COMPANY STRATEGY UPDATE
John Guscic
Managing Director
26 November 2014
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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
WEBJET LIMITED
B2C Travel
B2B Travel
• 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)
Strategy Update FY15
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WEBJET LIMITED
B2C Travel
Target EBITDA growth rate
5-10% pa for next 5 years
B2B Travel
Target EBITDA growth rate
20% pa for next 5 years
Strategy Update FY15
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B2C TRAVEL
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Online travel for the consumer market
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WEBJET LIMITED
B2C Travel
B2B Travel
Australia
New Zealand
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Webjet
Offer a range of air and non-air products
AIR
Air
•
•
Domestic and International flights
Booking fee includes our 30 minute
price guarantee
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
NON
-AIR
•
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
TTV Split (%) FY14
Air
Non-Air
Air remains largest
contributor to overall TTV but
has fallen as non-air products
grow
Strategy Update FY15
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Webjet - Air
Market environment remains flat
Source: http://www.bitre.gov.au/statistics/aviation/domestic.aspx
TTV (%) FY14
Domestic
International
Note: Represents split for Webjet business only
Bookings (%) FY14
Domestic
•
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
International
(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
Strategy Update FY15
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Webjet - Air
Competitive environment relatively unchanged
Commission structures
•
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
Airlines
Domestic
International
Hotels
0%
~ 5% plus over-rides
~10-25%
Booking fees - Air
Australia
International
markets
Webjet


Flight Centre


Expedia
x

Airlines
x
x
Source: xx
Strategy Update FY15
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Webjet - Air
Resuming 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
TTV for that respective month
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Webjet - Air
Remains #1 OTA brand in Australia
Source: Hitwise internet visitation reports, Online Travel Agency Category 2014
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Webjet - Non air
Growing 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 business
Strategy Update FY15
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WEBJET LIMITED
B2C Travel
B2B Travel
Australia
Singapore
Hong Kong
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ZUJI
Rationale 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
ZUJI
Asia offers attractive growth potential
Online travel growth
rates are higher than
Australia/ New Zealand
Online penetration
rates are low
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Asian Market - Background
ZUJI
High LCC penetration in APAC
Expanding
LCC offering
to meet
market
demand
Source: CAPA
Strategy Update FY15
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ZUJI
Post acquisition performance
• 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
All (200+) unprofitable TTV revenue
streams cut post acquisition
− TTV cut by 40% to $200 million (as
at March 2014)
•
−30% fall in operating costs
Focus now on growing profitable TTV
in all 3 regions
−Office closures and relocations
− Australia; Singapore; Hong Kong
Strategy Update FY15
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15
ZUJI
Acquisition plan timeline
FY14
Business integration
Completed
IT Cloud transition
Completed
Cost take out
Completed
Quality improvement program
Completed
FY15
Chinese language sites
Completed
Mobile platform
Completed
LCC content
FY16
Expected 2H
Propelling the brand
Strategy Update FY15
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ZUJI
TTV 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
TTV by region (%) FY14A
HK
SGP
AU
TTV by region (%) FY15E
− Umbrella movement
HK
SGP
AU
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IT TRANSFORMATION
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IT
What was done – and why?
WHAT?
WHY?
• Rewrote entire Webjet front end and
moved to Cloud platform
• Running out of “headroom”
− Completed October 2013
• Cost effective IT operations
• Moved ZUJI onto Webjet platform
• Needed adaptable/ flexible technology
platform to remain competitive
− Completed December 2013
• ZUJI operating on Travelocity system
− Required to migrate across to Webjet
post acquisition by December 2013
ISSUES
BENEFITS
• 18 month process
• Enables introduction of new products
• Temporary management distraction
• Teething issues
• Undertaken concurrent with ZUJI
acquisition
− Multi language sites; mobile sites;
mobile Apps; Webjet Exclusives;
dynamic packages
• Increases velocity of software releases
• Provides competitive scaleability for next
10 years
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B2B
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Providing hotel rooms to partners via the online channel
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B2B
Rationale 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 inhouse expertise
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B2B
Overview 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
Online versus offline penetration rates 2014
100%
80%
− Global market ~$50 Bn (1)
60%
− Disintermediation of B2B providers by B2C
has slowed down
40%
− Fragmented market where 2 largest players
have $2Bn each; no other player has
>$1Bn
− Different markets require different
approaches
20%
0%
US
Europe
Online
ANZ
Asia
Middle
East
Offline
Source: Company estimates
(1) Company estimates
Strategy Update FY15
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WEBJET LIMITED
B2C Travel
B2B Travel
Middle East
Africa
Strategy Update FY15
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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
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
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
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LOH
Multi supply aggregation strategy
OTHER PLAYERS
LOH
Offer own inventory
Offer inventory from all suppliers
plus directly contracted hotels
TRAVEL AGENT CUSTOMERS
Unique product offering for the market – “last room availability”
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LOH
Sourcing 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
• Deals completed with;
− Hilton, IHG, Accor, Starwood, Best
Western, Wyndham, Shangri-La,
Millennium, Movenpick, Iberostar,
Kempinski
• Continuing in
new cities
• Provides access to global inventory
pools
On track for 8% TTV margin for FY15
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LOH
Business mix
Top Source
Markets
Key Target
markets
Top Destinations
• Saudi Arabia
• United Arab
•
Turkey
• United Arab Emirates
•
South Africa
• Turkey
Emirates
•
Kuwait
• Saudi Arabia
• Qatar
• United Kingdom
• France
• United States of America
Considerable growth opportunities from existing and new markets
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WEBJET LIMITED
B2C Travel
B2B Travel
Europe
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SunHotels
What is it?
• Established B2B business based in
Spain
TTV by region (%) FY14
− 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
Sweden & Norway
UK
Other
UK markets
− Market leader in Sweden and Norway
− Top 10 in UK
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SunHotels
Acquisition rationale
•
•
Second step in building a global B2B
business
Acquisition details
•
Purchase price EUR 19 million
Acquisition strategy more suitable for
European market
•
100% Euro-debt funded
•
$1 million acquisition costs
•
Low FX risk
− Unique properties difficult to access
•
•
Attractive technology platform
Offers attractive growth opportunities
− Sell more product to existing
customers
Key Management
•
− Expand into other European markets
− Opportunities for cross selling with
LOH
•
Management continuing post
acquisition
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
years
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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 FY15
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WEBJET MANAGEMENT TEAM
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MD 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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