Ian Mcma­hon

Travel Bulletin - - CONTENTS -

THE lat­est fi­nan­cial re­sults from Hel­loworld pro­vide food for thought not just on the pub­lic com­pany’s re­sults but on chal­lenges fac­ing the wider travel in­dus­try, par­tic­u­larly those posed by the in­ter­net. The ob­ser­va­tion has been made that Hel­loworld’s an­nounced pre-tax profit of $3.45 mil­lion amounts to only 1% of the $345 mil­lion recorded by Flight Cen­tre. Well, yes. But the two busi­nesses are by no means ex­actly com­pa­ra­ble. Flight Cen­tre owns all but a mi­nus­cule por­tion of its out­lets; re­tail­ing is its core busi­ness. Hel­loworld’s core busi­ness is fran­chis­ing. To make a fair com­par­i­son of the prof­its of the two or­gan­i­sa­tions’ re­tail op­er­a­tions you would need to know the prof­its of the in­di­vid­ual agent mem­bers of Hel­loworld. In Ade­laide, for ex­am­ple, I would guess that Phil Hoff­mann Travel, a Hel­loworld mem­ber, out­per­forms Flight Cen­tre in the rel­e­vant lo­cal­i­ties. To be ac­cu­rate, Hel­loworld is a hy­brid or­gan­i­sa­tion. In the High Street re­tail sphere, it is a fran­chisor but it owns its con­sol­i­da­tion arm and its tour whole­sal­ing arm – op­er­a­tions which were sup­ple­mented in the sec­ond half of the fi­nan­cial year by the suc­cess­ful and prof­itable whole­sal­ing op­er­a­tion of AOT fol­low­ing that com­pany’s merger with Hel­loworld. De­spite the in­jec­tion of AOT, Hel­loworld’s whole­sal­ing op­er­a­tions recorded a net loss of $4.1 mil­lion, the ma­jor rea­son that the fran­chis­ing divi­sion’s sur­plus of $6.2 mil­lion ul­ti­mately trans­lated into an over­all com­pany result of only $3.45 mil­lion. This is a re­flec­tion of a wide­spread malaise in tour whole­sal­ing – with some no­table ex­cep­tions – as whole­salers bat­tle not only with the pub­lic turn­ing to the in­ter­net to di­rectly source over­seas hol­i­day com­po­nents but with in­creas­ing num­bers of agents do­ing the same thing. In some ways this is a more cru­cial is­sue than the cur­rent head­line-grab­bing fra­cas be­tween bricks and mor­tar travel agents and on­line travel agents led by We­b­jet. If you think about it, the OTA’S cam­paign dis­parag­ing bricks and mor­tar travel agents is re­ally an ac­knowl­edge­ment of its fail­ure to make in­roads into the mar­ket for com­plex travel ar­range­ments, dom­i­nated by tra­di­tional travel agents. On the other side of the coin, of course, tra­di­tional travel agents have yet to truly crack a “clicks and mor­tar” so­lu­tion com­bin­ing on­line and High Street re­tail­ing. The launch of the Hel­loworld brand un­der the com­pany’s then ceo, Rob Gur­ney, was in large part an at­tempt to achieve this. While suc­cess has proved elu­sive, Hel­loworld ceo An­drew Burnes, de­liv­er­ing the com­pany’s re­sults, fore­shad­owed “an in­te­grated so­lu­tion giv­ing our cus­tomers the best of both worlds”. If he can de­liver on this, and also re­store his tour whole­sal­ing arm to prof­itabil­ity, Burnes will have taken gi­ant steps to trans­form Hel­loworld’s for­tunes.

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