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We often hear about mergers and acquisitions. Well, it's also possible to have a d merger.
This is when a.
Company decides to split into two companies. And that's what we're chatting about today by hearing about what's been going on with the online travel company Webjet.
Started in nineteen ninety eight.
Webjet is a well known global travel company and a place that many Kiwis and Australians go to book travel and experiences and accounts for almost eight percent.
Of all travel booked.
Last week, shareholders voted and approved that the d merger of Webjet into two separate ASEX listed entities, web Travel Group, which is the B to B side of the business, and Webjet Group, which is the B two C side of the business. Joining me to help understand what this means for consumer travel, the new CEO of Webjet Group, Katrina Berry.
Welcome, Katrina, Hi, Sonya love to be here.
Yeah, thanks, thanks for having us. It's been a huge week, hasn't it.
I sound like I've had a really big night out. I've been. I feel like I've been talking to investors and brokers for about the last four weeks solid. And on Monday we rang the bell with Webjet Group WJL now officially listed on the AX. So that was quite a party. And yeah, so it's been a full on, busy week. It's been a good time.
Yeah, amazing.
And we will get into the whib jet you know what's been going on, because obviously there's been, you know, a lot to talk about. But first let's give a bit of an intro to you and well so people get a sense of who we're talking to. You've got a pretty impressive background, fast tech, fifty female leader, numerous director and CEO titles, held in some pretty iconic brands. You know, can you tell us a bit about your background and what led you to the travel industry At the.
End of the day, I'm just a Kirwy farm girl who grew up in Papa Korda. I'm just outside of Auckland and went to Auckland University and then I moved to Australia. My first job and Mackenzie doing strategy consulting, so I spent about seven or eight years doing that and then my first real job as what we call it, was working with a Virgin group. But I think and that's where I kind of fell in love with the
travel industry. I wasn't working specifically for Virgin Blue as it was called back then, but you know, you get a lot of exposed to it when I was working at Virgin Money Virgin Management and started a gym chain called Virgin Active. But I think what drew me into the travel industry was, you know, when I was at university, I went on this trip and it was pretty much
my first overseas trip. I went to a student conference in India, and so you know, it sort of traveled around there and which is you know, India for anyone who hasn't been, is an assault on every sense in the best possible way. It is colorful, it is confronting. The food is fabulous, and you know, for me, it was a complete adventure and something I never thought I would ever do, sort of, you know, spending my time at Papacotta High School, I was just hoping to get
to the big smoke, being Auckland, CBD. So that's what drew me to travel and my first real leadership role in travel. I was working at a bank and I had a recruiter call me and said I had just left the Virgin group about a year and a half failiure and they had said, look, I've got the perfect role for you. You wanted, you know, an MDCO role. I you know, you wanted to cover Australa, Zealand in Asia because I'd missed running Asia after I left Virgin.
Well that sounds perfect, what is it? She said of Kentucky? And I was like, sorry, Like, isn't Kentucky just a booze bus for Bogans? And in the end. I met with a chair and he was like, you're right twenty years ago, twenty five years ago, it was, and that's why we want you to come on board. You've got experience taking iconic brands and transforming them and that was my first full time role in the travel industry and
I've been in it ever since. You know, that's sort of twelve years ago now, so good times.
So you were on the board of Whipbjet, you know, for a few years before this, so you know the business pretty well. What's been your experience, like two weeks into the CEO role of the of the B two C side.
You know, this is a stellar business. You know, it's the original online travel agency for Austrand, New Zealand, and you know, as you said, formed twenty six years ago and you know since that time, it took about ten years for it to become number one and it's maintained that position ever since. And it's a i would say, a leader, a forethinker and how we buy you know,
e commerce. So you know one of the things though that this business, you know, prior to d merger was you know, three point two billion dollar business and you know that becomes a lot, and we had almost become two different divisions. We're two different sets of customers. B to B was you know, travel intermediaries, people who were selling travel and that's very much what our web bed
business served. And then the original business, Webjet Group, you know, which is the way to buy travel online in Australian New Zealand. The reality is when you get that big as a board member, you unapologetically spend your dollars and your time on the business that's growing the fastest. You always back your growth and now the Webjet Group has a very enviable growth target, don't you growth profile, but you know it was less than sort of thirty five percent,
which is what our other business was growing at. So the reason why as a board we started to talk about the de merger was we found ourselves as a board speaking mess and less about the iconic Webjet Group, the original business, even though that was the cash car of the group, and if we were honest, we'd probably you know, not focus on enough. In the last five to six years, you know, there was a bit going on. We had a pandemic and then they had to manage
through that and then there was revenge travel. But as a board, we thought it was the most appropriate thing to drive shareholder value but also to drive the growth agendas of both company companies, was to split it up and allow both to focus on the unique strategic agendas. We're extremely well cash preserved, if you will, you know, we have no debt, about ninety million dollars free cash, and that gives us an incredible opportunity now to focus
on our unique organic and potentially inorganic growth agenda. So that's what we're looking forward to doing. So it's been a whirlwind, I guess to your question of you know, what's being like, I officially, you know, step down from the board about three months ago to step into an executive role, and you know, I think we've just delivered the fastest merger in Australian corporate history. There's no prize for it but other than a horse throat, but I
think it's just been really exciting. The team is incredibly energized now that we have our own balance sheet. We have a dedicated board, dedicated you know, management team now, dedicated balance sheet, no debt, and all the opportunity in the world.
