Lenoir takes the plunge, passes the CEO baton at Rezdy

Founder Simon Lenoir has made the big decision to step away from his day to day management responsibilities at Rezdy, handing the CEO reins to Chris Atkin, previously Chief Operating Officer.

Lenoir, originally a software developer who has been working massive hours since starting the business in 2011, says he first thought of stepping back around 18 months ago. “I went to the board and suggested they should be looking for a professional CEO – they were surprised but very supportive.”

Rezdy, a tours and activities booking platform for operators, now has more than 60 staff with good management in place across all key positions. It’s also in a strong financial position, raising a further $3 million a few weeks ago and Lenoir feels the company is more than ready for the next step.

“We have good money and a good team, so the time was right to go,” he says. “At the end of the day it’s about putting the company first.”

For Lenoir it means an opportunity enjoy being a father for the first time – his son was born eight weeks ago – also indulge in his passion for travel and scuba diving. “I’ll be able to spend more time with my young family and doing what I love the most – scuba diving. In fact, I’ve just booked my first cage dive with the great white sharks. It’s been on my bucket list for years and now, I finally have time to do it.”

Lenoir remains a significant shareholder and will stay involved with Rezdy in the as a board director. He has been working closely with Atkin, previously holding the dual roles of Chief Operating Officer and Chief Financial Officer, for the past year to ensure a smooth transition.

“I moved to Sydney and started Rezdy with Hugo Sterin in my living room, having previously run a dive centre in South East Asia,” Lenoir says. “The aim was to build a software that would enable tour and activity providers to live their dreams and save time to focus on what they love the most – whether it be scuba diving, skydiving, dog sledding, bird watching or running a lifestyle business whilst spending time with family. At that time, we had no idea what it would evolve into and we are tremendously proud about what Rezdy has achieved.”

“From the experience I had as a CEO, I learnt that it is a never-ending journey. It’s about being a chameleon, adapting into various roles in a well-timed manner. And so, the purpose of a leader is to find the right people, bring the best people forward who would be the right fit for the role and ultimately, to bring the best out of the company.”

Co-founder Hugo Sterin is staying on with Rezdy in his role as Chief Technology Officer.

Chinese company wins approval for Club Med purchase

French travel icon, Club Med, will be likely Chinese-owned by February 9 after regulators approved the takeover bid by Fosun International, which has offered €24.60 per share for the resort operator, valuing it at around €939 million. Fosun has been in a bidding war with Italian businessman Andrea Bonomi for Club Med since May, 2013, the longest takeover fight in the history of the Paris Bourse.

Welcome To Accor’s New Business Model

AccorHotels has announced it’s embarking on a new strategy that will see the global hotelier sell the rooms of independent hotels (for a commission of course) and also provide them with technology services, much like a modern Online Travel Agent.

The big difference of course is that Accor also owns or operates 3700 properties in more than 90 countries.

Sébastien Bazin, AccorHotels Chairman and CEO, wants to triple the number of hotels on AccorHotels.com to more than 10,000. He said the first non-affiliated properties would be live next month.

“Transforming our distribution platform into an open marketplace is a major initiative for the Group and the result of a new approach to our profession and business model,” he said. “We are becoming a trustworthy, selective and transparent third party and we are once again amplifying the in-depth transformation undertaken within the Group since 2013.

“These initiatives and the launch of the new AccorHotels application are designed to enrich the content of our digital ecosystem and reinforce our position as a hospitality industry pioneer and trailblazer.”

Accor was vague about the hotels it will sell, saying they will be selected ion the basis of unspecified criteria “with guest reviews taken into account. “This initiative will supplement the services developed by Fastbooking, a company taken over by the Group last April, within a new BtoB digital services activity,” the company added.

Former Rydges on Swanston to rebrand as Crowne Plaza

The former Rydges on Swanston, the incubator for 90% of Victoria’s deadly second COVID wave, will be refurbished and rebranded as Crowne Plaza Melbourne Carlton.

New owner Ross Pelligra bought the property for $35 million in September, and says: “We plan to lift the game and give this property a full refurb and a fresh start as Crowne Plaza Melbourne Carlton in early 2021.”

