It is understood that Big Al’s Creative Emporium, the incumbent, repitched. Two other shops were also involved in the process.
Karmarama will be tasked with "moving the business on to the next level and creating a mass-market brand".
Alex Saint, the chief executive of Secret Escapes, said: "Karmarama really understands our business challenges and we’re looking forward to working with them to meet our ambitious targets."
The London-based Secret Escapes has an ambitious growth strategy and is hoping to become a £1 billion brand within the next four years.
When Campaign revealed news of the pitch in November 2014, Saint said it was "time for a change" despite Big Al’s advertising being "one of the longest-running and most-successful single bits of creative to have run in the UK".
Goodstuff Communications handles Secret Escapes’ UK media planning and buying account, which is worth £3 million.
The brand operates in the UK, Germany, Sweden, the US, Denmark and Norway.