Roamfree misses debt payments and goes into administration (news report)

Queensland based Roamfree has placed itself into voluntary administration according to the goldcoast.com.au. This is confirmed by a filing with ASIC (Australian government body that regulates companies) sent to me by an industry insider. It lists Roamfree Ltd as "* UNDER EXTERNAL ADMINISTRATION and/or CONTROLLER APPOINTED **" dated 24 August 2009.

The broad Roamfree group is a series of online accommodation brands, a channel manager and providers of technologies for tourism companies. Hard to know at this stage which of the business will be affected when. The article says that it does not effect all of the business enterprises under the Roamfree banner as

"The group's subsidiary trading companies, BookEasy Pty Ltd, Roamfree Pacific and majority-owned Tourism Technology, are not affected."

Toursim Technology operates the Calypso system used by many offline companies for inventory management.

As of 930am this morning the main site is still live (screenshot below).

I am always nervous about doing a Roamfree post. One back in April last year resulted in almost 100 comments, many of them unfit to print. That said I would welcome any info you might have as to which business are affected and which are not.

GFC presure finally comes to WTF - analyst rates Wotif.com as "under perform"

Wotif Group (ASX:WTF) has been a stand out Australian stock for as long as anyone can remember. Well at least since March 2006 when it burst onto the market at a pre-float price of $2.00 but closing the first day at $3.32. Has been a roller coaster ride since then. The first two years was all up up up, topping out at just below $6 a share. Then early to mid 08 saw a slump back below $3 a share. Recently the stock has rallied with the rest of the market to be around the $4.50 range ($4.50 close yesterday). Throughout that time I have not seen an analyst say a bad word about the stock (despite a P/E ratio in the twenties).

Now today we have a different voice. Senior Analyst at LINWAR securities James Bales has just published a research note on Wotif called "Check Out Time". In that note he sets a target price of $3.70 - 18% less than the current value. I can't share the whole research note with you as that is something LINWAR reserves for the clients but I can share some of the top level conclusions that Bales used to support his rating of Under Perform. Here are some extracts from his conclusions

"WTF trades on a significant premium to our DCF valuation. It also trades on a premium to larger well-performed global online travel peers in an industry which rewards scale.


Industry estimates of Average Daily Rate (ADR) declines are approaching double digit levels worldwide. The decline may be more moderate in Australia but Wotif expected low single digit rate decline in 2H09. Intense rate pressure has meant hotel chains are seeking ways of discounting prices without impacting brand - OTA’s offer this capability.


It appears Asian destination markets are holding up well [for WTF]– eg: Thailand, Bali. Source markets such as China post-Olympics and Japan appear weaker. In these areas global giants have a significant advantage over WTF. WTF is trying to grow an Asian business with no local language capability and just one small existing market (AU/NZ) from which to draw clients."

That said, Bales still supports the profit estimates from Wotif. As he says

"NPAT guidance of at least $42m was in line with our forecasts. This is no surprise given US 1Q09 results from Online Travel Agents (OTA’s). Our forecasts are unchanged, anticipating strong growth in FY10."

I agree with James analysis, especially on international expansion. That said hard to be too negative about a company that just upped its full year forecast.

That do you think? Will there finally be pressure on Wotif coming or is $4.50 a share just fine thank you very much?

Budget and United make 24/7 Wall St's list of 12 brands likely to disappear

Equities and investor blog 24/7 Wall street posted last week on the "Twelve Major Brands that Will Disappear" - joining the likes of Ansett.

Topping the list was the struggling former Car Rental giant Avis/Budget. As I talked about in this post Avis/Budget (CAR) is a shadow of its former self. Having just avoided de-listing on the NYSE, the company is struggling under a mountain of debt, mounting costs and falling revenues.

At number twelve on the list is United Airlines (UAUA). 24/7 Wallst puts United among American and US Air as the three most at risk airlines in the US and in convinced that someone like Continental will step in as an acquiring for one of these. United is most at risk among the three (according to 24/7) because their passenger numbers are dropping faster (despite your BOOT correspondent's recent travels with United). In my 2009 predictions I mentioned that I thought more airlines would go bust (hardly a revolutionary prediction).

Full details over at 24/7 Wallst.

