Former Fisher and Paykel COO Andrew Paykel has today launched LayAway Travel, an online service allowing travellers to book pre-packaged holidays and pay for them through the old concept of lay by, paying off a trip between five to 24 months before jetting off.
The original idea for the general concept came several years ago, when Paykel began conversations with a group of travel professionals. Work began in earnest on the business last year, with Paykel announcing his exit from the family business in February 2015 and raising $1 million in funding with the help of private investors to develop the new venture.
Though working in the appliances space, Paykel said he was driven to develop LayAway Travel after his years working at Fisher and Paykel, where he said he learned about what it means to be committed to customer service and understanding what customers want.
The startup has launched with 250 travel packages to locations including Bali, the United States, New Zealand, and Fiji. These packages incorporate everything from flights, transfers, hotel packages, and tickets for city tours, events, or other experiences such as tickets to Disneyland.
It has also developed a number of packages for group travel, focused on educational and sporting groups, tours, and destination weddings.
The user can choose their various extras and then a payment plan to suit their budget; payments can be paid in weekly, fortnightly, or monthly instalments, with the first to be made within 31 days of the booking and the final payment to be made two months before the trip. Tickets and itineraries are then issued.
Similar to a traditional travel agent, Paykel said the startup’s revenue comes through the margin to packages. LayAway Travel has chosen to have the client’s funds remain theirs until their balance is completely paid off; with this meaning a delay of between 12 to 16 months in initial profitability, it is here that the $1 million in funding will come in handy to fuel the startup’s operations.
So far, Paykel said a few hundred customers have come through the platform ahead of its official launch, choosing on average payment plans ranging from 11 to 15 months. Looking ahead, the startup is in particular looking to target parents of young children, seniors, and sports groups as it ramps up its marketing.
The potential for the startup is there: a similar startup launched out of Chicago last year and a graduate of the latest Y Combinator program has estimated that there are 72 million consumers in the US who don’t buy airline tickets because they don’t have the necessary savings or credit available. Based on its average profit per ticket, Airfordable estimates this market is potentially worth US$4.7 billion; since launch it has generated more than $500,000 in ticket revenue.
The numbers are of course significantly smaller in Australia, while the concept of lay by is not often associated with travel despite the fact airlines and various travel agents offer lay by payment options. However, Paykel believes that LayAway Travel will be able to change the travel habits of Australians.
“With the rising cost of living, it’s not easy for families to get a lump sum together to book a holiday in advance without reaching for the credit card,” he said.
An interesting point is the fact that the concept of lay by is being brought up to speed with 21st century expectations – and consumers – through the work of startups like AfterPay. The Sydney fintech last week announced its launch in Topshop Topman stores around Australia, allowing shoppers to complete online and in-store purchases through multiple transactions via the payment scheme that works best for them.
LayAway Travel will now look to partner with companies across the travel industry to expand its offering.
Image: Andrew Paykel. Source: Supplied.