How things have changed at Webjet since February when the online travel agent was a stock market darling following its purchase of troubled competitor Zuji. Its shares soared to $5.30 on the back of inflated performance predictions and unrealistic investor expectations.

This morning the shares were half that value at $2.63 after MD John Guscic downgraded profit guidance for the financial year. (Update 22/11/13: shares are at $2.82).

Webjet now says it will make about the same this financial year as it did last financial year, AUD21.5 million or so in earnings before interest, tax, depreciation and amortisation – about 20% down on market consensus.

But, as JP Morgan analyst Armina Soemino commented: “The release is a little bit unclear on what is driving the downgrade.”

That’s because Webjet has effectively talked up all its businesses, including Zuji, while issuing the downgrade.

For example, it says Zuji and its Middle East accommodation venture Lots of Hotels are now both profitable.

Mr Gusicic said loss-making business streams have been eliminated from Zuji Australia and that Lots of Hotel “is ahead of plan.”.

While he conceded the overall Australian travel market is flat, “there’s ample scope to grow domestic bookings through leveraging “major packaging market headroom – potentially as big as Web’s flight business”.

Perhaps significantly, Mr Gusicic did not mention Webjet’s Australian accommodation business.

In the past he has talked it up as a major potential growth driver. Maybe not.

So why the flat forecast?

The most logical answer is that Zuji may be profitable – but only just – while Webjet’s domestic business is dawdling.

The key is Zuji.

Webjet had originally said Zuji, which has never made a profit, would contribute more than A$5 million to the Webjet bottom line after integration.

That now appears wishful thinking thinking rather than an accurate forecast.

Meanwhile, in a bid to boost business, Webjet said it will increase its consumer marketing spend by a further A$2 million.

The money will be spent across the Webjet and Zuji brands in Australia and Asia.

That’s a long way for that money to go – especially when you consider the marketing budgets of its international rivals.

To give you a sense of scale, the world’s leading OTAs are spending more than USD2m a day on marketing.

Growth, you feel, will continue to be elusive for Webjet from here on in.

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