Here is the full list of the 12 brands at risk
1. Avis/Budget
2. Borders books (BGP)
3. Crocs footwear (CROX)
4. Saturn vehicles
5. Esquire Magazine
6. Old Navy apparel
7. Architectural Digest Magazine
8. Chrysler brand cars:
9. Eddie Bauer (EBHI)
10. Palm (PALM)
11. AIG
12. United Air Lines (UAUA)

Hat tip to Seeking Alpha where I first spotted the story

Thanks to Adelaide Archivist over at flickr for the photo

Some days I miss being a lawyer

Here is a picture of the email I received today from e-travel blackboard (an Australian travel industry newsletter). Nothing but depressing news. Any one got some good news to make me feel better.

Proving an Airline Depression - Top three reasons you know the airline industry is screwed (for a while)

Three things I noticed recently that really prove it is hell on earth for airlines:

1. Air New Zealand agreed to pay commission on fuel surcharges. Finally proving what we have all known, that fuel surcharges were a complete travel agent income denying scam and that airlines are getting more and more desperate to find ways to convince travel agents to shift share;
2. 2008 compared to 2007, Cathay Pacific carried 7.3% more passengers, generated 14.9% more revenue but lost US$1.1 billion. How is that for a collection of numbers; and
3. In 1990 I bought my first long haul airline ticket with my own money. A European round trip ticket from Sydney on Qantas to go backpacking. Cost A$2,100. In 2009 a close friend bought seats for him, his wife and two sons round trip from Sydney to Los Angeles on Qantas. Cost A$2,700. 1 person 17,000 kms, 19 years ago for just $600 less than 4 tickets to go 12,000kms . Given the inflation rate, $2,700 in 2009 is less than $2,100 in 1990.

What have you seen?

thanks to temp13rec for the photo

Help Wanted part 2 - bringing talent retention to the recession

Exactly a year ago today I wrote a post called "Help Wanted: Finding staff in a Travel 2.0 world". The quick summary from that story was that in March 2008 it was almost impossible to fill an open head count role in the travel industry. My inbox at the time was full of job descriptions from entrepreneurs looking for referrals and notes from recruitment consultants looking for names...any name.

Now, 365 days later, saying that the world has changed is using a an over-used cliché because we have all run out of ways to describe a world economy in free fall. I could not find people to match to the opportunities because it seemed that everyone had the perfect job.

Now, my inbox contains a new email every day with a high quality resume. Top class BDMs, senior marketeers, product builders and more looking for roles after cuts and efficiency rounds. The only recruitment consultant contacting me with a job to fill (rather than a pitching for work) is looking for a role in a country that has banned Chianti, Chardonnay, Chablis, Chivas and all the other great "Ch" words.

Don't misread me. I am not turning against my own optimistic words from last September. There is no doubt that the travel industry will come through this and growth will return. But I am going to add a point to my comments from September. Initially I called the global f'n crisis (GFC) a chance for product/company innovation. I am adding to that that it is a moment for people/talent retention. If the CVs that I am seeing are an indication of the talent that is being let go then all in the industry need to take a moment and work first on retention plans during hard times rather than turning first to cutting and shedding.

thanks to Paul Photo Byrne on flikr for the photo

PS - need more proof of the GFC? China just announced a 20 million increase in the unemployment rate - effectively the entire population of Australia.

PPS - looks like my week long break from blogging lasted a day. Finally found some late night time to rejoin the blogerati.

Qantas feeling world pain and wont return my calls

Despite a revenue growth of 2% to $7.92 billion, Qantas has joined the list of airlines being beaten up by the economic smack-down. Profits are down 66% to $210mm for the second half of calendar 08 from $618mm the previous year. Shares are currently in a trading halt - at time of writing - pending an announcement on a capital raising (full news story here care of SMH). I would not normally run a post on declining results for an airline like Qantas (because that is what we have online newspapers for) but in this case it reminded me that I have been trying to get in touch with Qantas media/comms staff and have heard nothing.

Last week Qantas announced a new $10 million customer service training centre. This peaked my interest as I have regularly commented that Qantas appears to have a culture of process rather than service. I wrote to the media contact at Qantas (bottom of the press release) and asked if they would be interested in giving me a briefing on the new facility. That was last Friday. As of today - Wednesday - no reply.