Pelligra has an established relationship with IHG, which operates the Crowne Plaza brand,  as the owner of  Holiday Inn Melbourne Airport, plus pipeline Holiday Inns at Werribee, southwest of Melbourne, and Richmond, near the city CBD.

A Victorian State Government inquiry was told more than 90 per cent of “second wave” cases could be traced back to a family which quarantined at Rydges on Swanston in May, now infamous for lax hygiene practices by security guards, which caused a renewed outbreak of the virus after it appeared to be under control. 

Australian short term rental booking growth leads the world

Leading short term property management platform Guesty reports that sector bookings in Australia grew faster than any other country during September.

“In September, we saw a 5% increase in reservation volume worldwide compared to August,” the company said. “Australia had the biggest increase in reservation volume worldwide – up 25% month on month.”

Guesty also revealed that nightly rates in Australia increased by 22% over the same period. However, while global short term reservations are now growing month on month, overall booking volumes are still down on last year.

“Reservation volume is decreasing across the board, though rates and lengths of stay are rising,” said Lauren Gumport from Guesty.

“Globally, Christmas reservation volume decreased by a whopping 40% compared to last year while the average nightly rate increased by 13%. Folks are also planning longer Christmas vacations – the length of stay increased by 17% compared to last year and now sits at 6 days on average per trip.”

It says last minute trips are still trending. “In September, 15% of reservations across all short-term rental channels were made the same day. More than 40% of reservations were made within 7 days of the reservation itself and an additional 30% within a 30 day window of the reservation.”

The Guesty platform is used in over 80 countries (including Australia, New Zealand and across APAC) and touches all seven continents. “We are seeing the most activity right now in Europe, North America and Australia.”

Veriu takes 16 years to become overnight success story

Opportunistic and casually ambitious – that’s one way to describe the team driving Veriu, a hotel brand that’s seemingly come from nowhere in the Australian marketplace, most recently winning the race to acquire the Punt Hill brand and leases on its 13 properties.

But Veriu is anything but an upstart with roots stretching back to 2002 when co-founders Alex Thorpe and Rhys Williams identified a niche in furnished accommodation leasing and started with two rooms in Bondi.

“No one was doing furnished accommodation at that time but there were a lot of people who wanted something they could move straight into,” says Thorpe.

Soon two rooms become four, four became eight, single apartments became whole buildings. Owners increasingly bought into the concept and now Furnished Property, the company they created, has 400 apartment keys and growing strongly. The creation and launch of Veriu in 2016, an inner-urban hotel concept, was a logical next step.

They still operate the same way – finding opportunities where they can add value for property owners, put the deal together and ensure Veriu wins has the management contract. The approach is working. Veriu now has five properties in the red-hot Sydney market – four branded and one unbranded – with several more on the way.

“More and more people are coming to us these days,” says Alex.

There’s no set funding model. In essence Thorpe says they source an opportunity and then put it out to their investor network.

“We deal with a lot of high net worth individuals,” he says. “Because we’ve been at this for more than 16 years we’ve built up a pretty good network of people. We self-fund where we can but there’s not a set way we do things.”

An example is the $44 million hotel fund Furnished Property has launched with the ASX listed property company Folkestone to develop a 144 room Veriu property at Green Square in Sydney.

He said the Punt Hill acquisition was a mix of internal and partner funding. The deal made a lot of sense but it’s one that nearly didn’t happen.

“We weren’t on the original tender list but someone we know suggested we should be there.” And the rest is history. “Our niche is in the 20 to 150 keys space where the big boys don’t play,” Thorpe says.

The actual building is less important to Veriu than location. “As long as location is attractive to guests and there’s good local F&B we are interested.

“Punt Hill is obviously a lot more corporate, our products really match well.” He says Punt Hill can feed corporate guests into Veriu properties while the reverse also applies. “We’d like to get Punt Hill more leisure focused.”

The move into hotels could not have been better timed. “Sydney is ridiculously strong at the moment (and) we’ve had a lot of success pushing rates and occupancy, especially at Camperdown.”

