By Martin Kelly, Editor, Travel Trends
What will Wotif get for the A$55m or so it has agreed to pay shareholders for Travel.com.au?
The answer is a company that has accumulated losses of more than A$33m over the past eight years and never made a profit, though different sets of management over the years have continually hinted that it would. But something always comes along to drag it into the red…
At one point it looked like 06/07 could be the year, however once again it was not to be. In a recent interview with Travel Trends, outgoing CEO Adam Johnson said TVL, which owns the lastminute.com.au and travel.com.au brands, has been performing strongly through 2007.
“This year we have continued the trend towards profitability,” he said. “Our net margin on revenue is 13% to 14% and all things considered we will be booking our first profit at the end of 07/08.”
“We are now at the tipping point with LMA … LMA is all about scale… Hotels are still a fabulous business and there is still growth ahead.”
Johnson said LMA – which in the past has sold a bit of everything, from theatre tickets to skydiving – now has a greater focus on accommodation.
LMA contracts its own hotels in Australia and NZ – generally charging a flat 10% commission – and gets international product through a variety of suppliers, including Travelocity, which owns the LMA international brand.
TVL this year bought the LMA brand outright in the Australian and NZ markets. “The board felt acquiring LMA created better long-term value for the company – it was an absolute coup as far as we were concerned.”
He said that Travel.com.au primarily remains an airline booking engine and that “accommodation is not a significant part of that business”. But that may change, he said, although who knows what’s happening now.
Both sites also have a significant email databases – more than 500,000 – that regularly receive newsletters. Site visits and sales conversions are also up, while the sites are undoubtedly looking and performing better.
So that’s what A$55m buys you these days? Maybe now is the time to sell if you own decent web travel business – one that is actually making money.
Travel Trends: October 16, 2007