Now it is possible that they think I am so negative on Qantas that it is not worth giving me a briefing. But that would be an unfair assessment of the BOOT. While there are plenty of critical comments on the blog about Qantas - especially on the glitches/failures on of the in flight entertainement system - I also have positive comments such as my post "In defence of Qantas" and have rated Qantas as number 5 on my list of top 5 airlines. But even so, surely they would want to talk to any commentator - especially negative ones- about service improvements. The other possibility is that that the Qantas media/PR team simply do not reply to bloggers. If that is true, then they have their heads in the old media sand. There are so many examples of social media impacting on Qantas as a brand. My blog is the number two hit in Google (on my results) for "Qantas VOD". Message board and info-blog FrequentFlyer.com.au is the number two in Google for "QFF" (the shorthand for Qantas Frequent Flyer). Twitter is awash with commentary about Qantas etc etc etc

I hope the real answer is that they just haven't gotten round to writing back yet. If so, Qantas - if you're listening - email me.

Have you seen how bad things are in car rental? Avis, Hertz, Dollar all down 80%+

The crash test dummy in this photo maybe smiling but the car rental industry has smashed into the recession/global financial crisis wall with such force that dramatic industry changes are inevitable. I usually spend my time ranting about airlines, hotels and online agents such that I often forget to watch other sectors like cruise and car.

I received an enormous shock yesterday when I was surfing around Yahoo! finance and decided to see how the Avis/Budget stock price was doing. I have soft spot for the Avis Budget Group Inc (CAR) stock ticker (to the extent you can ever have feelings for a stock ticker) for two reasons. Firstly because CAR is such as great ticker for a car rental company. Mainly though because it is the successor to the once public and once amalgamated Cendant Corporation. Back in Sept 2006 CAR took over from CD and Cendant was no more.

Anyway what I found was that Avis stock is now trading at less than $1, has a market cap of less than $85million and is on notice to be delisted from the New York Stock Exchange unless it can find a way to trade above a $1 per share. This is a company that has some 28,000 employees (after a cut of 2,200 in Dec last year) and at the time of the spin off in Sept 2006 had a stock value of nearly $20. The stock reached highs of $30 in mid 07. That said back in 2006 analysts were already saying that the company was in trouble. I have not been tracking enough to speak definitively but clearly the crash to a US recession straight after all of the pain and suffering of high gas prices and credit being squeezed has just been too much for this company.

It may not give the Avis execs much comfort but their competitors in car rental are also in terrible trouble. Dollar Thrifty Automotive Group (DTG) stocks are trading at less than $1.50 off a 52 week high of $27 and a two year high of $50 - only just staving off breaches of debt covenants. Unimaginable drops. Hertz (HTZ) - the market boss - seem to be holding steady at $6 off a 52 week high of $15.32. Standard & Poor's are expecting at least one of these players to disappear into bankruptcy - with Dollar Thirty their lead tip. The other big player is Enterprise - but they are private so I can't find word on how they are coping. [tips welcome]

The other side of the industry is the intermediaries and car dedicated meta-search players. The biggest global online car rental broker is the Lastminute.com/Travelocity owned HolidayAutos. Travelocity has been a private company for a year and a half now so it has been very difficult to get any news on how parts of their business is performing. There was word last Sept on the turnover at Lastminute being in the region of Euro 2 billion per year but September was an age away in this crisis and there was not split out in the announcement for HolidayAutos. [tips welcome]. My thumb in the air guess is that intermediaries should be able to take advantage of this industry pain and secure fantastic rates and deals. Down here in Australia you would think that this could be good news for two of main car intermediaries, the meta-search provider Oodles.com and consolidator Vroomvroomvroom. More info on Oodles is here including a bio on long time BOOT commentator and Oodles MD Steve Sherlock. Smart Company have a profile on Vroom inc Founder/CEO Peter Thorton here.

If you thought the air and hotel industry was in trouble, then spare a moment of industry reflection and concern for our brothers and sisters in the car industry.

Thanks to anthena1970 for the photo over at flickr

Yahoo sells Kelkoo for Euro 100mm to Jamplant (UK investment firm)

Yahoo! bought Kelkoo back in 2004 for Euro 475. News out late yesterday that they have sold it for Euro 100 million to Jamplant - a UK investment firm I have not heard of. This a significant loss for Yahoo! both in terms of capital losses but also in functionality. On the positive side for Yahoo because after three good years in 2007 the business lost Euro12 million. I can see the short term benefit but in the long term I think Yahoo will regret exiting meta-search. French language news story here including a table showing the turnover and losses. TechCrunch story here including English language version of the internal email.