As for the future: “We don’t have big empire building ambitions, we don’t have any grand plans – we look at things on a deal by deal basis,” Thorpe says. “We take a really long-term view. We love the business, we love hospitality.”

Tumbarumba proves NSW needs more rail trails

Tumbarumba – a sleepy timber, grape growing and grazing town in the bucolic Snowy Valleys of NSW – is undergoing a quiet tourism revolution.

It’s all down  to a new ‘rail trail’ that’s attracted more than 12,000 riders since a low-key opening during peak-COVID last April. Now other towns in the region want to join the ride, but archaic NSW government legislation frustratingly stands in their way.

It says everything that Tumbarumba is the first rail trail in NSW built on an ex-government line, while in bike-forward Victoria there are more than 1000km of rail trails built on government tracks.

The new trail between “Tumba” and Rosewood took 15 years of campaigning and fundraising from a group of passionate locals led by Owen and Cathy Fitzgerald.

Built on the old Wagga Wagga rail line, it runs for 21km through classic Australian grazing country and vineyards growing some of the nation’s best cool-climate chardonnay.

The determined couple have been proved emphatically right for the their persistence, which is not only attracting impressive rider numbers but is also giving locals a world-class bike trail and the opportunity to exercise.

It’s a win-win and other local towns like Batlow, which also has a rail trail lobby, want their own, while communities in the nearby Monaro Plains are also pushing hard.

Everyone can see the benefits, they are well proven through countless case studies in Victoria, where they’re very popular and have enhanced the tourism appeal of numerous country towns and regional centres.

Likewise Tumbarumba is clearly benefitting from more visitors and new business opportunities, exemplified by the local nursery  Tumba Bikes and Blooms diversifying into e-bike hire. So why is it so difficult to get a rail one in NSW?

Will Owens from Rail Trails Australia is frustrated by the situation and says planning must be streamlined to allow the construction of more rail trails. 

He says they’re so difficult to build because in NSW you need an act of Parliament to “close” a rail line – and that’s clearly not an easy thing to do.

He says the Snowy Valleys region is well-placed to lead the way if planning was relaxed and that the “next best opportunities” on government lines in NSW are:

  • Goulburn to Crookwell
  • Wagga Wagga to Ladysmith
  • Batlow to Tumut
  • Queanbeyan to Cooma and Bombala

All of these options are south and west of Sydney. 

Meanwhile, the Guardian recently reported that a legislative amendment to close the northern rivers rail line was passed by state parliament in mid-October and that construction  is expected to begin shortly.

“The two pilot rail trails will provide the NSW government with a better understanding of the full range of tourism and recreational opportunities of rail trail projects and will allow insights gained to be applied to any future rail trail projects,” a Transport for NSW spokesman told The Guardian.

Owens from RTA says more government support is needed rather than an ad hoc approach.

“While all these proposed rail trails  have hard-working local groups, none will happen within 5 years without more (govt) support.

“Meanwhile Victoria builds more  and NSW is missing out.”

So come on Gladys*, get on your bike and make it easier for regional towns to diversify their economies and attract more tourists and revenue.

*New South Wales premier

David Hammon, CEO and Director, Hammons Holdings

David is currently CEO and a Director of Hammons Holdings, the company which owns Australia’s most visited privately owned tourism attraction, Scenic World.

Under David’s leadership, Hammons Holdings was recently appointed to operate tourism activities on the Sydney Harbour Bridge following a rigorous tender process driven by the NSW State
Government.

The appointment marks one of the greatest milestones in Hammons Holdings’ 73 year history and will see the company forge ahead with its vision to improve accessibility and bring the Bridge to life with new technology.

As Scenic World’s former Joint Managing Director, David has a strong business acumen, having worked alongside his sister Anthea Hammon to lead the business through a sustained period of growth and innovation, including a $30 million redevelopment of the iconic Scenic Railway.

With a solid background in commerce and economics, David currently leads the diversification strategy of Hammons Holdings.

The company is an investor in the URBNSURF Melbourne project and David sits on the Board of Sydney Zoo as part of Hammons Holdings’ cornerstone investment in the project.

David will play a leading role in the continued evolution of the Sydney Harbour Bridge tourism experience when Hammons Holdings assumes the 20-year contract on 1 October 2018.

