Australian online travel agent Webjet has taken on a big challenge in agreeing to buy Asian OTA Zuji – which has operations in Singapore, Hong Kong and Australia – from Travelocity.com for $US25m. Managing Director John Guscic said the Zuji brand will be maintained and its business progressively migrated to Webjet’s IT platform.
Zuji, according to Mr Guscic the #1 online seller of air tickets in Singapore and Hong Kong, generated US$31m in revenue for the 12 months to June 30 on turnover of US$300m, with an estimated pre-tax profit in excess of U$5m for 2012 based on the acquisition earnings multiple 4.6, which is low. NB: This estimate is incorrect, see updated post Webjet Buy Zuji A Long-Term Loser – $33m In Australia Alone.
It is Webjet’s first major acquisition, although it did try to buy Travel.com.au in late 2007.
However on that occasion it was outbid by Wotif.com, which paid A$55m or so for a company that had accumulated losses of more than A$33m (coincidence?) over the previous eight years and never made a profit.
Te real value of this integration will be determined in the years ahead.
Successful integration is key.
Webjet is one of the top two Australian online travel agents and has always run a tight ship with relatively few staff.
It make a good profit and is very successful and focussed in what it does.
Zuji, which for many years was run by incoming Wotif.com boss Scott Blume, comes from the other end of the cultural spectrum.
It landed in Asia in 2002 with large budgets and grand plans but has taken many years to gain traction.
In the competitive and mature Australia market, Zuji remains something of a mystery.
A Top 10 website according to site visits stats from Experian Hitwise but with a muted profile and a static market share.
In Hong Kong and Singapore it has been much more successful with owner Travelocity reaping benefits from its long-term commitment to each city and an early mover advantage.
Zuji was also in South Korea for a few years but is no longer active in that market.
It’s worth noting that when Travelocity moved into India, it decided to deploy its own brand rather than the Zuji moniker.
Travelocity also operates a site in New Zealand. Neither of these is part of the deal.
No mention was made in the announcement of staffing.
The transaction is due for completion in the first quarter of 2013.