Helloworld Travel: onwards and upwards
It has been almost 18 months since Andrew Burnes, along with wife Cinzia, merged Helloworld with AOT. Steve Jones catches up with Andrew to review how things sit today and his plans for the future.
Although Andrew Burnes rejected the notion at the time, Helloworld was in the doldrums when, 18 months ago, he and wife Cinzia completed the merger of the retail group with their own AOT business.
Helloworld’s predicament had been largely self-inflicted. While the wider travel market remained generally strong, Helloworld and its previous incarnations had endured years of upheaval, mismanagement and under-performance, its unstable recent history capped by a $200 million goodwill write-down just three months before the Burnes’ came knocking.
A turnaround was needed.
Surveying events since then, culminating in the encouraging 2017 financial results, the duo appear to have achieved just that.
That’s not to say Helloworld is in perfect shape. Only foolhardy or arrogant companies would make such claims. But since taking the business by the scruff of the neck at the start of 2016, the Burnes’ have undeniably steered the notoriously rocky company into calmer waters, even if much remains to be done.
Burnes told travelBulletin in an emailed Q&A that while Helloworld remains a work in progress, he was pleased with achievements so far, and predicted a “more exciting phase” was on the horizon.
“The FY17 results have taken the business much closer to where it needs to be in terms of final performance, sustainability and having much better engagement with the key stakeholders in our enterprise,” he said. “The priorities in FY18 are to continue with recalibrating our cost base to ensure the business is right-sized for its revenues. But we are moving to a more exciting phase where we can look at new developments across our four key divisions that will start to deliver TTV and revenue growth in the medium to long term.”
While most of the synergies and cost savings between Helloworld and AOT have now been realised — to the tune of $18.6 million in 2017 of which $11m came through job cuts — it’s clear the drive for greater efficiencies across the wider business will continue.
Helloworld itself, described by Burnes as an “amalgam of a range of travel businesses put together over a number of years”, still has “unrealised synergies” across its four operating divisions that management will look to unlock in the year ahead.
In addition, in remarks which underline the unfinished nature of the task, there remain “obvious areas of improvement”, he said.
“Most particularly in retail where we are working very hard on the brand and getting our advertising and marketing sorted out together with our technologies,” Burnes explained. “Technology to drive productivity and yield is a really big challenge and will be something we are investing in for the next 100 years. But we do need to improve, in the short term, our online site, helloworld.com.au, which is now totally aligned with our agent’s businesses and provides a better integrated booking solution for our agencies.
“The wholesale business also has systems issues which can always be improved while our corporate business needs to take full advantage of some of the new technology our partners have or are developing in the next 12 months.”
Expanding on its digital strategy, which emerged from the ashes of its ill-advised and costly liaison with Orbitz, Burnes said Helloworld is not alone in playing catch-up in an environment where advancements in technology come thick and fast.
“I am not sure if any company is where it needs to be in terms of digital strategy right now. Every morning when I pick up the paper and read the technology section there is some new thinking around how businesses’ digital strategy needs to either have evolved or be evolving. But there is no question we need to make significant improvements in the functionality of helloworld.com.au and the functionality of our agency tool, Resworld.
“This is something we will never stop investing in and the strategy will continue to evolve as the digital economy evolves. But certainly within the course of this financial year we need to start rolling out our agency White Label sites and apps with bookable content.”
That, Burnes said, will enable Helloworld to complete the first stage of its “clicks and bricks” strategy and offer customers what he called a “whole of travel service”.
With Helloworld on a firmer financial footing, thoughts have begun to turn to the future with greater optimism and ambition. In its annual report, chairman Garry Hounsell wrote how the company is “poised to build on recent successes by identifying and harnessing opportunities”.
One opportunity it already grabbed was the 50% acquisition of MTA, a business that Burnes said has, so far at least, met all expectations and one he duly predicted will continue to grow as the home working sector develops.
Burnes told travelBulletin further expansion prospects exist both organically and through acquisition, and flagged a desire to explore beyond Australia’s shores to generate greater profitability.
“In our particular area of expertise, namely distribution and sales, we see both green field opportunities to develop services and enhance the existing services we provide as well as potential bolt on acquisitions that would enhance various parts of Helloworld’s operations here in Australia, in New Zealand and overseas,” he said. “Obviously, when you look at the annual report you can see the very heavy emphasis we have on Australia for profitability and we would like to improve our profitability in New Zealand and also grow our ‘rest of world’ portfolio to get stronger representation from our ROW businesses in both our TTV, revenue and profit.”
One of Burnes’s stated intentions when he took control of Helloworld was to develop more in-house product for its retailers to sell. To that end, a new China program and Canada brochure was launched, along with an upmarket Qantas Holidays Maldives program and a greater selection of Australian product.
Other destination gaps will be filled “where we can be relevant”, he said.
Burnes was non-committal when asked whether Helloworld was keen to pursue a more aggressive vertically integrated model and drive greater support for in- house wholesalers.
Yet it would be surprising if that was not the case, given its portfolio of brands. And there is evidence of tension between Helloworld and preferred third party suppliers, with agents frustrated at the direct-selling antics adopted by some partners.
“Helloworld has a great reputation for supporting long term preferred supplier partners and we are very keen to continue with that support,” Burnes insisted. “Having said that, the remarketing of some of our current preferred suppliers does cause us, and our agency members concern. We are very keen to work with our preferred suppliers to ensure that the integrity of the customer relationship is maintained between the traveller and our agency member.
