Departing Wotif CEO Robbie Cooke has used his final AGM to announce that the company is finally lifting its base commission rate from 10% – something he has repeatedly said Australia’s biggest online retailer would never do – while indicating that revenue for the first quarter of the 12/13 financial year will show no growth over last year, precisely the issue Wotif has faced for the past couple of years.
As a result, Mr Cooke said the commission would increase 1% from January 1, 2013, followed by a further 1% lift a year later. It’s a move many industry commentators believe the company should have made years ago to keep pace with international peers charging supplier commission up to 25% or even 30%, giving them far more to invest in marketing, technology and innovation.
Mr Cooke said: “The increased commission is necessary to enable us to continue the reinvestment in our business on initiatives necessary to drive sales performance for our partners and acknowledges that we are operating in a global marketplace.”
Understandably, Mr Cooke made no references to past statements on the issue. Analysts believe the commission boost will have little or no impact on supplier relationships.
Meanwhile, Wotif Chairman Dick McIlwain addressed the issue of staff remuneration at Wotif, where senior employees (apart from Mr Cooke) are paid significantly less then their counterparts at peer companies such as Webjet.
For example, recent annual reports from both companies reveal that the top five employees at Wotif, with the exception of Mr Cooke, who received $1.24 million, were paid between $223,139 and $350,154 for the 11/12 financial year.
It is important to note that the $350,154 wage is an outlier – the other four senior employees were paid in a tight band between 223k and 267k.
Meanwhile, the top four executives at Webjet (excluding MD John Guscic) received $339,356, $355,576, $444,500 and $594,500 respectively over the same period. Mr Guscic was paid $955,209 for the year.
Interestingly, executive pay at both companies lagged the wages paid by traditional travel retailers Flight Centre and Jetset to its ‘key management personnel’.
At Flight Centre the wage band for top staff ranged from around $600,000 up to $1,187,000.
Executives at Jetset, a company much less profitable than Flight Centre, Wotif or Webjet, were paid between $428,000 and $1,349,759.
Mr McIlwain commented: “The Company is changing and we also need to deal with the relevance of reward systems for staff. This requires more than just measuring financial performance and hoping that equity grants benefit from financial performance in future years.
“Our remuneration programs need to recognise innovative thinking and creative ways of better managing the enterprise to ensure we stay ahead of the competition.”
Mr Cooke will leave Wotif at the end of this year to take the role of CEO at Tatts.
I have written to Mr. Cooke about this issue. Interestingly, it’s announced on his departure despite “Wotif will never raise their commission above 10%” I really don’t care about Wotif raising funds for additional marketing, it’s just a crock of…….t. The bottom line is, it takes revenue from hoteliers and accommodation houses to compete in that field at what they may see as a higher level. I refuse to use Expedia and the like, despite their alleged massive market and was quite happy with Wotif at 10%. Now I will reduce my allocation to Wotif and actually increase the rates I offer driving more business to my own booking button.
But then you’ll just be in breach of your parity agreements, or are we not giving a …t about them either? 😛
I have seen this coming for a long time. We have got into bed with these booking agencies and now are almost reliant on their deilivery of clientele. Some of the bigger agencies are starting to amalgamate with others and once the monopoly is gained or one has the lions share of the market and competition reduced there is nothing stopping them from raising the commission to whatever they like. It is true as we know, some are demanding as much as 25%- If this is to be the norm we will see the life blood sucked out of the industry and those that are caught paying heavy leases and perhaps loan payments on top of the ever increasing costs to do business ie insurance,wages and utilities etc, will be forced out of their business. These guys are dictating to the industry and that should not be the case.
The analogy is what the big supermarkets are doing to our primary producers where it is the supermarket setting the price for the Australian producer and if they do not accept, the supermarket buys their “fresh” produce from oversees and the local boys plough their crop back into the ground.
The motel/hospitality industry is in very trying times and under stress. It the people on the ground ,moteliers,hoteliers etc supplying the product for this internet phenominum, basically started by wotif group with a few personel and couple of computers in a room with no overheads and no capital investment that milks the top end of the moteliers income.
At 10% it was seen to be fair enough and we were comforted that Cooke continually reassured us there would be no increase but this action is alarming and I believe the start of these greedy agencies helping themselves to our hard earned income.
The underlying principal in this, is that we need each other and perhaps they need us more than we need them, and as such we should be working together to achieve the best outcomes for both parties. If not greed may cause the demise of many of the smaller operators and destroy the zest of others as they work to eek out an income for their long hours operating their businesses.