So let's get into the opportunities that you see now that the B two C side is stepping and tigers its own light and its own chance to kind of go and I set itself from here. So can you tell us a bit around like how you see those opportunities? You know, what is the B two C strategy from here for Webjet?
Well, there's a couple of key areas that we think are underleveraged and we want to focus on as a team. The first one is probably you know, it's the first thing you do when you come into a company is you check your brand health. You know, what is the health of the Webjet brand, et cetera. It's incredibly famous, it has really high awareness, but consideration is probably something
we need to work on. So the first thing we're doing as a team is a bit of a brand refresh or a glow up as our younger lists would know it. So it's not a rebrand, but it's an opportunity for us to take the brand, freshen it up, make it a bit more relevant and a bit more contemporary. So that's your first piece from there. That'll set us in a good position to really invest in our marketing
and I think leverage our sex mil customers. So we have six million customers across Australia and New Zealand who are either members of our loged and members of our websites and our travel marketplaces. We have three of them being webjet dot com dot Au or Webjet dot Co dot nz it and then Airport Rentals dot Com and Motorhome Republic. The last two you know, obviously hopefully what it says on the car us says on the door
one's car Rentals and one's motor home Rentals. So each of those three marketplaces are leaders in their space, and we have six million customers sitting across those and I think we've got an opportunity to drive more loyalty and drive more repeat rate from those customers by focusing on our member journey and our member experience. So that's a key focus for us in terms of developing out that
member experience. And what I mean by that is, you know, we did our first piece of it, and there's plenty of e commers examples who do this way better than us, So this is not a hard stretch for us to really grab growth out of this lever. You know, we did our first ever promotion like a three weeks ago to Bali and it was if you're a webjeit member, you got access to that deal for the first twenty
four hours first. Now, everybody knows in a travel deal, you want to jump on that thing because that's where all the good flights go first. So we did that and gave that to members as an exclusive offer to them for twenty four hours. It went really well. Why because people love being treated special, and they love deals, and they love getting early access to something. So we think, you know, there's an entire extension you can take from that.
That was just you know, we've got the functionality. I've got my profile and there my kids, my husband's, all our frequent flyers, so it's really easy for me to book my flight, my hotel and have it all in one place. So that's functionality already exists. Now what we want to do is offer value to our members, and that doesn't have to be revenue dilutionary, but it's like, here's an exclusive offer for you. Also, it's work with
airlines going Okay, you've got some distressed inventory. You know May is not looking good for next year, and but you don't have enough to go out and do an above line campaign. Work with us We've got a closed user group being six million people we can talk to and go we can push this product for you. So there's some really good examples there. So that drives what lever I call the repeat. The next piece is you
know what am I? What am I buying? You know, there's an entire travel wallet that each of us has when we think about going on a trip. I've got to get my flights and then I've you know, how am I going to get around? Am I going to take a tour? Am I going to hire a car? We're going to hire a motor home. Oh, I'm going to need somewhere to stay. You know, I need some hotels, and you know being safe is cool, so I'm going
to need travel insurance as well. So these are their elements we If you look at our revenue, seventy percent of it comes from flight related activity and thirty percent comes from us receiving a commission from selling the hotel or selling the car, or selling the travel insurance for example. So the next key lever opportunity for this business is to focus on capturing that whole travel wallet and attaching
what we call these ancillary products. So most people know us for flights and probably domestic, so it's coming to us and the going Okay, you've got your flight, and most people don't know. He's two fun facts for every dull in listener. You can burn your AMEX points on webjet. Most people are like in business, they're like, I did not know that. The second piece is you can get twenty percent off your hotel if you book your flight, so you know, really good bargain. But the key thing
about that is most people don't know. You know, if I attach all these the extras for my holiday, I can bundle and save if you will. So that's the kind of the third key thing we're focused on. The last is international. Now, if you think about you know what's happening in the international space right now? Airflight prices are dropping yay for all of us. And you know that is because demand supply. The capacity hasn't. We haven't
fully reached outbound capacity. And but that I mean flights out of Australia New Zealand the level that we had pre COVID. We've still only at eighty ninety percent. Most airlines now are finalizing bringing back fleet, etc. And focus more on a capacity game than a yield game at the same time as we've got new airlines coming to Australia New Zealand who have never flown here before. You know his fun fact, Turkish air Lines third largest airline in the world. I never knew that until about two
