Wotif slumps after missing boat in the Asian market
SHARES in Wotif suffered their biggest one-day fall in five years after first-half profit slid 5 per cent and the company conceded it was not "getting its fair share" of the benefits from Australians travelling overseas in record numbers.
The company, whose sites include lastminute.com and LateStays, increased booking revenue from its core sites in Australia and New Zealand, but its Asian business under-performed. Wotif posted a 5 per cent fall in net profit to $27.5 million for the first half, which it blamed largely on increased costs from investments in online marketing, web maintenance and staff. Revenue fell 1 per cent to $73.2 million.
Shares in Wotif fell as much as 11 per cent on Wednesday but recovered some ground to close 47¢ lower at $5.37.
Wotif's total transaction value - the price at which travel products and services are sold - was unchanged on the same period last year at $595 million.
The chief executive, Scott Blume, said its online booking for accommodation in Australia and New Zealand was positive in a "generally lacklustre domestic retail environment".
But it was offset by a 19 per cent fall in revenue from its Asian websites and those which sell overseas hotel rooms from Australian websites such as lastminute.com.
"With the increase in ... Australians travelling in Asia, we haven't been getting our fair share," Mr Blume said. "The business in Asia and the outbound Asian performance has not been great."
Mr Blume, who succeeded Robbie Cooke last month, conceded there was "no magic bullet" for resolving the challenges facing its Asian business, and capturing the benefits of more Australians travelling overseas.
"I just don't think we have done a great job ... to position ourselves to get some upside as a result of the Aussies with the strong dollar continuing to travel aggressively outside Australia," he said.
He expects a strategic review of the business to be completed within the next two months.
Wotif has not given earnings guidance for the full year, partly because it wants to see the impact of recent commission increases.
Last month it raised commissions for hotels 11 per cent.
Mr Blume said he was "cautiously optimistic" about the outlook but conceded that it was "going to be a slow process back for the Australian domestic economy".
Wotif will pay an interim dividend of 11.5¢ a share on February 27, unchanged on the previous period.