Cheap airfares and accommodation deals have given Wotif.com a boost over the past year, but CEO Robbie Cooke forecasts high performance even after economic recovery. He cites ‘structural change’ towards online booking as the catalyst in achieving more than 20 per cent profit growth for 2008/09. He tells Brisbane Business News how it’s a mistake for stock analysts to lump all IT businesses in the same bucket.
Hotels have struggled, airlines have pushed down fares and while Wotif has thrived in this environment, the accommodation booking company is certainly not sleeping on its success.
CEO Robbie Cooke says if US trends are anything to go by then more Australians will continue to turn to the web to book hotels, but the low barriers to entry mean competition is always around the corner.
“We’re in a hyper-competitive market place, the apparent barriers to entry of an online site don’t appear to be that great and there’s always somebody new trying to take us on,” says Cooke.
“That in itself is quite invigorating as you’ve got to fight for every dollar, you can’t afford to get arrogant as a company and you can’t afford to get complacent.
“You’ve got to stay paranoid because somewhere in the world someone’s thinking of a smart idea — it could be a really small idea but it can get traction. So the minute you get comfortable and start to feel that you’re ‘it’, it’s the bullet you don’t see that always kills you.”
He says 13 per cent of accommodation in Australia is booked online but that figure is around 34 per cent in the US, with pundits predicting it to reach 50 per cent within the next five years.
“Underlying the whole Wotif story is that structural change is going on - in the past you’d go to a travel agent or you’d ring up a call centre. People over the years have started to realise that it’s more convenient and you get better value if you book online,” he says.
“In the cycle we’ve gone through we’ve had more corporates using us, more people domestically using us to get the best deals, and on top of that you’ve got some very deep discounting with airlines, particularly in Asia.
“As we come out of this down-cycle those people who have awakened to that value online will stay online and that should accelerate the uptake.”
Three million eyeballs a month
Cooke says the company has proved itself very capable of attracting demand to the site, with more than three million eyeballs a month to Wotif.com, as well as to Asia Web Direct, acquired last year for $34 million.
But he is careful to point out that while Wotif acts in the online environment the company is a retailer and not just an IT company.
“When we listed in June 2006 all the stock analysts lumped Wotif.com, RealEstate.com and Seek.com all in the one bucket, saying that all online businesses should basically trade at the same multiple and have the same sort of profile,” he says.
“The last 12 months has really demonstrated that each of the online businesses – and you could add carsales.com to that list – has performed quite differently in the economic environment we’ve been through.
“People go on about online internet businesses and put them in a separate category, but at the end of the day we’re a retailer – it’s just how we access our customers that’s a bit different.”
He says Wotif has a focus on brand awareness, with brand recognition in Australia of more than 50 per cent and 70 per cent of users typing Wotif.com directly, rather than through search engines or links.
He likens the website to a shop where the fundamentals of retailing still apply, in making sure you give the customers what they want with good value and service, while making sure you don’t make it too difficult to navigate.
It is a business philosophy that when combined with room for growth has led to an expected $42 million profit for the 2008-2009 financial year, but Cooke concedes Wotif’s recent success has been dependent on cheap airfares to some extent.
“I’d agree that good value, cheap airfares have acted as a bit of a stimulus and I don’t think we can usually depend on that, but it helps,” he says.
“At the end of the day I think good value prices will continue, you’ll see tactical pricing between the airlines for the next six months and then they’ll have to go up at some stage because it’s unsustainable.”
While Cooke recognises his company has changed the norm for traditional travel agencies, it doesn’t spell their demise by any stretch, as there will always be people who need personal interaction for travel services.
Young and internationally-focused
Wotif has established international offices in Phuket, Bangkok and Kuala Lumpur, with people on the ground all around the world negotiating and managing the business as it connects travellers with hotels in 45 countries.
As the No.1 online accommodation brand in Australia and New Zealand, Cooke hopes that through Asia Web Direct the company will be able to expand its presence in Asia, with a team of 180 staff in the region.
“For us it’s a key market, very much less mature than Australia’s so they’re about at the two to three per cent mark for online penetration – there’s some big opportunities there and it’s probably four of five years yet before we’ll know if we’re doing the right thing in Asia.”
Cooke says the company’s team of 400 staff is one of the best teams you could find – young with an average age of 28, extremely ambitious and talented, with a high level of enthusiasm.
“We have a very flat organisational structure, everybody has a strong awareness of what we’re doing and there’s no sort of hierarchy,” he says.
“People talk about ‘Gen Y’ and how it’s difficult to meet their expectations, they want to do everything and they want to jump ahead of the pack – if you can leverage off that enthusiasm and use it then it’s fantastic.”
Robbie Cooke’s views on:
Who he admires in Brisbane business:
There are a lot of privately owned businesses that have been built by one or two generations that are very credible, with entrepreneurial flair and determination behind them. You look at companies like Supercheap, Merlo, G.James Glass and they’re going great guns. I think we box outside our weight — you just drive around some of the industrial areas of Brisbane, have a look at what’s out there and see a lot of people who just get it done that don’t make a big song and dance about it.
His biggest challenge:
I am pretty hands on, so probably one of the biggest challenges I’ve had to come to grips with in this role is actually delegating more and the transition from a private company to a public company without destroying its unique culture.
Attitude and recruitment:
In Brisbane people have a ‘can do’ attitude, the weather and climate make people more positive, you don’t have the long cold winters you have in Melbourne, although the city is similar to Melbourne in a bizarre way. Brisbane is a very easy place to recruit and it’s a cliché but it’s a great liveable city, apart from the traffic.
For me, if you enjoy what you do and you genuinely get a rush out of your job the whole question of work life balance disappears because it’s all part and parcel – I don’t think you can compartmentalise.
The black swan that trips up business
I personally think the black swan would come the day we take what we’ve got for granted. I think that’s the risk – you think you’re invincible and at that moment, you look at most companies if they become complacent, arrogant, they fall asleep at the wheel, for my money that’s the biggest risk any corporate can take.
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