for personal use only2014/11/26 · •united arab emirates •qatar • turkey • south africa...

COMPANY STRATEGY UPDATEJohn GuscicManaging Director

26 November 2014

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Strategy Update FY151

What is Webjet Limited?

• Online travel company selling to both

consumers and business organisations

• B2C

• Leading consumer brands (Webjet and

ZUJI)

• Regional coverage

− Australia/New Zealand

− Singapore/Hong Kong

• B2B

• Sells hotel rooms to travel agent partners

• Goal to build a global B2B business

− Start-up operation in Middle East (LOH)

− Acquired existing business in Northern

Europe (SunHotels)

WEBJET LIMITED

B2B TravelB2C Travel

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WEBJET LIMITED


Target EBITDA growth rate

5-10% pa for next 5 years

Target EBITDA growth rate

20% pa for next 5 yearsFor

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B2C TRAVELOnline travel for the consumer market

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WEBJET LIMITED


Australia

New Zealand

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WebjetOffer a range of air and non-air products

AIR Air • Domestic and International flights

• Booking fee includes our 30 minute

price guarantee

NON

-AIR

Hotels • Over 150,000 hotels and 1 million hotel

rooms on sale each day

• Book accommodation in conjunction

with flights or on a standalone basis

Packages • Dynamic packages (create your own)

• Static packages – Webjet Exclusives

(launched June 14)

Cruise • Online offering with bookings made

online or through call centre

• Launched August 14

Car Hire • Range of car hire options available in

conjunction with flight bookings or on a

standalone basis

Insurance • Travel insurance available in

conjunction with flight bookings or on a

standalone basis

Air remains largest

contributor to overall TTV but

has fallen as non-air products

grow

TTV Split (%) FY14

Air Non-Air

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Webjet - AirMarket environment remains flat

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Source: http://www.bitre.gov.au/statistics/aviation/domestic.aspx

• Our core market (Australian domestic

travel) continues to be flat

− In FY14, domestic leisure market

growth ~0% (BITRE)

− FY15 YTD domestic passenger

traffic remains flat (1)

• We expect the market to remain flat

for the remainder of FY15

• Our goal is to outperform the market

− #1 OTA brand

− Offer customers greatest

convenience and choice

− Loyal customer base

Note: Represents split for Webjet business only

(1) Domestic passenger growth - July 2014 down 1.4% compared to July

2013; Aug 2014 down 1.7% compared to Aug 2013; Sept 2014 up 0.1%

compared to Sept 2013. Source BITRE

TTV (%) FY14

Domestic International

Bookings (%) FY14

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Webjet - AirCompetitive environment relatively unchanged

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• Key competitors

- Airlines

- Other OTAs

• Metasearch has not been a key threat to date

− Structure of Australian market limits impact

− 0% commission for domestic airfares and

price set by airlines

− Higher margin accommodation space more

attractive

• Booking fees

− Booking fees as % revenues continue to fall

− 29% revenues in FY14, down from 59% 3

years ago

• TTV margin

− TTV margin expected to be 9% on ongoing

basis

Source: xx

Booking fees - Air

Australia International

markets

Webjet

Flight Centre

Expedia x

Airlines x x

Commission structures

Airlines

Domestic 0%

International ~ 5% plus over-rides

Hotels ~10-25%

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Webjet - AirResuming growth in the core business

• Despite a flat domestic leisure market, bookings for FY15 YTD

have grown more than 10% compared to the same period last

year

− Website improvements providing better consumer experience

− Improved onsite merchandising

− New mobile sites and Apps

− Targeted tactical and brand marketing campaigns delivering

results

− Conversion continue to improve

− IT migration now complete

• Record TTV each month FY15 to date

− July, August, September and October have each reported record

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Webjet - AirRemains #1 OTA brand in Australia

Source: Hitwise internet visitation reports, Online Travel Agency Category 2014

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Webjet - Non airGrowing higher margin revenue streams