125 Helloworld franchisees close shop, business raises $50m

Helloworld has revealed that 125 of its franchise travel agencies have closed their shops due to the impact of COVID over the past few months. 

The Australia and New Zealand retail chain – ASX code HLO – made the revelation when announcing a $50m equity raise of new fully paid shares, which was successfully completed today.

It says the money will see the business through to the end of 2022, assuming no change to the present operating environment.

Helloworld also told investors that:

  • Bookings are currently running at 10% of previous total turnover value (TTV)
  • It expects a progressive increase in bookings from September
  • Helloworld has suspended all franchise and marketing fees for its members until 31 March 2021.
  • Corporate business is picking up due to the lifting of certain domestic travel restrictions.
  • 1200 of its employees are receiving employment subsidies from the Australian and New Zealand governments.

Helloworld has more than 2300 travel agents in its network. For now.

Paul Constantinou, Chairman and CEO, Quest Serviced Apartments

With more than 35 years in accommodation and hospitality, Quest Chairman Paul Constantinou is a respected industry leader.

Paul founded Quest in 1988 and has built the business to be the largest serviced apartment group in Australasia. Today, Quest has more than 150 properties operating throughout Australia, New Zealand and Fiji.

After gaining a scholarship at Footscray institute, Paul completed a four year diploma course in Catering and Hotel Management which equipped him with the right skills to operate effectively within the industry. When he completed his studies, Paul and his wife managed a number of motels throughout Victoria and also spent some time as an assistant accountant with the Commodore Group. Together with his father, Paul then purchased a hotel in Collingwood and after selling it purchased a restaurant business in Melbourne’s CBD.

By the mid 1980’s, and the age of 30, Paul had an extensive background in owning and operating accommodation and food and beverage businesses. He then conducted a thorough review of the accommodation industry and came to the realisation that it was failing to meet the needs of extended-stay business travellers. This proved to be the catalyst for Quest Serviced Apartments.

Paul realised that to gain market share in the competitive accommodation sector his business model needed to be innovative. He achieved this by developing a unique franchise model, targeting and understanding a niche market and setting aggressive growth targets.

After gaining buy-in from key relationships and financiers, Paul opened “Quest Royal Gardens” in Melbourne in 1988.

Initially competing against established hotels and motels, Paul’s strong and long lasting relationships with Quest’s stakeholders and staying true to the principles on which he founded the business has meant that the Australian serviced apartment industry has emerged as an industry in its own right.

Being a 100% franchise group, Quest has set the benchmark for both the franchising and hospitality industries in Australia with some notable awards including:

  • Customer Service Institute of Australia – Australian Service Excellence Award – National Customer Focused Franchise Award (2010)
  • Australia and New Zealand Pacific Hotel Investment Conference – Brand of the Year (2009)
  • PricewaterhouseCoopers Excellence in Franchising – Service Franchisor of the Year (2007)

Personally, Paul has received a number of awards including:

  • The Hellenic Australian Chamber of Commerce and Industry Business Excellence Award (2011)
  • Hotel Motel and Accommodation Association of Australia – Excellence Awards – Attitude, Commitment, Enthusiasm and Service (2010)
  • Ernst & Young, Australian Entrepreneur of the Year – Services (2009)
  • Hotel Motel and Accommodation Association of Australia – Chairman’s Award (2005)

One of the benefits of growing the Quest business are the employment opportunities created, particularly in key regional areas where some expansion has occurred in recent years.

These employment opportunities arise both during construction of the purpose-built property and afterwards with franchisees employing, on average, 12 to 15 local staff at each location. Some of these staff eventually become franchisees, and Paul’s greatest satisfaction comes from helping them to realise their dreams and ambitions. Under Paul’s leadership and commitment to family values, Quest and its franchisees contribute to the wider community in a number of ways.

Under the banner ‘Quest for a Cause’, Quest has selected to work with the charity MS Australia to promote awareness of the disease, the charity and the fund-raising activities and events that it hosts. In addition, Quest and its franchisees contribute to and support each local community that Quest operates in.

