Travel Focus on flights, holiday packages
The online travel company slumped more than 6 per cent on Wednesday after its annual net profit fell 12 per cent to $51 million due to its underperforming business in Asia and an increase in spending on marketing.
Wotif managing director Scott Blume said online growth had slowed, and his focus was on enticing the company's "sticky customer base" to use its other offerings such as flight bookings.
"That online growth has definitely slowed. But for us, we basically just operated in one sector ... so we have huge opportunities to grow," he said, citing bookings for flights and package holidays.
While the company has historically benefited from a weaker Australian dollar, Mr Blume said he would not rely on it to boost earnings from its domestic operations in the new financial year. "I will not sit here and wait for Australian consumers to do more domestic travel."
Wotif, whose sites include lastminute.com and latestays.com, is focused on selling accommodation to consumers in Australia. Almost one in 10 room nights in Australia is booked on Wotif's sites, while its online service for flights remains in its infancy.
Wotif's Asian business continued to underperform, with travel bookings to the region declining for the fourth consecutive year. Travel to Asia totalled 6 per cent of Wotif's total bookings.
Despite the poor performance, Mr Blume said he was optimistic the Asian business was close to reaching the bottom.
The travel company has not given guidance for the new financial year, although Mr Blume conceded the "Australian retail environment continues to be problematic". He indicated Wotif was more focused on growing its existing business than pursuing acquisitions.
"We haven't got any acquisitions in mind but if something comes along that is opportunistic, of course we will look at it. [But] we are not building our business plan around that." He declined to comment on speculation Wotif could show interest in buying online holiday rental business Stayz, owned by Fairfax Media.
Wotif will make its next round of commission increases in January when it raises what it charges suppliers from 11 per cent of total transaction value - the price at which goods and services are sold - to 12 per cent. Analyst Moelis & Co estimates the commission increases will boost Wotif's revenue by about $20 million by the 2014-15 financial year, although it is sceptical of how much will flow through to the bottom line.
Wotif will pay a fully franked dividend of 11.5¢ a share on October 10 - down from 13.5¢ in the same period last year. It takes the payout for the year to 23¢.
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Wotif reported a 12% drop in annual net profit to $51 million, which the company attributed to an underperforming Asian business and higher marketing spending. The result prompted the share price to slip more than 6% after the announcement.
Wotif plans to reduce reliance on accommodation bookings and push customers to use other services such as flight bookings and package holidays. Management is focused on growing existing offerings rather than relying on currency moves or rapid acquisitions.
Wotif's Asian business has underperformed, with travel bookings to Asia declining for the fourth consecutive year. Travel to Asia accounted for about 6% of Wotif's total bookings, dragging on overall performance, though management said it believes the Asian segment may be nearing the bottom.
Wotif said it is more focused on organic growth and does not have acquisitions in its core plan, though it would consider opportunistic deals. Management declined to comment on market speculation that it might show interest in buying holiday-rental business Stayz (owned by Fairfax Media).
Wotif will raise the commission it charges suppliers from 11% to 12% in January. Analyst Moelis & Co estimates this could boost Wotif's revenue by about $20 million by the 2014–15 financial year, but the firm is sceptical about how much of that will flow through to the bottom line.
Wotif will pay a fully franked dividend of 11.5 cents a share on October 10, down from 13.5 cents in the same period last year. That takes the total payout for the year to 23 cents a share.
Although Wotif has historically benefited from a weaker Australian dollar, managing director Scott Blume said he will not rely on currency weakness to lift earnings or wait for Australian consumers to travel more domestically.
Wotif operates sites including lastminute.com and latestays.com. Almost one in 10 room nights in Australia is booked through Wotif's sites, but its online flights service is still in the early stages of development.
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