Webjet has been a sharemarket success story, with the company’s share price increasing from just 15c in 2004 to more than $5.50 as this issue of travelBulletin goes to print. Putting that in perspective, an investment of $10,000 in the company ten years ago would now be worth more than $360,000. So it’s no wonder that the company’s ceo John Guscic is keen to have a larger piece of the action, as Bruce Piper reports.
Clearly the Webjet board has confidence in Guscic, who late last year had his contract extended to 30 June 2018. At the same time the company’s remuneration committee announced changes to his overall package, including a limited recourse loan of up to $1.5 million “to assist him in accumulating an equity position in Webjet” by exercising his long term incentive options. Guscic told travelBulletin he has strong confidence in the future of the business, both in its traditional flights operation and in the business-tobusiness hotel division.
In terms of flights, Webjet already dominates the local OTA market for domestic services but Guscic expects the trend to online transactions to be mirrored for international flights. He said that while this part of the market had been more stubborn, Webjet is seeing a definite shift, particularly in terms of trans-Tasman sectors.
“Consumers want choice,” he said. “While traditional travel agents have access to all fares, typically they only present a subset. At Webjet we are able to offer all choices which gives consumers the opportunity to draw their own conclusions.”
Webjet has highlighted this fact in its new TV advertising campaign which launched just after the New Year – and which drew the ire of bricks and mortar travel agents from across the country. Travel Daily broke the story in early January and provoked a storm of controversy – although, as some commentators have pointed out, consultants have criticised OTAs for years and so it’s not a surprise to see Webjet striking back. The reality is that there is definitely a segment of the market which craves the wide variety of options highlighted by Webjet’s fare matrix – even if they end up opting for a direct flight on a well-known carrier. “Webjet gives them permission to buy,” Guscic told travelBulletin.
Webjet is also differentiated from its online competitors by eschewing online marketing via Google or Facebook advertising as well as participation in meta-search engines such as Skyscanner or Kayak. Most of the company’s online traffic is organic, meaning it can direct more funds towards marketing and further developing its loyal client base. Guscic claims Webjet has a “massive repeat purchase rate,” and all these factors combine to mean metasearch is actually detrimental. “Why would we give credibility to a third party brand to leverage our fares to the lowest common denominator?” he asked. Webjet clients, he said, value the website’s convenience and choice as well as dealing with a trusted brand, whereas “people doing metasearch are just looking for a cheap price”. Instead Webjet interacts with consumers in the ‘real world,’ via TV ads and sports sponsorships which Guscic said give a much better rate of return. “We are focused on customers who come to us by default,” he said.
One of the criticisms often levelled at OTAs like Webjet is that of service levels, however this isn’t an issue, according to Guscic. Webjet has a 24 hour call centre and benchmarks itself against key competitors including airlines themselves. The formula seems to be working, with Webjet’s TTV growing significantly faster than the overall aviation market last year – and Guscic forecasting that this trend will continue over the next five to ten years.
The other key area of potential for Webjet is its B2B hotel operations. The company’s Dubai-based Lots of Hotels business as well as European accommodation wholesaler SunHotels, acquired last year, are part of a “major global opportunity,” Guscic told travelBulletin. Established just two years ago, the hospitality division is already profitable and he believes the overall global market for wholesale hotels is worth as much as $50 billion annually. Lots of Hotels is ideally situated in the fast-growing Middle East region, while Webjet has also seen strong performance from SunHotels which will “some day be a global player,” Guscic said.
