I’m sure it comes as no surprise to anyone tuned in to travel to read that Webjet’s B2B business WebBeds is going gangbusters.
The brainchild of founder John Guscic, the world’s second-largest bed bank has been providing Webjet and its shareholders with plenty of reasons to cheer about in recent years, with growth in the division seeing it now account for the lion’s share of EBITDA.
So strong has its performance been, that in November WebBeds posted 50% stronger bookings than it did before the pandemic, in the process eclipsing the earnings brought in by Webjet’s consumer arm, which includes Webjet OTA, GoSee, and Trip Ninja.
While it’s a nice dilemma to have, the striking growth of WebBeds has provided Webjet’s management with plenty to sleep on, as they plot the best way to remove impediments to future growth for its B2B business, whilst also ensuring its legacy consumer arm remains strong.
The answer came in May, let’s break up with ourselves.
Yes, Webjet has put a daring proposal before its shareholders for a demerger that, if approved in September, will see the company split into two separate ASX-listed entities to free up strategic growth opportunities.
At the time of the announcement, Guscic said the company’s B2B and B2C divisions were “increasingly diverging and have minimal operational co-dependence”.
So, a mutually beneficial divorce plan has been set in motion, with both arms to be managed by its own executive structure.
While the consumer business appears to be the bridesmaid in the story, don’t dare say that to new Webjet B2C boss, Katrina Barry.
It can’t be denied that WebBeds’ growth has indeed been rapid and impressive, but its consumer counterpart has been far from a loss leader.
The division has been rebounding well from the pandemic, steadily piling on more bookings, more profits and more revenue.
Barry is well-respected in the industry, and for many, the news of her return to travel after a more-then two-year hiatus leading hospitality tech business me&u, was long overdue.
After joining the Board of Webjet as a Non-Executive Director in December 2022, Guscic certainly had a very capable pick in-house if he ever decided the time was right to pull the trigger on any potential demerger plan.
After having a year or two learning the business from the inside out, Barry was announced as the new CEO of Webjet B2C in June.
Speaking with travelBulletin this week, Barry spoke glowingly of her time at me&u, but said there was simply no other industry quite like travel.
“I’m not going to lie, it’s just so fabulous to be back and the one thing about the travel industry is it’s just full of such lovely people, and the amount of hugely supportive messages from people across the industry has just been overwhelming,” Barry beamed.
Having spent close to a decade at The Travel Corporation rejuvenating well-known brands like Contiki, it’s fair to say Barry is well placed to take an already successful brand like Webjet to new heights – especially given her specific expertise in digital technology, some of which was garnered in her recent stint pioneering innovation in hospitality marketing at me&u.
“Webjet is an iconic Australian and New Zealand brand and I’m just so excited to join a business that’s been so successful, is still the number one OTA across ANZ, and has enjoyed an outstanding performance over the last couple of years following COVID,” Barry said.
“My background is in strategy consulting, so I look forward to bringing my experience working with iconic Aussie brands and using that strategy depth to see where we can go to next.”
Reflecting on the demerger plan itself, Barry said the move would allow each business more freedom in pursuing their own unique growth agendas.
“I’ve inherited a beautiful business here, but what Webjet B2C will benefit from is undivided management attention,” she said.
“We’ve got a dedicated board now, a dedicated leadership team, a dedicated balance sheet, no debt, $80-100 million in capital, and this creates a unique opportunity to pursue some strategic agendas,” Barry added.
Central to the strategy moving forward, at least in the short-term, will be building momentum off the back of clear and existing objectives across the consumer divisions.
For Webjet’s OTA division, Barry explained there will be a particular focus on increasing international flight market share and ancillary sales, as well as leveraging the 5.5 million subscribers it has following its EDMs, app, and website.
Another key priority for the OTA business will be to refresh the marketing approach and pursue “some bigger strategic opportunities”, the latter of which will be revealed in due course.
When it comes to the smaller players in Webjet B2C’s brand mix, Trip Ninja and GoSee, Barry believes there are a myriad of opportunities for growth, with a proposed splitting of the business enabling Webjet consumer to allocate more time and attention to their respective needs and possible enhancements.
“When you’re that small and exist in a $3.5 billion value business, you don’t get a lot of love,” Barry conceded.
Trip Ninja, the Canadian-based start-up Webjet bought in 2021 for around $4 million, helps make complex travel itineraries simpler to create and sell.
Barry said the development under Webjet is proceeding “extremely well”.
“It really is a wicked piece of technology…but it’s still in its early days and once our entire industry gets clear of NDC roadmap prioritisation…I feel like this business has a very deep customer pipeline, and we’ll be looking forward to integrating all those new customers.”
“Our target market are intermediaries internationally and we have a really nice pipeline on that and we will continue that as the focus,” Barry added.
The Auckland-headquartered GoSee brand continues to be impacted by a slower-than-anticipated visitor recovery in New Zealand, which is yet to reach pre-pandemic numbers.
GoSee enables customers to search, compare and book rental cars and motorhomes via two market-leading websites, Airport Rentals and Motorhome Republic.
While the business has been pedalling forward mainly on VFR demand, Barry conceded the major growth probably won’t really start until international visitors starts coming to Australia and New Zealand in greater numbers.
“Like most people, I haven’t gone and hired a campervan and gone around the South Island with my kids yet, and there’s still a lot of people who haven’t returned to New Zealand to take up those longer types of trips.
“The world’s been doing what it missed out on, which is enjoying Aperol Spritz in Italy and picking up a bit of moussaka in Greece and seeing grandma in London, as a result exploring the more remote regions is still to bounce back, and New Zealand has definitely suffered from that.”
With all of the caveats aside, Barry said that GoSee is in a good position, has really strong fundamentals, and it’s a far more efficient business now to take advantage of the return in numbers when they occur.
“The reality is, GoSee and trip Ninja were very small parts of Webjet limited, but now they are bigger parts of Webjet Group,” Barry said.
While the impression one gets is that Barry will not be looking to reinvent the wheel at Webjet, her background and savvy business acumen would suggest she is the right person to get as much juice out of the orange in its present incarnation, while also unlocking a healthy pipeline of future growth opportunities to speed up its recovery.
Continuing the shift away from being a flights-dependent business are likely to be on the radar, as well as smarter ways to integrate its various brands and technology on the back end to maximise customer engagement and retention.
While most break-ups end in tears, Webjet’s fortunes in being able to catch Barry on the rebound from any demerger, should keep the good times rolling for the foreseeable future.
