ROAMFREE says it is still considering further acquisitions despite sacking 50 staff. The sackings, concentrated in IT, reduce staff numbers from 230 to around 180. COO Gary Knowles said there had been a “resizing to take (Roamfree) forward in a more effective manner” but indicated a couple of deals may be in the pipeline. Knowles claimed Roamfree still had plenty of cash following a $40m capital note raising last August but acknowledged in a recent interview that the company had a significant cash burn rate.
While the news, still to be acknowledged on the Roamfree website, was all over the industry last Wednesday, it came as no surprise to many who claim they saw it coming. Roamfree, led by big-talking founder Tony Smith, spent more than $30m acquiring more than 300 websites and several travel IT businesses in less than two years. They approached dozens, perhaps hundreds of others, offering their standard deal of half in cash and the rest in shares, which would supposedly be worth plenty more when the company listed.
Smith, who has been lying low since work on his $70m Gold Coast mansion was put on hold, once infamously said he wanted the company to become the Google of accommodation. Right now it’s looking more like a symbol of modern corporate excess with echoes of the late 1990s. Still, Roamfree owns several good business, including well-respected Tourism Technology, which operates Calypso, Australia’s leading wholesale system. Other Roamfree companies and products include Book Easy, Last Minute Manager and Travel Online. The challenge now is to get them working effectively together as the company enters a period of consolidation.