Steve Jones’ Say
A fuss about nothing or institutional unethical behaviour?
Whatever your view of the recent Flight Centre shenanigans — disgruntled or easily offended ex-staff with an axe to grind, or an unpleasant culture that needs addressing, and eradicating — the market didn’t take too kindly to the allegations contained in last month’s ABC investigation.
Even on the back of another solid financial result, Flight Centre shares tumbled, wiping countless millions off the value of the company. At time of writing, they had yet to recover.
The allegations were serious, ranging from ripping off customers with inflated mark ups, to a “toxic” culture rife with hard-drinking, bullying and harassment. It wasn’t a pretty picture, but one denied by the retailer. Skroo Turner branded it a “beat-up”.
Was it? Should the complaints of the few — and it was a few when measured against the 10,000 employed by Flight Centre in Australia — tarnish the reputation of the entire company? And when is such insidious behaviour so ingrained that it becomes an integral part of the “company culture”, as was alleged.
What is clear is that we are living in a delicate era where suspect behaviour, be it of a personal or professional nature, is being called out on an almost daily basis.
The reaction, therefore, was unsurprising, at least not from individuals or the industry at large where the relish that some greeted the retail behemoth squirming under the national spotlight was inevitable. It was the market reaction which took me by surprise.
Despite record financial results, released just as the ABC investigation went to air, Flight Centre’s shares lost 18% of their value in next to no time. It highlighted not only the unpredictability of the stock market, but maybe reflected the environment we are operating in, one where indiscretions, real or otherwise, just won’t be tolerated no matter how profitable a company may be.
The market clearly didn’t like the unpalatable culture that is said to pervade Flight Centre, or the negativity that ensued. Not so many years back, I suspect only the financials would have truly mattered.
But it is not only Flight Centre’s integrity that has been called into question in recent weeks. Meriton was fined a whopping $3m for rigging TripAdvisor reviews, while Trivago is the subject of Federal Court action amid claims the aggregator misled consumers and prioritised advertisers.
So, in the space of a few short weeks we have a hotel company manipulating online reviews, an aggregator accused of fooling consumers and the country’s largest travel retailer apparently adding huge mark-ups to the cost of flights.
And here is the problem. It is not only that trio of companies to have suffered reputational damage. It is the wider industry. If it transpired Trivago did act dishonestly, is it an isolated incident or common place in the sector? Who else attempts to manipulate reviews? And do other travel agents mark-up flights on the quiet? Those are the questions consumers will be asking.
Trust is hard won, and easily lost.