United on premium customers - not sure what will happen to demand in 2009 but am sure that premium customers do not make decisions based on price

I posted on Monday some thoughts about the premium air fare product and the downturn/crash/eco tsunami. On Center Stage at PhoCusWright is Tim Simonds the MD of Customer Strategy and metrics for United Airlines talking about the increased focus that United will be making on the premium customer. Simonds highlighted that in the US Air market the premium passenger sector represented 30% of revenue in 2007 but lept to 50% in 2007. He was open and honest that he did not know if the numbers would hold up in 2009 but premium will still be a core focus as "a very attractive part of the market".

It will hold up in his view because United is rolling out new product. He displayed this product to us - which looked like an Emirates, Singapore Airlines or Cathay Pacific advertisement from 2004 - so is only a revolution if you are looking solely and US based carriers. When asked on this point Simonds admitted that the product will not be as "good as foreign flag carriers. The first step is to be number one in the N.American market".

In response to this a mini revolution broke out on the Center Stage floor. Questions were asked about what this meant for United's commitment to non-Premium customers. Charlie Leocha of Tripso put it simply "Doesn't this mean that United abandoning the back of the plane?".

Simonds answer "we try to give a high level of service consistent with the level of value that each customer has paid. But agree the bar needs to be raised for everyone." To another version of the question he answered "we need to enhance economy plus but quite simply there is a large and increasing differentiation between economy and business."

In a follow up Simonds said that he thought this strategy was appropriate because (and this is the main point) " United do not see the premium customer as making decisions based on price." I am trilled to hear a US airline rep talk about lifting the level of service and experience but I do not agree that premium customers will not be making price based decisions. I have been a top tier Qantas flyer for now 8 years. Yet this year I flew more long haul economy that any time since 1999. Price is now a greater factor in my decisions that any time in my non-lawyer career. It will be a factor in 2009 for a large majority of premium flyers. US airlines need to register this and improve the "behind the curtain" products.

what do you think?

Thinking about the gap between economy and business fares

Was sent a question as a follow up to the recent post on the airline industry with fuel at $60 per barrel. Was asked "Wanted to get your thoughts on the possibility of airlines lowering their prices. Most think the airlines will maintain prices despite the falloff in passenger demand".
Here is my reply

I have been trying get my head around the two competing airline trends. Firstly the decline in demand but also the corresponding drop in capacity. The current economic pain is in effect being absorbed by the airlines through reductions in supply. This can only last so long, as there reaches a point where airlines cannot cut any more (ie cheaper to keep planes in the air than on the ground). The other factor that will hit in the next month or two is a dramatic reduction in premium fare usage by consumers. I have looked a very unsophisticated statistical sample (my peers, friends and check-in staff at premium class counters) and have noticed people flying long haul economy for work they had not done so for ten years. This sent me to think about the costs of long haul premium travel now and historically.

I remember that back in 1990 when I first starting looking at travel as more than just a wide eyed kid, the gap from economy to business to first was double:double. Business was twice the cost of Economy and First was twice again. An economy trip to Europe from Australia was $2,000-2,500, business was $4,000 - $5,000 and first was $8,000-10,000. Now, 18 years later you can still get an economy fare to Europe for around $2,500. But the gap to business and first is times four and times one and a half. Business is now four times the cost of economy and first is now one and a half times the cost of business. No doubt that the quality of the 2008 version of premium product is light years beyond that of 1990 (flat bed as standard, limo pick ups, hundreds of hours of interactive entertainment, world class restaurants in airport lounges etc) but the price gap is now significant. Of course, airlines have looked to fill that gap with premium economy (twice the price of standard economy). But the 2008 version of premium economy is not as good as the 1990 version of business (seats smaller, pitch not as deep, staff not as attentive).

The airlines were able to justify/maintain/get away with this increasing the price gap/multiple from 1990 to 2008 due to a booming economy and ever increasing T&E budgets. But now the economy is boomed out and T&E budgets are being wiped out. From this I believe that the first hit on pricing we will see is in premium classes. I expect that very early next year (if not starting right now). Meanwhile capacity cuts will continue. Then some tipping point will hit where capacity cuts have reached as far as they can and early cuts in premium have gone as low as they can. Then economy fares will hit the floor and more airlines will hit the wall.

I say all this back on good old fashioned blogger intuition and anecdotally driven research. I have not done the deep price and capacity analysis that should accompany an answer like this - but that is the blogger prerogative.

