From the man­ag­ing editor

Travel Bulletin - - CONTENTS - Bruce Piper

THERE’S no doubt the Aus­tralian travel in­dus­try is go­ing through a quiet pe­riod. A plethora of high sea­son not-so-early early­bird of­fers, tac­ti­cal deals and cre­atively pack­aged prod­uct is ev­i­dence of a soft mar­ket, while both Qan­tas and Vir­gin Aus­tralia have both is­sued up­dates con­firm­ing their for­ward book­ings are slower than ex­pected, each cit­ing a dip in con­sumer con­fi­dence in part due to the un­cer­tainty re­lat­ing to next month’s Fed­eral elec­tion. It is cold com­fort, but some will be re­as­sured by in­di­ca­tors that the down­turn ap­pears to be right across the mar­ket. Even the seem­ingly un­stop­pable Flight Cen­tre cited a “chal­leng­ing trad­ing cli­mate that has im­pacted short-term re­sults” at an in­vestor con­fer­ence in May. In­dus­try ob­servers have noted a change in Flight Cen­tre’s rhetoric, with the com­pany for the first time in mem­ory say­ing its tar­geted net profit growth of 4-8% was “not a for­mal­ity” due to un­cer­tain trad­ing con­di­tions and in­vest­ments made to drive longer-term re­turns. The re­spected John O’shea, travel and tourism an­a­lyst with Bell Potter Se­cu­ri­ties, has raised the is­sue of Flight Cen­tre’s shop net­work, which while the big­gest con­trib­u­tor to group earn­ings also has a rel­a­tively high fixed cost base. His anal­y­sis in­di­cates that the tra­di­tional Flight Cen­tre branded stores in Aus­tralia “ap­pear to be de­liv­er­ing neg­a­tive like-for-like TTV growth”. Hel­loworld is still bask­ing in the af­ter­glow of its merger with the AOT Group about four months ago, with new CEO An­drew Burnes un­der­tak­ing sig­nif­i­cant re­struc­tur­ing which should im­prove the bot­tom line. There’s still lots of work to do, and a soft trad­ing en­vi­ron­ment cer­tainly won’t be help­ing, but Burnes flagged an in­crease in TTV to be­tween $5.3 bil­lion and $5.4 bil­lion in the next fi­nan­cial year due to the AOT merger and im­proved trad­ing con­di­tions within QBT. Nev­er­the­less at the re­cent Hel­loworld for Busi­ness (HFB) con­fer­ence in Sin­ga­pore, Hel­loworld head of as­so­ciate net­works David Pad­man re­vealed the HFB di­vi­sion had grown by nine new mem­bers to a to­tal of 73 agen­cies over the last year – an in­crease of over 10% – while at the same time “in a pretty tough year we have grown our turnover year on year by 2%”. So if busi­ness seems to be slow, you’re not alone. The good news is that the fun­da­men­tals are still good. Out­bound de­par­tures con­tinue their re­lent­less rise and O’shea said he “re­mains con­fi­dent the cur­rent slow­down is likely to prove tran­si­tory”.

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