mr & Mrs Smith acquired SideStory, a small experiences company that conducts cultural tours. The funding will be used to help roll out these new experience offerings, branded as Smith SideStories. Offering curated experiences congruent with the brand’s list of hotels will help Mr & Mrs Smith gain a stronger level of ownership over its customers’ travel experiences, even after it hands them over to a hotel property.
“We’re trying to become more involved in your trip… once you book with us, that isn’t the end of our relationship.”
Palazzo Margherita Hotel, Bernalda, Italy
Extending into alternative accommodation
Secondly, Mr & Mrs Smith’s eye is beginning to wander from hotels to alternative accommodation, continuing its expansion with luxury villas in particular.
“Villas are big part of our growth plan. We have about 500 hotels that are good enough to be Mr & Mrs Smith hotels on our waiting list… so we want to move quicker on that. But we also want to get villas on board.”
And thirdly, it aims to capitalise on its growing popularity in the USA. “You literally have to market your product almost city by city in America… to do that takes a lot more cash, so we want to invest to tell Americans that they should spend their precious dollars with us.”
Despite luxury travel trends being on the rise in Asia, Mr & Mrs Smith is apprehensive about making moves in a market that remains quite foreign, at least for the time being.
“[APAC is] about 15% of our business… but it’s small for us,” said Lohan. “We’d love it to be more but we’re really going where our strength is. For us to really explode, we’d need to translate, and that’s going to take some time to think about.”
Having raised more than it bargained for, it’s time to think strategically about how it wants to use the extra funding. “We don’t want to just spend it all on everything, because we’ll do it badly… we need to focus and decide if we go into translation or maybe acquisitions, whatever it might be.”
