Wotif.com management called a 3.8% dip in annual profit to $51m a “sound achievement” but investors disagreed, dumping the stock today (Wednesday) and wiping 10% off its share price. Room night sales fell in all markets for the online accommodation company with the biggest drop in Asia, off almost 9%. Australia and New Zealand room night sales fell 0.81% to 5.82m despite site visits increasing 17% to 4.5m a month.
Consumers are looking more but booking less. CEO Robbie Cooke blamed the shift to overseas travel by Australians for the poor result, which highlighted Wotif.com’s lack of market diversification.
Cooke did not refer to other factors such as increased competition from Booking.com and Expedia, leaving that to Chairman Dick McIlwain, who claimed “the aggressive and exuberant attempts by foreign interlopers to advertise their way into the Australian and New Zealand online accommodation market” had done nothing to increase the “brand position” of these companies.
Not sure what he means by that. Brand recognition, perhaps, but how important is that? Wotif’s increased to 60% but sales were down.
Meanwhile, it seems certain that competitor sales are up, eating into Wotif’s market share.
Anyway, McIlwain says that Wotif.com has pulled back on marketing spend after initially fighting fire with fire, though it was up around $3m for the year, most of the extra spent in the first half (which in sales terms slightly outperformed the second half).
Wotif is now reverting to daily email blasts – ‘Wot Deal of the Day’ – which McIlwain said is far more successful at stimulating sales.
Also worth noting is that airline bookings were up 35% across Wotif’s brands to 137,000 transactions although flight revenue declined slightly to $12.18m ($12.22m in FY10).
Looking ahead CEO Cooke believes uncertain economic times may lead to more Australians taking domestic holidays, which will benefit Wotif.
He says that forward bookings increased year on year for the final quarter.