Non-Air Initiatives

Hotels • No longer a key growth focus due to intense market

competition but continues to perform well in path

• TTV expected to remain constant going forward

Packages • Dynamic packages allow customers to create their own

custom packages

• Webjet Exclusives has shown good growth since launch in

June 2014

Cruise • On and offline booking system

• Completes travel offering

Car • Growing significantly faster than the core air business

Insurance • Growing significantly faster than the core air businessFor

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B2C Travel

WEBJET LIMITED

B2B Travel

Australia

Singapore

Hong Kong

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ZUJIRationale for acquisition

• Leading OTA in Singapore and Hong Kong; with substantial operations

in Australia

−Acquired from Travelocity in March 2013 for US$25 million

• Rationale for acquisition (1) Status

− Regional expansion in OTA space

− Enhance already strong online position in Australia

− Back office synergies

− Gain scale in emerging hotels segment x

− Platform for further growth in Asia ?

(1) From Webjet presentation dated 12 December 2012

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Asian Market - Background

ZUJIAsia offers attractive growth potential

Online penetration

rates are low

Online travel growth

rates are higher than

Australia/ New Zealand

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ZUJIHigh LCC penetration in APAC

Source: CAPA

Asian Market - Background

Expanding

LCC offering

to meet

market

demand

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ZUJI Post acquisition performance

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• 18 months post acquisition

− Business was losing $6 million EBITDA pa on acquisition

− Cost synergies all extracted

− Revenue synergies starting to flow through in Singapore and Australia –

Hong Kong is taking longer than expected

− Hotels no longer a strategic focus given intense competition in that segment

Cost synergies Revenue growth

• All synergies identified at acquisition

have been achieved

− ~$8 million pa ongoing cost

synergies

−40% reduction in headcount

−30% fall in operating costs

−Office closures and relocations

• All (200+) unprofitable TTV revenue

streams cut post acquisition

− TTV cut by 40% to $200 million (as

at March 2014)

• Focus now on growing profitable TTV

in all 3 regions

− Australia; Singapore; Hong KongFor

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ZUJIAcquisition plan timeline

FY14 FY15 FY16

Business integration Completed

IT Cloud transition Completed

Cost take out Completed

Quality improvement program Completed

Chinese language sites Completed

Mobile platform Completed

LCC content Expected 2H

Propelling the brandFor

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ZUJITTV growth in some markets

• TTV growth flowing through in 2 of our 3 markets

• Australia and Singapore showing growth

− TTV expected to be up in both markets for FY15

− Better positioning of ZUJI offering in Australia and Singapore

• Hong Kong experiencing a difficult market environment

− TTV expected to be down for FY15

− Increased competition impacting margins

− Umbrella movement

TTV by region (%) FY14A

HK SGP AU

TTV by region (%) FY15E

HK SGP AU

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IT TRANSFORMATION

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ITWhat was done – and why?

WHAT? WHY?

• Rewrote entire Webjet front end and

moved to Cloud platform

− Completed October 2013

• Moved ZUJI onto Webjet platform

− Completed December 2013

• Running out of “headroom”

• Cost effective IT operations

• Needed adaptable/ flexible technology

platform to remain competitive

• ZUJI operating on Travelocity system

− Required to migrate across to Webjet

post acquisition by December 2013

ISSUES BENEFITS

• 18 month process

• Temporary management distraction

• Teething issues

• Undertaken concurrent with ZUJI

acquisition

• Enables introduction of new products

− Multi language sites; mobile sites;

mobile Apps; Webjet Exclusives;

dynamic packages

• Increases velocity of software releases

• Provides competitive scaleability for next

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B2BProviding hotel rooms to partners via the online channel

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B2BRationale for expansion into B2B market

