Asia holds back Wotif as profits tumble

Asia holds back Wotif as profits tumble
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The continuing poor performance of Wotif’s Asia and Rest of World business sent profits tumbling in 2013 despite record transaction volumes and revenue.

After tax profits fell 12% to $51m in the year to June 30 with increased costs of $9.1m also contributing to the disappointing performance.

The decline came amid record total transaction value of $1.16 billion, up 0.4% on last year, and revenue of $146.6m, a rise of 0.9%.

Australia and NZ revenue climbed $4.1m, largely off the back of commission charged to hoteliers which increased from 10% to 11% in January.

And while Australia and New Zealand room night volumes were flat at around six million, the number of Asia and RoW room nights plummeted 22% with revenue down $3.3m.

Wotif’s “standout performer” was flights with TTV rising 17.5%. Flights and “other” TTV hit $136.8m with revenue up 11% to $15.1m.

Chief executive Scott Blume described it as a “challenging year” for the group amid a “problematic retail environment”.

“Some positive momentum has been achieved, with accommodation revenue increases and the growth of the flight business,” he said. “The flights business has been the standout performer for the group and we are optimistic that this trend will continue in FY14.

“However, these revenue gains have been offset by a continued deterioration in Asia and RoW business volumes.”

That deterioration is being addressed through a number of “previously announced strategy projects”, he said.

These include improved cross selling across the company, the roll out of dynamic packaging and enhanced sales and conversion of Asia property searches on Australian and New Zealand websites.

Blume has previously admitted Wotif had been “lousy” at promoting short haul destinations to Australians.

“We are working very hard on implementing the outcomes of [these] strategies,” Blume said. “Whilst it will take some time to see the effects of this work flow through to TTV and revenue growth, we have solid plans in place and work has already commenced on a number of key initiatives.”

He flagged projects based around packaging, mobile and customer reviews as well as the previously announced commission increase from 11% to 12% from January 2014.

“Although the Australian retail environment continues to be problematic I am confident that we have the right plan in place to improve the overall business and financial performance of the group in the coming year,” Blume added.

Highlighting the growing importance of mobile, Wotif said mobile devices delivered 36% of all traffic to Wotif.com and 17% of room nights.

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