Andrew and Cinzia Burnes have taken the reins of Helloworld, with shareholders voting in favour of the merger between the Burnes’ AOT Group and Helloworld. In his first major interview since becoming CEO Andrew Burnes gives an insight into the rationale for the deal and his big plans for the future. By BRUCE PIPER.
It’s been a tough few years for Helloworld Limited. The company has undergone a massive transformation, with the launch of the new brand in 2014 seeing the demise of the former much-loved Harvey World Travel, Travelscene, Jetset and Travelworld franchises. While the consolidation of the brands was seen as necessary to position the business for the future, it has not been without its detractors – not to mention a significant exodus of members to other agency groups. Then there was the huge write-down of goodwill last August, when the company was devalued by more than $200 million – a figure larger than its entire stock market capitalisation.
With all that baggage, why on earth would Andrew and Cinzia Burnes – the founders and owners of the highly successful – and private – AOT Group – want to merge their company with Helloworld? According to Burnes, the pair are absolutely committed to the future of Helloworld and believe it has massive potential – and that’s why they have effectively staked their future on its success.
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Q: Why did you do the deal?
AB: The motivation to do the deal with Helloworld was our fundamental belief in the strength of Helloworld’s distribution businesses in the retail, wholesale and corporate segments and a belief in the fact that bringing both AOT and Helloworld together would create an organisation in which the value of the whole was much greater than the sum of the two parts.
I have worked with various parts of the Helloworld business over many years and although Helloworld has faced a number of significant challenges over the last few years, not least of which has been the rebranding of the retail network, the business is still very sound. We have over 1,600 members of our agency network in Australia and New Zealand, a very powerful wholesale business particularly with Qantas Holidays, Sunlover Holidays and Viva! Holidays in Australia and Go Holidays in New Zealand, and the QBT and AEX corporate businesses in Australia and New Zealand continue to go from strength to strength. Insider Journeys is going very well in Asia and our Fiji businesses are doing well. AOT is the largest ITO in Australia and New Zealand and our TTF business is going very well in Fiji.
From my perspective, in the retail space some retailers and most OTA’s are constantly focused on price. But price is only part of the equation and I am very confident that across the Helloworld network our fundamental customer proposition is cutting through with the travelling public who really do understand that it’s not just about getting a well priced deal but it’s also what happens when you step outside the door of the plane that really matters.
Q: Do you think you can turn Helloworld around?
AB: Well that’s an interesting question because I don’t think Helloworld needs turning around. But we do now need to focus on growing our profitability now that the brand transition is complete and we have got the network established both in Australia and now in New Zealand. I am very fortunate in that many of the hard yards in this business have already been done and so I’m in the very cheerful positon of being able to ensure the business reaps the benefits of the hard work that’s gone in over the last few years to get us into the position we are in today.
Q: I presume you are planning changes, can you give us some hints as to what you expect to do?
AB: I think we have to get some alignment of our interests throughout the business. The online team at Helloworld has done a fantastic job of creating a very viable and successful portal with helloworld. com.au but there is no question that the success of that portal has alienated some of the agents in our networks. So what we are going to be doing is trying to get better alignment between what’s going on with our online portal, helloworld.com.au, and our agents’ interests. That’s something we are already undertaking.
Another thing I can tell you is that we are going to have more Helloworld product out in the marketplace for our agents to sell through enhanced consumer offerings via both digital and traditional media channels. This is not something we’ve done too much of in the past but I believe we need to put out own footprint across the products that we promote via our retail networks and do the best job we can to drive business into the door of our retail partners, onto the phone of our retail partners and onto our retail partners’ online sites.
Q: You mentioned a share scheme for members/franchisees – what are your plans?
AB: It’s too early to talk about that at the moment but I have a fundamental belief that our franchisees should have a reasonable stake in the company as I think that better aligns the interest of both the company and the franchisees. So it’s something we are giving very serious thought to at the moment but I don’t have anything further to add to that at this time.
Q: Any thoughts about the Helloworld brand and the model of members, associate members, affiliates. Would you consider returning to any of the previous brands?
AB: The answer to that – well I think the model we have is right. There are members who want to carry the full Helloworld branding and with just under 300 of those now in Australia, with another 60 coming online in New Zealand. Then there are those who have the associate relationship with us which is a very strong relationship but is not built solely around the Helloworld brand at a store level.
Plus of course there’s the membersof our buying group which is a much lower touch model but through which we have over 900 members participating. I should also mention our Helloworld for Business agents, who provide a fantastic network of corporate travel agencies targeting particularly the SME sectors across Australia.