• Next step in becoming a global

online travel company

• Looking for growth opportunities

− Growth opportunities remain in

core Australian business but

market is maturing

− ZUJI acquisition provides B2C

growth opportunities in Asia

Pacific region

− B2B provides global

diversification of revenue

streams by leveraging in-

house expertise

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B2BOverview of B2B market

• Sell hotel rooms to travel agent partners via

online channel

• Key suppliers

− Hotel chains; individual hotels; third party

suppliers

• Considerable growth opportunities

− Global market ~$50 Bn (1)

− Disintermediation of B2B providers by B2C

has slowed down

− Fragmented market where 2 largest players

have $2Bn each; no other player has

>$1Bn

− Different markets require different

approaches

0%

20%

40%

60%

80%

100%

US Europe ANZ Asia MiddleEast

Online Offline

Online versus offline penetration rates 2014

(1) Company estimates

Source: Company estimates

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B2C Travel

WEBJET LIMITED

B2B Travel

Middle East

Africa

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LOH What is it?

• Established in Dubai in July 2012 and

launched in February 2013

• Start-up to #3 in market within 16 months

− Annualised TTV run rate $80 million

− Breakeven for FY14

• Unique Middle East/Africa coverage

− Currently in 27 markets

• Region offers significant growth

opportunities

− Increase revenues in existing markets

− New revenues from new markets

− Increased margin opportunities

Market Coverage

Algeria

Armenia

Azerbaijan

Bahrain

Canada

Egypt

Iraq

Jordan

Kurdistan

Kuwait

Lebanon

Libya

Nigeria

Oman

Pakistan

Palestine

Qatar

Saudi Arabia

South Africa

Syria

Tunisia

Turkey

UAE

Uganda

Ukraine

UK

Yemen

Why Middle East?

• Fast growing offline market

• Highly fragmented market place

• In-house expertise facilitated start-up venture

− CEO expertise in B2B space

− Relationship based market

− Successful and proven team in place

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LOHMulti supply aggregation strategy

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TRAVEL AGENT CUSTOMERS

Offer inventory from all suppliers plus directly contracted hotels

OTHER PLAYERS LOH

Unique product offering for the market – “last room availability”

Offer own inventory

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LOHSourcing strategy drives margin growth

Step 1:

Multi-supply

aggregation

Step 2:

Direct

contracting in

key cities

Step 3:

Global chain dynamic inventory

agreements - 2015

Done Done Ongoing

• 12 partners

integrated

• 1,200

agreements in

place

• Continuing in

new cities

• Deals completed with;

− Hilton, IHG, Accor, Starwood, Best

Western, Wyndham, Shangri-La,

Millennium, Movenpick, Iberostar,

Kempinski

• Provides access to global inventory

pools

On track for 8% TTV margin for FY15For

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Top Source

Markets

Key Target

markets

Top Destinations

• Saudi Arabia

• United Arab

Emirates

• Qatar

• Turkey

• South Africa

• Kuwait

• United Arab Emirates

• Turkey

• Saudi Arabia

• United Kingdom

• France

• United States of America

LOHBusiness mix

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B2C Travel

WEBJET LIMITED

B2B Travel

Europe

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SunHotelsWhat is it?

• Established B2B business based in

Spain

− FY13 EBITDA EUR 2.6 million

− Expected on-going TTV margin 9%

• Attractive inventory offering

− 40,000 unique city and beach

properties

− 6,000+ directly contracted – including

key beach properties

• Strong position in Scandinavian and

UK markets

− Market leader in Sweden and Norway

− Top 10 in UK

TTV by region (%) FY14

Sweden & Norway UK Other

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SunHotelsAcquisition rationale

• Second step in building a global B2B

business

• Acquisition strategy more suitable for

European market

− Unique properties difficult to access

• Attractive technology platform

• Offers attractive growth opportunities

− Sell more product to existing

customers

− Expand into other European markets

− Opportunities for cross selling with

LOH

• Management continuing post

acquisition

Acquisition details

• Purchase price EUR 19 million

• 100% Euro-debt funded

• $1 million acquisition costs

• Low FX risk

Key Management

• Kenneth Karlsson, CEO (til July 15), then

Chairman

− Founder and MD, SunHotels

• Nigel Horne, CEO Elect (from July 15)

