Wotif Model Not Broken Says Chairman

Business is slowly recovering at Wotif after the company recorded its first fall in profit last financial year.

CEO Robbie Coke is forecasting that the online hotel retailer will make “in excess of” $27m in the six months to Dec 31, effectively returning Wotif to the position it was in at the end of 2009, when business was booming.

A defensive Chairman, Dick McIlwain, said: “I would like to make a few observations about the temptation to take one year in isolation and then conclude that  the Wotif model is broken.

“This reaction invariably leads to an impatient rush to  a judgement based on  speculation about the future rather than a considered analysis of past performance and the opportunities for a company with a powerful market position to adjust, and even reinvent, itself. 

“Let me emphasise this point by reference to the performance of the main players in the accommodation segment of the travel market  over the last 3 years. 

“First, Wotif’s FY2011’s result followed 3 years when many enterprises, including land based travel agents, went backwards and are only now getting back to where they were. 

“During this period, Wotif’s revenue and profits (grew) by almost 50%. 

“While Wotif prospered, the land-based travel agents were written off and their share prices trashed until they recovered recently.”

But Wotif recorded a 3.8%% fall in profit last financial year, which it largely blamed on the trend to overseas travel.

“Nobody in Wotif is sitting on their hands waiting for good times to return,” Mr McIlwain said. 

“The Company’s workforce remains confident and continues to explore ways to improve its performance and build on its position within the travel market.”

The share bounced a little yesterday to $3.70.

But the fact remains Wotif has offered investors a total annual return of just 2.2% over the past five years, according to CommSec.

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