UPDATE - LA times travel blogger Jen Leo just let me know that expiring and midnight tonight Qantas are offering two for one in all classes to AU and NZ. Expect this to be the first of many.

thanks to atalou on flickr for the photo

RedHerring likes tripJane at lot, TechCrunch 50 a little but I have not idea what they do

RedHerring is the tech boom magazine who's death keeps being reported and yet somehow managed to survive. Every now and then I check in on the online version to see what is happening. In keeping this week's (accidental) start-up theme at the BOOT, I came across the list of the Red Herring North America 100 from back in May 2008. This is their list of the top 100 start-ups in North America. Lots of good pedigree here as past winners include Google, Yahoo!, Skype and YouTube (with a little glitch around Netscape).

Much like TechCrunch50 I could only find one travel company on the list - tripJane. tripJane was also a finalist in the TechCrunch50 - being part of what they called the demo pit (ie not on the main stage but out in the foyer on a card table).

No details on the tripJane website on what they do. Something about social networking, purchasing and planning - which we have heard before. Here is the Crunchbase profile for a little more.

At lot of time has passed since the May RedHerring awards. Anyone out there from tripJane want to share with us what you do.

Promise next week to leave start-up land the get back to the more regular feature of this blog - whining about Qantas covering general industry trends.

GoPlanIt - interview with COO Jimmy Ku on the day the Dow imploded

It is start up interview and profile week here at the BOOT. Earlier this week we talked with Yen Lee of UpTake about how he felt cashing a $10,000,000 cheque moments before the Dow went into (the first of many) freefall(s). Then I posted an exchange with Our Explorer CEO Dave Cunningham about his efforts to match tour guides with lost tourists.

Today I had a chance to speak with GoPlanit COO Jimmy Ku. You’ll recall that GoPlanit was the only travel company to be part o the high profile start-up competition TechCrunch50. My earlier profile of them is here.

Discussions around money

On any normal day our interview would have focused on GoPlanit's plans to move from beta to a full release, how they would generate traffic and thoughts on balancing editorial and user generated content. Unfortunately this is not a normal day. On this day Washington degenerated into a $700 billion game of “I like George Bush less than you do” driving the Dow down 778 points (check out this interactive graphic on nytimes.com tracking the decline of the Dow with the counting of the nae votes– registration required). Unsurprisingly it meant we spent time talking about GoPlanit’s plans for raising their first full round of funding. As the Crunchbase profile states and Ku confirmed GoPlanit have raised $500k in seed capital. This is enough to support current efforts and the team of 7 but Ku admits that they will need more.

Thankfully for GoPlanit the profile boost of Techcrunch50 participation has opened a huge number of doors as they look for funding. As Ku put it Techcrunc50 guaranteed me “days of back to back meetings”. But even Ku admits that the horror on the Dow going to make it tougher. “Anyone not scared [about the Dow decline] is probably lying” said Ku “but good products will still make money and VCs will still invest in those that can succeed”

Discussions around traffic

It is too early for Ku to share any traffic numbers with us but we did discuss GoPlanit’s marketing tactics. As expected the focus will be on SEO through user and editorial content. GoPlanit needs to take time to develop each destination it is planning to launch through connecting tot a “respectable source” of content and information, building out the links to providers and setting up the framework for attracting user generated content.

Sidebar - While discussing this I noticed that both TripIt and TripAdvisor are bidding on the keyword phrase “planning a trip” (as you can see in this poorly cropped photo image).



This seemed odd to Ku. He said (and I agree) that you want to attract the people looking for a destination not someone generically searching for a trip planning tool.

Discussions around the founders

The idea behind GoPlanit is best drawn directly from CEO Steve Chen’s presentation at Techcrunch50. In short the founders separately experienced the pain of trying to organise large holidays. In Ku’s case he found himself as the designated organiser for group holidays with friends. In CEO Chen's case it was in organising his honeymoon and his general experiences post a career with Accenture as an event organiser in the Bay Area. Chen and Ku are also joined in the founder club by CTO James Chen, most recently of CNET, Rotten Tomatoes and HotorNot.

My take

I like the idea and as with many start up interviews with travel content/tool companies, if they can generate the traffic, then the ad revenue will follow. The CPM rates and advertising desire for good consumer travel eyeballs is strong enough to survive this economic Bush-wacking. The challenge is raising the money to support the product to attract the eyeballs on a day no one can get $700 billion from the US government.

Related News

• TechCrunch story on a site upgrade at the Microsoft backed PlanetEye;
• TechCrunch story on impact of the credit crunch/implosion on VCs and Startups; and
  
• Jason Calacanis on "the Startup Depression"