Paul attributes many of the inherent values evident in Quest’s culture to what he learnt from his father. The key value of relationships, alignment, respect and understanding and personal best ensure that all stakeholders associated with the Quest brand benefit from its continued success.

Paul has continued to maintain his ties with the Footscray Institute, now Victoria University, with the Quest Group providing over the last six years 12 month Co-Operative placements to students. Many often remain with the Quest group once they have graduated.

In broadening his experience outside of the accommodation industry, Paul has been on the board of directors of a Melbourne based bank, Transcomm Credit Union since March 2010

WebBeds world’s top bed bank post-COVID?

Webjet aims to transform its WebBeds accommodation distribution/saler business into the “#1 B2B player globally”, overtaking the long-term bed bank market leader HotelBeds, when the world finally emerges from the COVID crisis.

But what are the metrics and how will Webjet make that happen? Neither of these key points was addressed by Melbourne-based company in its announcement. So let’s look at the numbers as they currently stand.

At this point WebBeds is claiming 350,000 hotels and 44,000 customers (distribution network). Based on past Webjet ASX announcements, between 30,000 to 40,000 of these properties are directly contracted with WebBeds.

The remaining 300,000 plus would therefore be supplied by third-party providers, who own the hotel relationship and take a commission cut along the way.

Meanwhile, HotelBeds, which calls itself the world’s leading bed bank, says it has 180,000 hotels – an estimated 75% or 135,000 of which are contracted, three times more than WebBeds – and 66,000 customers.

HotelBeds, which is headquartered in Palma, Spain, also (currently) has a much bigger contracting team than WebBeds, giving it a key advantage. 

The importance of having a direct relationship cannot be overstated – higher commissions per transaction, greater flexibility in terms of partner pricing and distribution, better data and ownership of the client.

So the question remains – and it has been put to Webjet today – on what metric are they aiming to be #1? No answer yet, but one thing is for sure, WebBeds is the now the major profit engine of Webjet, which announced its annual results late last week.

Webjet registered a net loss of $143.6 million for the year to June 30, 2020. This included a $40 million debtors write-off, $14.6 million associated with the closure of Webjet Exclusives and $20 million in impairments arising from the closure of Online Republic Cruise. The company has cut operating costs by around 50%; reduced staff numbers by 22% (515 jobs) and introduced four day weeks for most employees.

Meanwhile, Webjet raised more than $500 million in April and July to see it through the tough times.

“Faced with a significant fall in bookings and nominal revenues in all our businesses, we focused on what we could control,” said Webjet MD John Guscic. “We materially reduced our costs and fortified our balance sheet. We are starting FY21 with a strong capital position offering significant financial and strategic flexibility.”

As for WebBeds, 3.2 million bookings were made through the platform during the year and earnings before tax came in at $15.3 million despite a terrible second half in which it lost -$42 million.

Following the results announcement, Guscic told the Australian Financial Review he believes a COVID vaccine is the only antidote to travel woes.

“As soon as a vaccine is either announced or goes into widespread implementation across a significant population, we would think that six to 12 months beyond that date we would see a significant improvement in the underlying travel industry sentiment,” Guscic said. “I think very few travel businesses will thrive without a vaccine. We’re no different. Our business is predicated on consumers having confidence getting on an aircraft and consumers having confidence arriving at a hotel. That’s paramount and fundamental to our industry. There are other alternatives if there was a prolonged period without a vaccine that would ensure that we would survive.” 

Stayz on the way out as HomeAway takes centre stage

Holiday rental brand Stayz, one of Australia’s online travel pioneers, is being phased out and will ultimately be superseded by parent company HomeAway.

Product migration to HomeAway has been under way for the past six months and should be finished by June.

Meanwhile the American company has embarked on a digital campaign headlined ‘HomeAway – The New Home of Stayz’. It’s part of a global brand and technology revamp for HomeAway, which bought Stayz from Fairfax Media for $220 million in late 2013.

Stayz was just one of many companies acquired by HomeAway before it was gobbled up by Expedia in 2015.

Leading French holiday rental site Abritel.fr, which HomeAway bought in 2007, has just gone through the process. Travel Mob in Singapore is also moving to the HomeAway platform. The strategy mimics what Expedia has done with its large family of brands including Wotif.

