After 30 years on the business side of travel media, including over two decades in leadership positions with Hotel & Travel Index, Travel Agent Magazine, Travel Agent University — and having launched both Premier Hotels & Resorts and Luxury Travel Advisor — John McMahon is now the CEO of online hotel booker Five Star Alliance, having completed a management-led buyout last week.
“For years, I was educating agents about how to sell travel and advocating for the travel agency community. Now, I’m going to practice what I preach,” he told Travel Market Report.
While he declined to discuss current revenues, he said the now-independent company, after its purchase from Questex, has a head count of about 20 full- and part-time employees. It also has an eye-catching ADR of $750 for its hotel bookings, which foreshadows McMahon’s strategy.
“We are attracting the do-it-yourself traveler who isn’t loyal to a particular hotel brand or travel advisor, otherwise, they wouldn’t be coming to us,” he says. Courtney W. May, Five Star Alliance’s vice president and general manager, who with McMahon are the controlling shareholders, says out of over 180,000 hotels worldwide, Five Star has edited its inventory down to 4,000 hotels and resorts worldwide including pure five-star properties and the upper end of the four-star market.
Hotels can’t pay to be included, but are hand-picked based on multiple criteria, and it even includes some smaller, unique hotels that cannot be booked online. Last year, it downgraded about 100 hotels from five to four stars and dropped another 50 properties.
McMahon says for his busy and affluent consumers who want to book online, they can trust the hotels included on Five Star’s website booking engine and they also get good service. He notes the company has a 5-star rating on Trustpilot. By contrast, Expedia, Travelocity and Hotels.com each get 1-star, the same as Ryanair.
The difference, he says, is that Five Star offers its users a concierge desk with 24/7 service by phone, chat, email and social media messaging that is provided by advisors who specialize in luxury, so they are not like your typical OTA call center. The opportunity to expand, he says, is by adding air, car rental, cruise, and even tour package bookings.
May says 80 percent of all travel starts with reading or researching online. Both partners note that the business has been operating for more than a dozen years. Questex acquired Five Star from its founders in 2007 and then merged the editorial content of its premier luxury guide into Five Star’s website.
Today, McMahon compares Five Star to the evolution of banks. You can bank online. You can come to an office, and the first thing you see is an ATM. But now, instead of a line of tellers, there are a couple tellers, roaming customer support staff and lots of financial advisors.
“Luxury travel isn’t going to be online or offline. It’s going to straddle both sides and that’s our sweet spot,” he says.