Leisure booking service Wotif.com follows regional ambitions

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In March 2000, Graeme Wood, an IT professional and one-time poultry farmer based in Brisbane, Australia, founded an online accommodation booking service – just as the bubble burst for high-technology companies. That setback did not stop Wotif.com Holdings from becoming one of Australia’s biggest internet success stories.

In the past decade, the company has morphed from a two-person start-up with A$200,000 ($180,000) in funding into an A$1bn company with more than 450 staff across Australia, New Zealand, the UK, Canada and Asia.

Launched with 60 properties, Wotif.com now displays discounted accommodation deals from more than 17,500 hotels in 57 countries. In the 12 months to June 30 2010, it sold 7.12m room nights, of which 1.07m, or almost 25 per cent, were in Asia.

“It’s a wonderful rags-to-riches story,” says Robbie Cooke, chief executive and managing director. “I don’t think anyone anticipated how successful [the company] would become.”

Wotif.com takes a 10 per cent commission on bookings, with hotels retaining control over how many rooms they sell and at what price.

“A lot of other sites and travel agents don’t have that one-on-one relationship,” says Mr Cooke.

In August, Wotif.com Holdings, which listed on the Australian Stock Exchange in 2006, posted a 22 per cent increase in annual net profit to A$53m on revenue of A$136m. However, the stock then plummeted to A$4.07, a 52-week low, as analysts expressed concerns about the company’s ability to continue to post robust growth rates in the face of a more subdued outlook for accommodation revenue in Australia.

In recent years, the group has expanded into other travel sectors with acquisitions such as Travel.com.au, an Australian website that sells flights, car rentals and travel insurance, and Wotflight.com, which extends the group’s move into the flight space.

Wotif.com’s key markets are in Australia and New Zealand – it accounts for roughly 50 per cent of online hotel bookings in Australia and 10 per cent of all accommodation sales – and in Asia. In 2008, it acquired Asia Web Direct, a leading online travel business, to expand its hotel inventory, staff and customer base in Asian markets.

The company has built up a strong presence in countries where internet usage is well established, such as Singapore and Malaysia.

However, the unstable political environment in Thailand, a key destination market, has been a “road bump” for Wotif’s regional ambitions,

Mr Cooke says, with the Asia Web Direct operation posting a significant drop in average room rates in 2010. China and India also have proved tough markets to penetrate.

“People need to get comfortable with online and that builds over time,” says Mr Cooke. “We have a road map in Asia, but we are coming from a relatively low base, as is everybody else [online]. You won’t know who has won the game for another five years.”

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