Gaines fixes Helloworld’s management style, now faces challenges

Issues & Trends – April 2014

Gaines fixes Helloworld’s management style, now faces challenges

By Ian McMahon*

Elizabeth GainesELIZABETH Gaines has achieved at least one major success since taking over the Helloworld chief executive’s desk abruptly vacated by Rob Gurney.

She has restored shattered morale within the company’s management ranks, according to a senior executive who spoke to travelBulletin.

The executive, who was far from complimentary in his comments on Gurney’s management style, said Gaines has won the respect of her management team. Since joining Stella Group Holdings from a non-travel background in 2008, she has gained an acute insight into the workings of the industry and is right across the issues facing Helloworld, the executive said – an assessment corroborated to travelBulletin by other senior industry executives outside Helloworld who have dealings with her.

Gaines, who previously ran Heytesbury, the Perth-based company formed by the late Robert Holmes à Court, was appointed Stella’s chief financial officer by Gurney’s predecessor Peter Lacaze.

Lacaze was a strong advocate of succession planning and he was widely seen to be grooming Gaines as a future chief executive – albeit he could scarcely have foreseen the management upheaval that would take place around Gaines as her role expanded to include the title of chief operating officer before her appointment as chief executive of the company that has now morphed into Helloworld.

Lacaze, much admired for his stunning achievement in persuading the Australian Competition and Consumer Commission to reverse its initial position and allow the merger of Stella and JTG, also had great success in calming turmoil among the company’s agents unsettled by constant change.

But even as he brought stability to the company’s four branded chains and slowed the outflow of disillusioned members to the likes of Independent Travel Group, Magellan and Travellers Choice, I am told the board was growing impatient with his lack of progress in evolving a new consolidated business model adapted to an industry rapidly changing in an online world.

And so we saw Lacaze exit left and Gurney enter right with a dramatic flourish, unveiling a radical shake-up that saw the dumping of established brands Harvey World Travel, Jetset, Travelworld and Travelscene American Express.

In their place came a single new brand, Helloworld, that also badges a new online presence set up in conjunction with giant US online travel agency, Orbitz.

Personally, I was always treated courteously by Gurney and he was incisive and plausible in articulating his Helloworld strategy. His line “the biggest risk was to do nothing” resonated well.

But in mid-March an email from the Helloworld board to senior and middle managers made it apparent that the management style under Gurney’s watch was causing internal problems.

The board’s email said it took feedback it had received seriously enough to call in employment consultancy, HR Spectrum, to conduct “a cultural health check”.

The revelation of the email inTravel Today caused an industry sensation. (Surely the board cannot have been surprised that it leaked. It went to 23 recipients , 20 of whom had PAs who were also privy to its contents.)

The board’s attempt to spin its move as “common practice” did nothing to quell fevered industry speculation of management unrest at Helloworld, not least among the company’s agents.

Operating with a different management style that has evidently quelled executive dissension at Helloworld, Gaines has solved one problem but now faces challenges of substance.

Gurney has departed the company with his single brand Helloworld strategy still very much a work in progress.

“The jury is out,” as one of the company’s agents, still pondering the wisdom of transitioning to the Helloworld model, put it when asked for a verdict on the success of the new strategy.

Gaines, having taken the driver’s wheel from Gurney, would appear to have three options.

Does she continue in cruise control, not deviating from the course set by Gurney? Does she remain on course but change gear, tweaking the strategy here and there? Or does she apply the brakes?
The third option can surely be ruled out, but there is no doubt Helloworld faces significant issues in both the online and bricks and mortar sectors and it will be interesting to see if there is a gear change.

On the online front, the decision to close down Best Flights appears to have backfired. Acquired by Lacaze, Best Flights provided a lucrative revenue stream for the company with a market share that put it comfortably inside Australia’s top 10 OTAs, according to Experian Hitwise figures for site visits.

Its sudden and unexpected closure and attempted diversion of customers to Helloworld saw the company’s share of online traffic plummet and remain well below the levels achieved by Best Flights.
Latest figures show Helloworld well outside the top 20 OTA sites with its market share seemingly in decline – 0.65 per cent for the week ending April 26, down on the 0.73 per cent achieved in the week ending March 29 which was itself down on the 0.8 per cent share for the week ending February 8 (immediately following the Best Flights closure with invitation to visit the Helloworld site).

There is considerable puzzlement within the industry about the suddenness of the Just Flights closure in the wake of statements that it would initially continue to run in parallel with the Orbitz-powered Helloworld site. It is not known if Orbitz played a part in the decision.

Inevitably there will be those who see ironies that Helloworld is now apparently doing much less well in the online space than under Lacaze.

Meanwhile on the bricks and mortar front, Helloworld still has by no means completed the task of convincing its agents to sign up to its new business model and there have been well-publicised defections of high-performing agents to Magellan and ITG.

The departure of Gurney will have done nothing to dispel uncertainty among uncommitted agents.
It has not gone unnoticed that his nearly $1.6 million pay packet for last financial year possibly exceeds the turnover of some of the smaller Helloworld agents. There is certain to be considerable interest from agents (not to mention shareholders) in the company’s next annual report which will reveal the amount he was paid this financial year prior to leaving the company with the Helloworld project far from complete.

One of the tasks to be tackled by Gaines will be to emulate her first travel industry mentor, Peter Lacaze, and instil confidence and a sense of stability among Helloworld’s agents.

* Ian McMahon is a shareholder in Helloworld.


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