State of the industry: February 2016

Nobody in the industry was surprised when the merger proposal between the AOT Group and Helloworld was overwhelmingly endorsed late last month, French hospitality giant AccorHotels has entrenched its position in the luxury segment, and more, in this month's look at the state of the industry.

Burnes takes the reins

Nobody in the industry was surprised when the merger proposal between the AOT Group and Helloworld was overwhelmingly endorsed at an Extraordinary General Meeting which took place late last month.

The deal required ratification from Helloworld shareholders, and while an independent expert’s report concluded it was “not fair, but reasonable,” it seems to have been the preferred option in the absence of any superior offer.

AOT CEO Andrew Burnes has now become head of the combined businesses, while Cinzia Burnes is an executive director, expanding her former role as AOT’s chief operating officer. Later this month the rubber will hit the road, with interim results for Helloworld to be released on February 24th, along with updated outlook on the combined group – certain to be intriguing reading. One thing is certain – for long-suffering shareholders, franchisees, suppliers and staff at least they now have some certainty – along with a heavily committed ceo and executive director who have significant skin in the game with a 40% shareholding. The deal will also see Helloworld’s shares consolidated on a 6 to 1 basis.

ATAS review completed

Last month AFTA released the outcome of a review of the AFTA Travel Accreditation Scheme (ATAS), conducted by Chris Greiner of Ryan Lawyers. The independent review, which was commissioned after the first year’s operation of the scheme, included a request for submissions from the industry, with the feedback incorporated in the final report prepared by Greiner who made a total of 11 recommendations.

Nine of these have been adopted by the AFTA board, along with wording changes to make the ATAS code and charter more readable. However a suggestion that a timeline be established for the implementation of mandatory client trust accounts was rejected, with AFTA saying it “does not believe it provides any material benefit to the ongoing operation of the scheme while it is in a voluntary state”.

Webjet commercial under fire

Travel Daily provoked a storm of controversy just after Christmas when it highlighted a new Webjet television ad which was seen as criticising the so-called limited choice of airfares provided through bricks and mortar travel agents. The Webjet Facebook page went into meltdown with comments from outraged agents, colourfully branding the OTA’s anti-agent approach as “disgusting”, “disgraceful,” “disappointing” and “stupid”.

Webjet kept its head down through the dramas, and while AFTA ceo Jayson Westbury urged a focus on direct airline sales as a key threat to the industry, the Federation has also written to the ACCC about the Webjet approach claiming it’s in breach of trade practices legislation because it has misled consumers about the choice available through travel agents.

P&O Australia’s newbuild

Rivalry in the local cruise market has reached a new level with the announcement last month that P&O Australia will receive a gigantic newbuild vessel in 2019. The move signals the ongoing strength of the Australasian cruise market, which had long been seen as the graveyard for Carnival Corporation ships, which made their way down under after stints with more prominent northern hemisphere brands before ending up on the scrap-heap.

The new vessel will be P&O’s seventh Australian ship, and with 4,200 lower berths will be more than double the size of the line’s next largest vessel, the Pacific Explorer which joins the fleet next year. The growth of P&O has also been reflected in the appointment of Sture Myrmell as its local president, with Carnival Australia ceo Ann Sherry transitioning to the role of executive chairman.

Flight Centre on acquisition trail

It’s been a busy couple of months for Flight Centre, which has announced the purchase of a 70% stake in Australian online travel agency BYOjet. The move will see the OTA switch from its former affiliation with Helloworld, and vindicates the innovative approach taken by BYOjet founder and ceo Lenny Padowitz who has also pioneered the company’s JETMAX white label booking engine.

Flight Centre ceo Graham Turner said BYOjet was a profitable business, “with a lowcost model to deliver cheaper airfares to the public… more than many of its OTA rivals”. In December Flight Centre also purchased US-based youth travel specialist Student Universe, with Turner saying the moves reflect the company’s strategy to “grow more aggressively in some sectors of the market that haven’t previously been priorities”.

Cramer definitely on the Ball

Australia certainly seems to punch above its weight when it comes to airline executives on the global stage. Etihad chief James Hogan is probably the highest profile example, but there’s also Rob Gurney who now heads up Emirates in the USA – not to mention our own Barry Brown who recently returned to EK in Australia after his previous role as senior divisional vice president for the Dubai-based carrier. And former Qantas and Emirates executive Bryan Banston also looks set to take up a senior commercial role with Thai Airways International.

However further afield there’s also Cramer Ball, who launched Etihad’s online operations in Australia and has gone onto a variety of senior roles within the airline and its affiliates across the globe – including Air Seychelles and Indian carrier Jet Airways.

Ball’s most recent ascension, announced just before Christmas, is as ceo-designate for Italian flag carrier Alitalia. He’s also a director of the airline, which is 49% owned by Etihad. Alitalia’s board cited 48-year-old Ball’s “expertise in the air transport industry, managerial skills and change management drive” as key factors in his appointment.

Helloworld plans NZ rollout

Plans for the New Zealand expansion of the Helloworld brand are well under way, with the NZ operation now led by Simon McKearney who confirmed that there will be 61 fully branded stores to be updated with the Helloworld brand early this year.

Most of those were previously Harvey World Travel outlets, along with a handful from United Travel, with most of the former United members switching to First Travel Group. The change will also see Stella NZ’s independent and “broker” network members become part of the Helloworld affiliate model, with McKearney saying this means the brand will present as a “family” of more than 265 businesses across NZ.

“Our industry is no longer a cookie cutter offering, but the trick is in connecting the complete spectrum together within one brand,” he said, emphasising that there is “safety in numbers”. McKearney said Helloworld NZ was re-engineering its business to “recognise the needs of its members and the part they play in a value chain for their clients”.

AccorHotels bigger than ever

French hospitality giant AccorHotels has entrenched its position in the luxury segment, with the announcement late last year that it would acquire FRHI Holdings limited, the parent company of the Fairmont, Raffles and Swissotel brands.

The massive deal will expand the AccorHotels portfolio by 155 properties, including 40 currently in development, with ceo Sebastien Bazin describing the move as a “great step forward” for the company, offering “robust and global leadership in luxury hotels”.

The purchase will see a significant increase in Middle Eastern interests in AccorHotels. Along with a US$840 million cash payment, new shares in AccorHotels will be issued to the FRHI vendors, seeing the Qatar Investment Authority end up with 10.5% of the company while the Kingdom Holding Authority of Saudi Arabia will hold 5.8%.

NTIA adds People’s Choice award

The 2016 National Travel Industry Awards will have a new consumer-facing element, with the first time introduction
of a category where travellers will vote for their favourite travel agent. To be conducted in partnership with the publishers of International Traveller and Australian Traveller magazines, the new award will be part of their annual People’s Choice survey which also nominates readers’ favourite resorts, airlines and destinations. ATAS is sponsoring the People’s Choice awards, meaning those who vote will again be reminded of the benefits of booking through an accredited travel agent.

State winners in the new “People’s Choice – Best Retail Travel Agency” category will be announced in April while the overall winner will be revealed at the 2016 NTIA gala dinner



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