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Three Aussie firms selling travel stumble, stride and soar

February 27, 2014 Corporate, Headline News No Comments Email Email

egtmedia59Half-yearly results are coming out this week, with Qantas set to release its figures today, amid much ballyhoo, dread and gnashing of teeth.

Three travel retailers of different sorts released their results yesterday, with wildly differing outcomes. helloworld reported a major loss, saw its after-tax profits slide by 18% and Flight Centre did as Flight Centre always does – made a whopping amount of money and notched up yet another record profit.

helloworld has suffered a pre-tax loss of almost AUD 4 million in the six months to December, down from a AUD 15 million profit in the previous corresponding period. TICBanner

The 126% decline was blamed on AUD 9.1 million in business implementation costs and AUD 5.4 million in costs connected with the sale of its inbound businesses to the Australian Outback Travel Group.

Cost cutting and increased efficiency saw operating costs fall by 9%.

helloworld chief executive Rob Gurney said the results were consistent with previous guidance.

Meanwhile, the company says 675 stores have signed up for helloworld and many more are in the pipeline.

helloworld is planning campaigns to drive increased customer traffic to its network of franchisees and members, supported by a strong digital offering. It expects benefits to flow through in the 2015 financial year, with improved profits and market share growth.

A new television commercial campaign for helloworld hit TV screens last week on the Seven and Nine networks in a bid to nudge Australians into thinking about their next holidays. It’s the first shot in a five-week multimedia campaign.

Many in the audience might have considered that the Christmas/New Year holiday season had hardly ended. The 2014 school year was just a couple of weeks old when the campaign hit the screens. Gurney sees it differently, however, saying most Australians are now back at work after their summer break and thinking about their next holiday.

“The Christmas holidays are already a distant memory but with great deals available at helloworld in February, summer doesn’t have to end,” he says. “helloworld customers can choose a holiday that suits them. With our incredible promotional fares to Europe, cruises to New Zealand or package deals to Bali, we have something for every kind of traveller and budget.”

A challenge helloworld faces is reminding the public that it is the new composite face of those well-known brands Harvey World Travel, Jetset Travel, Travelworld and Travelscene American Express.

helloworld (the brand is all-lower-case while Helloworld Limited takes capital initials) refers obliquely to the identity issue when it hints: “With more than 40 years of travel experience, your perfect holiday begins with helloworld.”

The brand’s new integrated marketing campaign covers the two TV commercials, backed in coming weeks by press ads, billboards, digital, search-engine marketing, social media “and through exclusive promotional offers from helloworld preferred partners”.

The helloworld TV commercial can be viewed here.

Wotif, meanwhile, saw its first half after-tax profits fall by 18% to AUD 22.6 million.  with the retailer blaming increased marketing and technology costs.

The result came on the back of record revenue of AUD 75.8 million, up 3.5% over the previous corresponding period and towards the top end of guidance issued in December.

Although total transaction value from accommodation slumped 6%, revenue increased 4%. Flight revenue and total transaction value soared 20% and 44% respectively.

As Martin Kelly of Travel Trends noted: “The underlying issue – the elephant in the room – is that Wotif sold 300,000 fewer room nights than the year before – 3.2 million compared with 3.5 million. The drop in profit was no surprise as it had been flagged late last year.”

Flight Centre is generally a by-word for travel industry profit, consistently racking it up while rivals find the going tough. Sure enough, Flight Centre has again reported a half-year record profit before tax – AUD 155 million this time, for the six months to December.

Australia was the key contributor to the result, delivering record first half earnings before interest and tax. The result, the Sydney Morning Herald reported, takes the total dividend payout since Flight Centre listed in 1995 to more than AUD $1 billion.

Fluctuations in the value of the dollar failed to prevent droves of Australians heading overseas.

Flight Centre Revenue rose 15% to AUD 1.1 billion for the half and Flight Centre reported a 20% increase in before-tax profit to AUD $155 million for the six months to December. That included a AUD 9 million on-off gain from its wholesale business.

Over the past four years, Flight Centre has added more than 4000 people to its workforce. It opened its 2500th store in July 2013 and hit 2643 stores by December – an 8.2% increase over the 12 month period.

Flight Centre is sticking with its earlier profit guidance of a full year profit before tax somewhere between AUD 370 million and AUD 385 million – an 8-12% increase over the previous year.

Written by : Peter Needham

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