Webjet Managing Director John Gusicic (pictured) says cash is flowing back through the business after six months from hell, a period when travel demand collapsed, forcing it to slash costs by 50 percent, including significant staff redundancies, while raising around $500m to stay afloat.
Good times. Not. But in a conversation at the Sydney Travel Industry Hub last week, Guscic, a notoriously combative character, sounded like he enjoyed the challenge, which is a long, long way from receding, as the recent COVID developments in Europe, where Webjet’s B2B accommodation business is based, remind us all.
And the fact is everything’s relative – business is still a fraction of last year but recent increases from an exceptionally low base means that Webjet now has working capital and hopes of a brighter future. “We now have the very thing that caused our demise – working capital has swung back in because we’re going into growth mode.
“To put that in context, our B2B business, which was down to 1% on previous volumes, is now back up to north of 10%, so we see a positive working capital movement, and the Webjet (OTA) business, which was down to 1% of previous volumes is tracking around 17%. So all of it brings cash into the business.”
He added: “We took a view very early on in April that when the markets came back the pure OTA would be the first to recover and that’s what we started to see.” The Webjet.com.au OTA is focused on the Australian market and that will never change, said Gusicic, who was honest about various missteps over the years to expand its footprint.
“We have tried to expand Webjet very unsuccessfully in numerous markets over the journey so there is no appetite to be a late entrant into the business to consumer space (outside Australia), where there are well-established players that are the Webjet’s of their respective markets.
“Plus we’re operating in a shrinking competitive sphere in terms of numbers and but not size. There are two major global players that dominate the online transaction space and they have got, as you can imagine, a few more resources to throw at a problem.”
After COVID hit Webjet was forced to make some brutal decisions, cutting its cruise and Exclusives business.
“Cruise is a sore point with me. We had done a poor job in cruise for a significant period of time so it wasn’t the most difficult decision to close it down. It was borderline profitable and declining in relevance to our Online Republic business (from whence it came). It was also a relatively small part of our own business through a lack of performance more than anything else.
“Exclusives was a little bit different.” It was a nice business that had grown well but in an environment where there wasn’t likely to be much travel, closing it seemed to be the prudent thing to do. “We’re focused on saving costs and everything was on the table and that was one of the ones on the table. We made that decision primarily because we had to take costs out of the business and were focused on things that would leverage and recover more quickly.”