Wotif still waiting for travel surge
Wotif has cautioned investors that trading conditions in Australia and New Zealand remain soft, with the company yet to experience any increase in accommodation bookings despite a lift in consumer confidence.
The online travel company said it would not provide specific earnings guidance for the new financial year until February, when it releases its half-year results.
Wotif chief executive Scott Blume told shareholders in Brisbane that the overall trading environment here remained soft, and any uplift in consumer confidence following the federal election was yet to translate into higher sales.
Mr Blume, who began as CEO in January, warned that its Asian business continued to be a drag on the company, and any turnaround in its performance was unlikely to occur until the second half of this financial year.
But he said Wotif's flights business was exceeding expectations, and its total transaction value - the price at which goods and services are sold - was set to increase by more than 30 per cent in the first half if trends continued.
The online flights business is in its infancy for Wotif, which remains heavily reliant on accommodation bookings. Almost one in 10 room nights in Australia is booked on Wotif's sites.
Mr Blume's comments echo those from Qantas on Friday when the airline warned that a pick-up in business confidence had failed to translate into added bookings for flights.
Shares in Wotif, whose sites include lastminute.com.au and latestays.com, closed down 3¢ at $4.64 following the update to shareholders. In contrast, Webjet rose almost 5 per cent to $3.64 on Monday while Flight Centre struck a record high of $51.87. The latter's share price has more than doubled over the past year.
Wotif chairman Dick McIlwain also told shareholders that the end of an era of double-digit growth in accommodation bookings marked a turning point for the company, which could "no longer see itself as a single-purpose accommodation booking transaction service".
He emphasised that the earnings last financial year, when it posted a 12 per cent fall in net profit, showed that its core accommodation and Asian business had not produced the growth evident in its early years.
About 10 per cent of shareholder votes were also against its executive-pay report on Monday.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free