By Martin Kelly, Editor, Travel Trends
When the going gets tough, the tough get marketing.
Flight Centre, Australia’s largest travel retailer, may be in for a rougher ride than expected but “does not subscribe to recession mentalities” and will boost ad spend to fuel growth.
“We see advertising as an investment, not as a cost-cutting opportunity,” Flight Centre Chairman Peter Morahan told shareholders yesterday.
“By increasing our spend, while others decrease theirs, we create an opportunity to increase our market share.”
This strategy has been evident over the past few weeks, particularly in the corporate market where Flight Centre Business Travel has decided to go large and ramp up its public pitch.
“Our progress in corporate travel has been significant in recent years, although it is fair to say that our market share still trails our leisure market share in some countries including Australia,” said Morahan.
“This is our opportunity.
“To win new accounts and increase corporate sales, we have consciously boosted our sales force over the past 12 months.
“Our healthy results in corporate travel this year prove that this strategy is working, particularly in the SME market, which has become our real strength.”
As part of the strategy, Flight Centre is giving businesses which book three domestic flights a $250 travel credit.
It is also guaranteeing to cut at least 10% from the annual travel budget of companies that spend more than $50,000 a year on business trips.
Flight Centre will also significant invest in key IT systems as various projects come on line over the next 12 months.
Growth remains a major priority for Flight Centre, said Morahan.
“The company’s 2000th shop will open early in 2008/09, as will the 1000th Australian shop.”
Some poorly-located shops that fail to meet sales targets will, however, close.
Meanwhile, Acting CEO Shannon O’Brien believed that profit will be “moderately down on the $92.9m result achieved during the first half of 2007/08.”
“This year will be challenging in some ways but our fundamentals are strong and considerable opportunities are within our reach in the medium term.”
Travel Trends: November 4, 2008