It’s a question the industry has been asking for ages, but it’s once again front of mind for Helloworld – how do agents tap into the power of the internet instead of clashing with it head-on?
Companies have been struggling with finding a balance for more than a decade. But with the retail giant last month announcing it will ditch its tie-up with Orbitz Worldwide, the world of travel is keenly waiting to see what direction its online arm will take next.
Helloworld chief executive Andrew Burnes confirmed the split on April 20, saying the agreement had not delivered the revenue streams initially envisaged by both parties with the company investing a whopping $18 million in its development since it was established three years ago.
As a result, Helloworld.com.au will transition to a new platform on August 31.
But Burnes also admitted the decision was fuelled in large part by the conflict between the online arm and its branded and associate members. He suggested the new platform would attempt to resolve this.
“Once we transition the site, Helloworld.com.au will continue to provide full transactional functionality for air, land, car hire and other travel products and services, however, from September the site will match the available microsites for our individual agencies and the commissions from bookings made on the site will be allocated to agencies in the same way as if a customer walked in the door, called, or sent an email booking,”
Andrew Burnes, Chief Executive, Helloworld
The launch of the site back in 2013 did indeed ruffle a few feathers, particularly as it coincided with the company’s messy closure of its highly profitable Bestflights arm under former chief executive Rob Gurney.
But last year, former Helloworld.com.au chief executive Jeremy Reitman insisted that bad feeling towards the online business among agency members had been “put to bed” thanks to a range of measures including a new app which allowed agents to earn commission on web bookings.
At the same time, Reitman had admitted that brand awareness was not where it needed to be, but was optimistic a range of promotional activities such as last year’s #Helloworldrelay campaign would help build on that.
The campaign, which saw digital influencers post images from 70 countries around the world over the course of 36 hours, was heralded a success by Helloworld’s chief marketing officer at the time, Kim Portrate.
But not successful enough it would seem. Both Reitman (who resigned to move back to America) and Portrate (made redundant) have both now “left the building”, two of many that have exited the business under its new leadership – their departures mourned by some, but deemed necessary by others.
While it’s clear that Burnes has another plan for the future of the online arm, what that vision is and how it fits into the overall turnaround strategy remains to be seen. But one thing is for sure – online is set to play an important part in the company’s future.
Analyst at market research firm PhocusWright Chetan Kapoor highlighted the immediate opportunities for travel intermediaries to benefit from the “fragmented nature” of Australia’s bricks and mortar market, with our offline travel market still “considerably larger” than the online market.
“But, the online market growth will continue to outpace that of the offline market over the next several years, indicating a continued consumer shift towards online bookings. The transition to mobile will also heighten this shift,” he told KarryOn.
“There is no denying that people are increasingly becoming self-reliant when it comes to discovering destinations, activities and booking travel online. Accordingly, online intermediaries stand to immensely benefit versus those focusing on offline distribution.”
Chetan Kapoor, PhocusWright
Flight Centre, Helloworld’s main rival, is clearly placing great emphasis on building this side of its business, through the implementation of its hybrid strategy and, more recently, its acquisition of online players Studentuniverse.com and BYOJet.
It also recently launched its new “virtual travel agent” Aunt Betty, although with surprisingly little fanfare.
The shift was underlined once again in its latest profit update, in which the retailer signalled a “broader use of websites as a cost-effective sales channel.”
And although Graham “Skroo” Turner this week announced the company expects to miss its short-term profit target, he also revealed FLT’s leisure websites are expected to deliver around $1 billion in TTV next year. That’s a hefty chunk of change.
So the question may well be getting old, but it’s certainly not getting boring. Watch this space…