Revenue from the new, higher 11% accommodation commission can’t flow soon enough for Wotif.com CEO Scott Blume, who today announced a 4.6% profit drop in profit for the online travel company in the six months to December 31. It was a tough initiation for Mr Blume, who started in late January and had nothing to do with the result except to articulate a poor set of numbers that show a company requiring a fresh approach.
Blume said the fall in first half net profit to $27.5m was primarily due to marketing, tech and labour costs.
However could be argued a 2% fall in accommodation revenue was more significant.
Costs are always going to increase in this business, the goal is to grow revenue at a faster rate, something Wotif is struggling with.
The main reason is that it’s not selling as many rooms as it used to.
Room night sales went backwards with a 4% decrease when compared with the previous corresponding period.
This sales slump was masked somewhat in Australia where higher room rates meant accommodation revenue increased slightly – $57.516m v. $57.173m.
But that wasn’t the case in other regions.
The Wotif Group’s performance in Asia and the ‘rest of the world’ was awful with total revenue falling 19% to $6.126m.
The new 11% commission (up from 10%) kicked in on January 1.
This should give Mr Blume something better to report next time he fronts investors, although they’ll also be looking for structural change.
More analysis to follow.