Doing It Their Way at the End of The World

Mike Ballantyne, Online Republic
Mike Ballantyne, Online Republic

Cranky Frank Sinatra sang that if you can make it in New York, well, you can make it anywhere.

True, however imagine trying to make it – in a big way – from New Zealand; remote, population 4.6m  – much tougher, surely.

But not impossible, as two NZ travel tech companies are demonstrating.

Online Republic, an online travel agent, and Serko,  which builds and markets corporate travel management software, are proof that geographic isolation is no impediment to success.

Enthusiasm, optimism and an innovative mindset – traits shared by Mike Ballantyne of Online Republic and Darrin Grafton from Serko – are much more important.

Both Ballantyne and Grafton – who are speaking at the first-ever TRAVELtech NZ conference on June 25 – lead companies that are most definitely making it.

  • Strong cash flows? Check.
  • Excellent technology? Check.
  • More than 120 staff and growing?  Check.
  • Dress down dress codes? Check.
  • Trendy Auckland waterfront offices? Check.

Sounds impressive but it hasn’t always been easy.

“We tried hotels but got our asses kicked,” says Online Republic’s Ballantyne, who runs a company with annual sales now approaching NZD200m.

“We also tried coach tours and yacht charters but they didn’t work either because we didn’t have any experts in those categories.”

But it does in car, motor homes and cruise – the backbone of Online Republic’s business.

Serko has also had its ups and downs, though it all worked out well for founders Grafton and Bob Shaw.

Darrin Grafton, Serko
Darrin Grafton, Serko

They sold the company for plenty to Gullivers a decade or so ago and were able to buy it back from ultimate owner, S8, a long-gone travel conglomerate, in 2007 for a fraction of what they sold it for.

That was the beginning of a process – a reconstruction of thinking and technology – that culminated in Serko raising NZD20m and listing on the New Zealand Stock Exchange last June.

It became the first Australasian travel tech company to do such a thing.

“The cool thing about the IPO is that it’s given us the capability to build what we’ve always wanted to,” says Grafton.

Great timing and execution has also been a decisive factor at Online Republic, says Mike Ballantyne, who founded the company with his late brother Paul in 2004.

Back then the web was a much friendlier and more liberal place where it was still possible to quickly gain traction through launching and cross-linking thousands of websites.

Which is exactly what Mike and Paul did under the brand iMall, though the early good times didn’t last forever.

“Google has dished up some opportunities and challenges along the way,” he says.

“More challenges than opportunities actually.

“The Penguin 2 update (which penalised interlinked sites) hammered us.

“We still have thousands of sites that still bring a lot of bookings but it’s not the wild west any more.”

Ballantyne says,”At the beginning the web was like a door you could walk through and any store could compete.

“But now it’s a lot harder to do that because you have to be very good at PPC and site conversion rates to get a leg in.”

In other words it’s very easy to blow cash very quickly if you don’t have checks, controls and a clear understanding of what you want to achieve.

He sees wannabes all the time.

“In cruise they come in hard with PPC for two weeks and then disappear,” says Ballantyne.

This change of environment – brands becoming more important – prompted a change of tack.

“We knew the writing was on the wall and adopted a single brand strategy,” he says.

That’s why iMall became Online Republic with three travel divisions: Cruise Republic, Car Rental Republic and Motorhome Republic.

It’s also selling its online marketing expertise through Search Republic, and recently launched PredictHQ, “a new global business intelligence platform that analyses events happening all over the world, then forecasts how they might affect your business”.

In an email Mike confirmed booking numbers from the last financial year for each of the businesses:

“Cruise: We booked 49,000 cruises passengers in our two markets: 90% AU & 10% NZ.  CruiseSaleFinder.com.au

“Cars: We booked 260,000 car rentals worldwide (main markets AU, US, CA).  Airportrentals.com

“Motorhomes: We booked 20,500 motorhome rentals worldwide (main markets NZ, AU, US, CA) MotorhomeRepublic.com.”

Overall, 93% of bookings came from outside New Zealand and search remains the major driver of its business with Online Republic spending more than NZD12n a year on the medium.

Grafton says the ex-New Zealand sales figure is even higher at Serko.

About 95% of sales come from Australia while the remaining 5% is drawn from Singapore, India and New Zealand.

Serko builds the software and works on a ‘clip the ticket’ business model taking a percentage of each transaction.

Life as a public company has its challenges with Serko having to tell the market it will likely miss its first-year revenue target of NZ11m by 4-6%.

Still, the company says revenue will still have increased 53% – 57% compared with the 2014 financial year.

Serko blamed the shortfall on delays in software development, Serko Incharge and the launch of Serko Mobile.

The weaker Australian dollar is also hurting.

Clearly, Serko still has an awfully long way to go before it challenges market leader Concur, which absolutely dominates the corporate travel management tools sector.

So how do they get traction?

Through superior technology and usability that delivers lower travel costs and greater efficiency to clients, says Grafton.

Serko is claiming its technology delivers a 10% cost saving over the competition.

Marketing partnerships in key international are also a signifcant part of the growth strategy.

“We think our technology is better, they think theirs is better

“At the end of the day competition is a good thing.”

Looking forward, Grafton says: “My goal  is to take corporate travel and make it personal, creating a framework where everything can be done in one place.

“We’re part way through our journey and we want to drive a billion dollar tech business.”

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