For personal use only2014/11/26 · •United Arab Emirates •Qatar • Turkey • South Africa...
Transcript of 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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Strategy Update FY1522
WEBJET LIMITED
B2B TravelB2C Travel
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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Strategy Update FY15
B2C TRAVELOnline travel for the consumer market
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Strategy Update FY1544
WEBJET LIMITED
B2B TravelB2C Travel
Australia
New Zealand
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Strategy Update FY155
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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Strategy Update FY156
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
Domestic InternationalFor
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Strategy Update FY157
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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Strategy Update FY158
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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Strategy Update FY159
Webjet - AirRemains #1 OTA brand in Australia
Source: Hitwise internet visitation reports, Online Travel Agency Category 2014
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Strategy Update FY1510
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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Strategy Update FY151111
B2C Travel
WEBJET LIMITED
B2B Travel
Australia
Singapore
Hong Kong
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Strategy Update FY1512
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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Strategy Update FY1514
ZUJIHigh LCC penetration in APAC
Source: CAPA
Asian Market - Background
Expanding
LCC offering
to meet
market
demand
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Strategy Update FY1515
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
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− Australia; Singapore; Hong KongFor
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Strategy Update FY1516
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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Strategy Update FY1517
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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Strategy Update FY1522
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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Strategy Update FY1524
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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Strategy Update FY1525
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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Strategy Update FY1526
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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Strategy Update FY1527
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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Strategy Update FY1531
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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Strategy Update FY1536
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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