− Ex Senior VP, Global Sales & Marketing,

GTA

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B2B – 2016 and beyond

• Shared technology platform rollout

− Create common inventory pool enabling LOH and SunHotels to access

inventory for their respective customer bases

− Combined inventory to be available to B2C businesses

− Rollout expected in FY16

• Build global B2B business through further acquisitions

− Will consider appropriate acquisition opportunities to further expand

global B2B presence

− North America

− Asia

• Considerable EBITDA potential

− See potential for B2B to generate 20% EBITDA growth pa for next 5

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FY15 GUIDANCE

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FY15 Guidance

• Expect FY15 EBITDA of $27 million

− After expensing $1 million costs associated with acquisition of SunHotels

• B2C

− Webjet

• 10% growth in TTV and bookings YTD. Expect to continue for remainder of

FY15

− ZUJI

• TTV growth expected in Australian and Singapore businesses

• HK business experiencing a difficult trading environment, impacting both sales

and margins

• Expect breakeven for FY15

• B2B

− Expect to contribute $5 million EBITDA for FY15For

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WEBJET MANAGEMENT TEAMMD and Key Executives

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EXECUTIVE MANAGEMENT TEAM

Key Experience

John Guscic

Managing Director, Webjet Limited

• Associated with Webjet Limited since 2003

− Board member since 2006; Managing Director since 2011

• Extensive experience in B2B space

− Chief Commercial Officer, GTA based in London

− Managing Director, Asia-Pacific, GTA based in Tokyo

Michael Sheehy

CFO

• Over 20 years of Finance experience

• Prior to Webjet, was CFO at Probuild Constructions, the $1.2bn turnover

Australian division of publicly listed Wilson Bayly Holmes–Ovcon Ltd

Shelley Beasley

Group COO

• Over 20 years in Travel and Travel IT experience in senior roles throughout

the US and APAC

• Worked for globally recognized firms such as Travelport and United Airlines

Graham Anderson

Head, IT

• Over 20 years in IT and Travel in Europe and APAC

• Track record of delivering innovative, transformational programmes and

solutions in the Travel domain

Lynne Oldfield

Head, Hotels

• Over 20 years in Travel, with extensive hotel industry knowledge

• Previously managed travel businesses across Australia, New Zealand, India

and North America

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EXECUTIVE MANAGEMENT TEAM (cont’d)

Key Experience

David Galt

CEO, Australia / New Zealand

• Substantial Travel experience, including 8 years at Webjet in senior

commercial and marketing roles

• 13+ years in search engine, e-mail and mobile marketing

Paul Ryan

CEO, Webjet Exclusives

• Over 20 years of multinational Travel and Finance experience

• Held senior roles in industry leading companies such as Flight Centre and

Scoopon

Hui Wan Chua

CEO, Singapore

• Over 20 years of senior managerial experience in the Travel and IT industry in

Asia, with companies such as Travelport and Abacus.

• Intimate knowledge of the complex and rapidly changing Asia travel

environment.

Charlie Wong

CEO, Hong Kong

• Over 15 years in senior Travel and Finance roles in Asia

• Held senior managerial roles with Travelocity and KPMG in the region

Ossama Wagdi

CEO, Lots of Hotels

• Over 35 years of hotel industry experience in the Middle East

• Held senior roles in industry leading companies in the accommodation sector

such as Sheraton, IHG, and GTA

Kenneth Karlsson

CEO, SunHotels

• Over 35 years of hotel industry experience in Europe

• Original founder of SunHotels, following a long career with Thomas Cook and

various other Spanish travel companies

Nigel Horne

CEO Elect, SunHotels

• Over 20 years of hotel industry experience

• Held various commercial, strategic and operational roles both regionally and

globally at GTA

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for personal use only2014/11/26 · •united arab emirates •qatar • turkey • south africa...

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