Stayz website has been already been tweaked from a design and tech perspective over the past few months. For example, the booking button on Stayz now directs customer to the HomeAway site, where the transaction is completed.

When the migration of all 40,000 Stayz properties is complete, HomeAway will be rolling out a campaign to explain what is happening.

Both URLs will remain but likely direct to the same website, which in the short-term will be co-branded with the HomeAway brand taking precedence.

Virgin Australia disappears from view after Bain Capital acquisition

Update 18.1.21: Virgin eyes ‘former glory after major c-suite appointments

Challenging times for Virgin Australia and its new owners, Bain Capital, which paid $3.5 billion for the broke and battling airline several months ago, but has given the carrier no voice or profile during Australia’s peak summer holiday season. 

All the talk has been left to Alan Joyce from rival Qantas, a polarising CEO who knows the value of a headline, even when what he says is debatable. Case in point, Qantas announcing it is now taking bookings for international flights from July 1, much earlier than initially forecast.

The announcement drew the ire of consumer advocate Choice over cancellation policies and the Australian Government, which effectively declared: “we decide when borders are open”. 

That may be so, but Joyce rides with the punches and is out there aggressively pushing the fact that Qantas is flying passengers and open for business.

His counterpart at Virgin, Jayne Hrdlicka is doing nothing of the sort. The former CEO of low cost carrier Jetstar, owned by the Qantas Group, has stayed mute. She’s said nothing for a few weeks, nor has the airline. 

To this observer its profile is close to an all-time low with the PR, Product and Marketing departments unwilling or unable to create positive noise for the carrier.

Admittedly this continues a longer term trend at Virgin Australia, which never seems to be ahead of the game. For example the last time Virgin Australia posted a press release on its main website media page was September 2018. That’s more than 16 months ago. It’s a really bad look and so easily rectified.

Disturbing to see that this sloppiness has not been addressed under Bain Capital or that the new owners and management don’t want to put their stamp on the operation.

Details matter in every business, no more so than their airline game, and so does cash flow in an industry which operates on wafer-thin margins during the good times and is bleeding cash at the moment.

Bain Capital understand that better than anyone, so it’s hard to decipher their current lack of urgency to drive brand awareness and sales.

The most likely explanation is that they’ve shut everything down ahead of major – and most likely controversial – announcements concerning staffing, market positioning and fleet deployment over the next few months. Early messaging indicates the new Virgin Australia will be a hybrid carrier carrier attempting to service both the budget leisure and business travel markets.

Whatever approach they take, major challenges, the scope of which Bain Capital probably didn’t anticipate when it took control in September, lie ahead. As one high-ranking aviation executive, who has spent time at Virgin, put it in an email:

“It would be logical to think that COVID developments in the last few weeks might give Bain some worries about their purchase of VA. No doubt the deal would have been sold internally within their organisation on a moderate-to-optimistic view of the future (at the time), but the actual experience since the deal was done has been far worse, with a high volume of rapid border closures.

No green shoots in sight, in fact it just gets worse. I have absolutely no knowledge of their internal view but I feel sure they must be worried.

If you are Bain, you only buy airlines like VA in the expectation of selling them again…just the way things work. As it stands, a sale in 2021 is now almost out of the question in my view, so their holding costs will go up.”

“They have a few other options, but none are all that good.”

OTAs increase market share at supplier’s expense

Online travel agents in the United States now have 39% of the digital travel market and continue taking market share from the suppliers whose products they sell, according to new research from Phocuswright. 

Phocuswright says the OTA online US travel market share will reach 41% by 2020, with US$81.4 million in online gross bookings.

Hotels dominate OTA sales, which have also been boosted by the shift to mobile, an arena in which OTAs dramatically outperform suppliers in both technical and strategic terms.

“Mobile now accounts for more than a quarter of OTA gross bookings, and will rise to 40% by 2020 – more than doubling in just six years,” the report says.

Meanwhile, “Rate parity clauses still hinder hoteliers from undercutting OTA prices, and OTAs are creatively outmaneuvering suppliers”.

