Maturing Wotif Gets Punished For Slower Growth

By Martin Kelly, Editor, TravelTrends

MATURITY is over-rated. Just look at the fate of former PM John Howard. Now turn your attention to the Wotif share price which is going nowhere despite the company recently announcing a record net profit of $17.1 million for the six months to December 31, 2007, 43% more than the same period a year ago.

So what’s the problem? Maturity, of course, combined with a jittery stock market that probably pushed prices too high in the first place.

The online travel space has moved beyond adolescence in less time than it takes a teenager to shed acne, and Wotif’s growth is now slowing across all headline indicators.

For instance, room nights sold increased 22% compared with a blistering 47% 12 months earlier, net profit was also growing substantially quicker at that time.

Flighty investors don’t want slower growth from an internet stock, they want the excitement of youth. And, frankly, so do I.

Now that the sector has “matured”, it’s become rather boring with consolidation partly the cause. Fewer companies mean fewer voices. It’s also run by a remarkably conservative group of people, many of whom sport a majority of grey hair and are definitely not part of the Internet generation.

Wotif is a great example. The company continues moving forward and doing what appears to be smart corporate things, primarily through the acquisition of other companies such as Asia Web Direct and Travel.com.au (though time will tell on these deals).

But it’s happened in such a methodical, deliberate fashion – with the appropriate sanitised rhetoric – that I’m finding it hard to get excited. Phrases like "earnings accretive" really don’t do much for my circulation. What about some online innovation?

Ah, for the "good old days" when founder Graeme Wood started building the company from scratch. He travelled relentlessly in what appeared to be the same jacket and was always good for a quote. Wood was direct, down to earth and the company flourished. As did its accommodation partners.

While that is still the case, and Wotif remains a powerful corporate force, the company persona has become drier than desert dirt since its listing on the ASX in 2006, when entrepreneurship ceded to the faceless money men.

Over time, Graeme Wood’s public role has diminished – and who can blame the guy. He worked his backside off, became a multi-millionaire with a big yacht or two and wants to spend his time sailing.

Wood is now a low-key Executive Director. The day-to-day management is handled by CEO and MD Robbie Cooke, a friendly fellow who doesn’t say much beyond financial press releases and appears in public even less.

These days not making a mistake appears to have become the major priority for Wotif, as is controlling the flow of information – a philosophy which also extends to its efficient website, now attracting 3.25 million site visits a month.

None of those visitors, however, are allowed to review the properties they book through Wotif.com as the company continues to ignore the march of consumer power – aka Web 2.0, which is now driving the fastest online travel growth … look at Trip Advisor.

Yet, and there’s a contradiction here, Wotif apparently still sees itself as a ‘fun’ brand of the people with the crazy green corporate colour and quirky name.

Effective and profitable? Yes. An efficient booking engine? Yes. But fun? Not an easy question to answer.

Does this matter? Probably not in the short-term but over time it may. Just ask John Howard.

Travel Trends: February 21, 2008

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