Wotif widens horizons as growth slows
Wotif will step up efforts to reduce its reliance on accommodation bookings after conceding the days of double-digit growth in online sales in the industry are over.
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¢.