Webjet has clarified “inaccuracies” relating to how it acquires traffic in a damaging analyst report by Morgan Stanley.
On Tuesday, the online travel agency appeared to be among the hardest hit from the coronavirus panic sale, with its shares down 13.9 per cent to $12.37.
Coinciding with this was news Morgan Stanley had reduced Webjet’s outlook to an underweight rating, with the price target on the company’s shares slashed by nearly 20 per cent to $10.00.
Moreover, Morgan Stanley’s analysts pointed to Google’s travel-booking features eating into Webjet’s earnings, which is similarly affecting large online travel agencies like TripAdvisor and Expedia.
The analysts reportedly argued Webjet would be the most vulnerable travel company in the Australian market as a result of the level of control Google has when ranking booking sites.
The investment banking company also claimed the OTA receives nearly 65 per cent of bookings through search engines, with a large chunk received at a low cost, according to multiple outlets.
Webjet denies “certain factual inaccuracies”
In an ASX release published on Wednesday, Webjet refuted some of the claims reportedly levelled in the Morgan Stanley report; namely that its OTA receives 65 per cent of its traffic from search engines.
“Google’s intentions, as interpreted in the report, do not present a material threat to the current traffic or bookings volumes due to the fact that the vast majority of bookings are generated through channels where the Webjet brand is the focus for the search,” the company said.
Instead, Webjet claimed a third of its bookings come from direct channels, including typing its URL into a browser address bar, email marketing, Webjet apps, and others.
A further 27 per cent of its bookings come from “paid brand search” when customers type “Webjet” or similar iterations in a search box and a paid advertisement displays.
While the company claims just under 20 per cent of bookings come from “paid non-brand search”, in which a Webjet link appears in response generic search terms. Another 30 per cent of bookings come from organic search results that Webjet does not pay for, according to the OTA.
“As Google currently operates, paid results will come first in a customer’s search, followed by Google Flights, and lastly organic results are displayed,” Webjet said.
“This is the competitive situation that currently exists, and Webjet OTA captures eight per cent of its bookings from the organic non-brand category – not the 65 per cent that the report implies.
“Unfortunately, the analysts research has relied on web-based tools which do not have access to first-party data and therefore have questionable accuracy.”
Google Flights is set to go through a series of changes from February, with airlines no longer charged for listings within Google Flights.
Non-Google listings could even appear above Google’s own – a big change from the current situation, with Google favouring its own Flights’ module over organic search.
On Wednesday, shares in Webjet closed 4.29 per cent higher at $12.90.