Qantas targets $15 billion in cost savings over next three years

While so many airlines around the world are finding their way to cut costs and keep operations running, this trend unfortunately has also impacted Australia’s most popular airline. Qantas CEO Alan Joyce expects the airline group to cut $15 billion from its operating costs over the next three years, mostly through reduced flying with just $1 billion coming from cost cutting.

So far Qantas has made at least 8500 staff redundant with the majority of remaining employees stood down. It’s also suspended all cash sponsorships, is reviewing travel agent commission payments and ground handling arrangements, which may be outsourced.

Domestic capacity is running at just 30 per cent and there are no international flights now, or for the foreseeable future. 

“What has become crystal clear is that the Qantas Group after COVID has to be structurally different to the Qantas Group before COVID,” Joyce announced at the Qantas annual general meeting.

“We know the economy will be finding its way out of a recession, with all the implications that has for consumer confidence and spending. We know the domestic market will be extremely competitive. And we know that our revenue will be significantly lower for some time – especially with the continued grounding of most international operations. The only antidote when you’re faced with less revenue is to lower your costs” said Joyce.

“We have identified $15 billion in cost savings over the next three years, mostly through reduced flying activity. We’re also targeting $1 billion in ongoing cost improvements from Financial Year 23. The $1 billion in savings are front-end loaded, with $600 million due to be unlocked in this financial year. Progress has been strong, with the FY21 program about halfway through, and expected to be 90 per cent complete by the end of December 2020.”

“In addition to job losses, we’ve announced a review of our property footprint in order to consolidate. We’ve stopped cash spending on sponsorships – because we can’t justify that while the majority our people are stood down. We’re renegotiating our arrangements with travel agents, which will create better selling opportunities for the trade and significantly reduce our cost of sale. And we’re reviewing our ground handling operations with a view to saving up to $100 million a year.”

Joyce said the domestic rebound has taken longer than expected with continued border closures in key states Victoria, Queensland and Western Australia.

“We had expected Group Domestic to be operating at about 60 per cent of pre-COVID levels by now. Instead, the continued border closures mean capacity is now below 30 per cent,” he said.

“This delay resulted in a $100 million negative impact on earnings for the first quarter of FY21, and will have an impact on Q2 as well. Essentially, this is a timing issue. We know the upswing will materialise – just later than planned. Assuming Queensland opens to New South Wales in coming weeks, we expect Group Domestic capacity to reach up to 50 per cent by Christmas.”

TripADeal founders sell majority stake to private equity

TripADeal founders Richard Johnston and Norm Black have ceded control of the business they founded in 2011, selling 55% of the company to BGH Capital, which is in the process of buying theme park operator Village Roadshow.

Like so many travel companies, TripADeal, which describes itself as an “online travel agent offering bucket list experiences at unbeatable prices”, clearly needs the cash due to a torrid 2020 and continuing uncertainty.

The business, which Black told the SMH turned over $200m last year, was particularly hard hit by border closures with much of its revenue derived from international travel deals.

“While TripADeal’s revenue has been growing by over 40% per annum, Covid hit the entire industry hard,” the company said in a statement. “As an online business we were not weighed down by expensive bricks-and-mortar stores, allowing us the agility to pivot our resources to supporting our customers and travellers stranded across the world.”

“While the travel industry was the first industry affected, we strongly believe it will be one of the first industries back. TripADeal is now ready to hit the go button as soon as international travel resumes.”

TripADeal says it has “identified several exciting growth opportunities” that help it “emerge from the pandemic stronger and more responsive to the changing travel needs of its customers and  business partners”.

Black and Johnson said the business has fielded several offers. “Over the past two-years several firms have knocked on our door eager to invest in TripADeal,” they said.

“BGH approached us late last year, well before COVID, and we knew they were the ideal fit. Working with them through COVID has only reinforced the common culture and respect we have always looked for but never found in the past.”

BGH Founding Partner Ben Gray commented: “We have always been attracted to TripADeal’s position as an online travel agent. The disruption posed by COVID-19 will ensure they continue to benefit from strong industry tailwinds and the bricks-and-mortar shift to online.

“The company has a very scalable business model that is supported by a well-developed technology platform.”