Ian Mcmahon

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.