“One of the things that our in-house wholesale businesses do not do is remarket back to customers… and that is obviously a plus for those in-house wholesale brands.”
He declined to name those suppliers causing concern or whether Helloworld would consider removing their preferred status.
Whatever transpires, Burnes said a strong stable of preferred partners will be maintained “to ensure that ultimately travellers have choice and our agencies have the options they need to put together the best possible experience for their customers”.
Among Helloworld’s Achilles heels dating back to the 2013 launch has been the on-going struggle to convince agents to buy into the vision. Even now — four years on — only around 350 stores are fully branded, with a further 300 associate locations adopting a co-branded model. There can be no doubt that relatively small number has muted the brand’s marketing activity and hampered its overall development.
Notwithstanding the many business agents that Burnes said were leveraging the Helloworld Travel brand, he conceded he was “certainly keen to see more fully branded agencies in the network”.
“I believe that ultimately they get the greatest benefit from our extensive marketing efforts.”
Those marketing efforts earlier this year saw the addition of ‘Travel’ to the Helloworld name, and the nostalgic return of a familiar strapline. The Travel Professionals and its associated jingle last aired when the fondly remembered Harvey World Travel still populated our towns and cities.
While the HWT brand itself is consigned to history — prematurely as it was — Burnes admitted it still has residual value.
Explaining the rationale behind the brand refresh, he said: “It was not blindingly obvious to everyone that Helloworld was actually a travel company so it seemed helpful to add the ‘travel’ extension. And with the reputation of our travel agents, adding in the ‘travel professionals’ strapline was a natural evolution.
“Then we had a think about jingles and given how well known the HWT jingle was, and following on from some comprehensive research about how people viewed the jingle today, we decided to roll that out again. I cannot tell you how warmly it has been received in the marketplace.”
It has, it seems, helped Helloworld resonate with the public. Unprompted awareness now stands at 22%, second only to Flight Centre according to Burnes, while prompted awareness has reached 60%.
“Both of these numbers are significantly higher than our previous results in 2015 and 2016 [but] obviously we are not content with where that currently sits and we are looking for a significant improvement in both of those numbers and also a shift in ‘First Choice’,” he said.
“What is very pleasing in our latest research is that our customer satisfaction levels are the highest of any of the retail brands and again that is a credit to the agents who make up the Helloworld network.”
Some of those agents have become shareholders in the network courtesy of the Helloworld Members Loyalty Bonus Scheme, a share give-away designed to both instill and reward loyalty.
Furthermore, Helloworld struck equity swap deals with Hunter Travel Group, its largest multi-location member, and QLD based Cooney Investments, the operator of two Helloworld shops in Mackay and Mount Pleasant, along with Hosted Journeys Group Travel.
Talks are underway with other franchisees over similar arrangements.
“The rationale is quite simple,” Burnes explained. “These are great businesses, very well run and Helloworld was very happy to take a minority equity stake in these businesses to further cement our partnership with them.
“I have said to all of our agencies in Australia that we are interested in taking a minority equity position in their businesses. We have a number of discussions going on at present with various members of the network that will hopefully come to fruition over this financial year and next.”
Turning to the travel retail sector as a whole, Burnes insisted the future was bright. He suggested the uncertain nature of the world coupled with the “almost incomprehensible” array of travel options available to consumers played into the hands of traditional consultants.
Being able to rely on a travel agent to advise, book and manage travel is becoming increasingly valuable, and even “trendy”, he said.
“Our own brand research showed that 46% of people who had booked online or direct in the last year were likely or very likely to book with a travel agent in future,” Burnes declared. “We are seeing not only our more traditional demographic grow but we are starting to see an increasing number of millennials utilising the services from our agency members. So I think there are many opportunities out there for us to build on that and to convince consumers that the service their agent brings is something to be valued.”
He said the value agents provide should be more actively promoted both by the retail industry, and the Australian Federation of Travel Agents.
“I think all of the travel agency networks have some role to play in this as does AFTA because unquestionably the service that travel agents provide is increasingly valued by our customers.
“That service involves a lot more than just providing a cheap ticket or hotel room. We need to keep sight of that and explain our core value proposition to consumers.”
He declined to elaborate on how the industry should go about that task.
While stressing he was more positive about opportunities than worried about threats, Burnes also warned against the industry’s penchant for “racing itself to the bottom”.
“Some of the irrational behaviours we see from some of the airlines and some land and cruise suppliers in this space is bewildering,” he said. “Having said that, it has always been thus.”
Returning to his day-to-day job of managing Helloworld, Burnes said he was “thrilled” to be at the helm, and was enjoying discussions with shareholders, brokers and analysts about the firm’s performance.
The positive nature of Helloworld’s trajectory has no doubt aided that enjoyment. His predecessors faced with less-than-delighted invested parties may not have found such conversations quite so cordial, and the public market can be a fickle, ruthless place.
For the moment though, all is progressing smoothly for Burnes and Helloworld.
So when will Helloworld be the finished article? Never, is the answer.
“Business is evolutionary and I do not ever expect us to get to the “finished article” scenario you mention and there will always be things to improve within the business,” Burnes said. “But I said from the outset I thought it was a two-year project to get this business to fundamentally where it needed to be. We have got six months of that left and it will be onwards and upwards from there.”