On terms of returning to previous brands, I have got a very short answer to that and it’s no. They were great brands but we’ve moved on and we are not going back.
Q: What are your plans for Helloworld online, and the technology agreement with Orbitz?
AB: As I said earlier, the plans for Helloworld online are to get some better alignment between the interests of that portal and Helloworld Limited in the use of that portal with our agencies. I think Jeremy Reitman and his team have done an outstanding job with helloworld.com.au but it has created some conflicts and we are looking to resolve those as soon as possible.
As far as the Orbitz agreement goes, this is providing the technology that we needed to launch and develop helloworld. com.au. As you know, Orbitz has been bought by Expedia and we are currently having discussions around the future use of that technology and where we go, given Expedia’s ownership of Orbitz.
Q: What are your plans for Wholesale – Qantas Holidays, Viva! Holidays. Clearly the Travel Corporation believes there’s no future for traditional wholesaling – what do you think?
AB: Let me say that I think we’ve got some gre
at wholesale businesses and they are continuing to do very well not only with the support of the agents in the Helloworld network but with the support of the broader agency community here in Australia and in New Zealand with Go Holidays. I can’t speak for what the Travel Corporation think about the future of traditional wholesaling but I can certainly say, from my perspective, I believe it has a future and I think if you ask our friendly competitors in Brisbane, I’m sure they would tell you the same thing.
Q: World Aviation has gone from representing many airlines some years ago to just a handful. Do you think this can be rebuilt?
AB: As far as World Aviation goes, it certainly is not as big as it was but the whole airline representation business has changed on a global front over the last decade quite significantly. We still have some very good partnerships in that business and I certainly think it’s worth pursuing but I wouldn’t be surprised either to see some consolidation in that space in Australia and New Zealand in the next couple of years.
Q: Any thoughts on Air Tickets? And what about the corporate travel business?
AB: Air Tickets is a huge part of the Helloworld business. It has got outstanding technology, it is extremely well run and it’s providing a great service to the agents who utilise it so all I can say from that perspective to you right now it it’s onwards and upwards for Air Tickets. There has always been lots of competition in travel, including consolidation, and there will continue to be lots of competition because it’s such a great industry but we are extremely good at it across the board at Helloworld and we will continue to remain very competitive in this space.
In relation to QBT and corporate, winning the Whole Of Australian Government deal was an outstanding achievement for the QBT business and to Helloworld generally. The federal Government is an important customer of Helloworld and we look forward to continuing to service them with the efficiency and competitiveness that won us the business we have in the first place.
Q: Are you friends with the Helloworld Board again after they rebuffed your earlier approach?
AB: Look Bruce I’ve always been friends with the Board but as you know there have been a number of changes on the Board and I am particularly grateful for the efforts that Brett Johnson put in as our chairman and to Rob Marcolina for stepping in as acting chairman and for getting the deal through to completion. We now have a Board of five and we are actively looking for a non-executive chairman and an independent chairman and an Independent nonexecutive director and I am looking forward to working with our new Board as the year unfolds.
Q: Integration of AOT – are there synergies? Any plans to move Head Office to Melbourne?
AB: In relation to integration with AOT, well of course there are synergies and a lot of these were set out in an explanatory memorandum that was sent out to shareholders prior to the EGM to vote on the merger. I am pleased to say that all the synergies set out there are achievable in a reasonable timeframe and I am confident we will also find some more as we move forward but in the meantime we are focused on what we have committed to deliver and that’s going well.
As far as plans to move Head Office to Melbourne, both Melbourne and Sydney are great cities and I am enjoying going between the two at the moment. Ultimately we have a national business and we will make a decision at some point in the future as to whether we continue to have our corporate headquarters in Sydney or move it to Melbourne. If we make any decision on that, the first people to know will be the members of the Helloworld team and the second person to know, Bruce, will be you.
Q: Any closing comments?
AB: Let me finally say that I completely and totally believe in the future of Helloworld and I would not have merged the AOT Group into Helloworld and effectively staked my future on it had I not seen not only the great opportunities that I believe there are for Helloworld, but also seen the tremendous businesses and commitment of the people at Helloworld.
It’s a very exciting opportunity I for myself as the new CEO and for Cinzia as an Executive Director of the business and I know the team at AOT is looking forward to being a part of the merged entity. The other thing I can say is that I am really enjoying working with the very professional management team that we have at Helloworld and of course we have at AOT. The level of cooperation between both organisations has been outstanding.