months ago. And they have just confirmed they're going to be starting to fly out of Australia this year. So that is bringing more capacity to the market. What does that mean prices begin to drop? So is a real We've got a real key opportunity right now to sell more international flights. Now, as I said before, most people will know webjait. It's like, okay, you know, how we started was selling point to point around austray and New Zealand and between the two countries. But now we are
significantly growing our share of international outbound. Now here's a trick about international outbound US Ossie's and Kiwi's. We like to travel and we don't do simple point to point Americans and Europeans they go, I'm going to fly from New York to London back again, or I'm going to go from Rome, you know, from Rome to la and
back again. They do point to point travel. Now that's really easy to solve with technology, and that's why technology, you know, sort of boomed across the last fifteen years for actually buying travel online. For however, for international, for OSSI's and Kiwis, we don't do that. We do multi stop trips. Stop off in Singapore, they hang out there for a couple of days, up to Dubai, go to the raids track into London. Oh got to pop across
to France to see Auntie Cecil. Then I want to go down to Italy because that's where I want to have my aparol Greece. Need a bit of sunshine, and you know I'll go home by La to see my friend there or to take the kids to Disneyland. So you know, we really move around. That's called a multi stock trip. Now we have a really unique competitive advantage in this using AI and a piece of technology that
we have bought and integrated. That now means we have a real shot at disrupting the industry again and becoming the way that you can book international. So traditionally you would have to go to what we call a bricks and water travel agency or you know, your travel agency store at the local shopping center. You walk in there and you sit down and a good travel agent can put together that multi stop trip for you across a
couple of hours. I know my sister in law is a travel agent and that's what I've been making her do for years. But with webjet and now how we're using AI, you can do that from your couch by
yourself in five minutes. So, given the trends that are happening in the international market, given the continuing on acceleration to online purchasing for every category, particularly travel, and now the technology is at a place and we have a distinct competitive vantage with an AI that we have implemented, we've got a really good shot at starting to win
an international share. So those are the three things that we're focused on in the first one being fixed, the brand, fix the repeat, attach more, capture more of the travel wallet, and then grow our international share.
Thanks for that overview. Who are your main competitors?
People compare us to Expedia and Booking dot Com in terms of the online world, but they started out life as hotels, so most people go to them for hotels and selling flights is a lot lot harder. And then people can also compare us to I think you know, major travel agencies like Flight Center.
Cool and then you know, it's great to have the plans and the strategies of what you're gonna seize and achieve, but how do you consider what are the big risks that you're managing, Like, what are the things that can get away in the way of that plan?
Well, I mean, you know, the number one rest we always talk about now is a pandemic or something that's a true disrupted to the industry. You know, in the industry we're all burnt by that, So that is always top of mind. And I think the other sort of the key pieces, you know, sort of fall off the back of that global events. You know obviously you know things slowed down in Eastern Europe given global events over there.
You know, you've obviously got cost of living crisis. You know, this is this is softening a little bit domestic demand and traveling around astray in between New Zealand and Australia. That's starting to soften that a little bit, but international is still growing strong. So I think macroeconomic conditions are probably the key rest of the business we see.
And how do you how do you think about sustainability, How does that rep into your thinking?
As a travel company.
Yeah, I mean it's really important to our customers and therefore it's really important to us. So we were the first online travel agency to introduce carbon offset. So with each you know, interaction you have with us, you have the opportunity to offset the carbon produced by the flight. And we obviously do our sustainability report on an annual basis. The key thing for us on that is is you know,
dealing with lots of different suppliers. We deal with suppliers from hotels and from airlines and from you know, car rental companies, and you know, also checking through their credentials, but also checking through our modern slavery. I think it's a really important thing in terms of being a good corporate citizen is making through making sure you're checking through all your suppliers as well to make sure that you're working with I think great corporate citizens.
Yeah.
Great, And you know we have you know, we've talked about apparol, sprits and revenge travel and as well, you know, you did touch on it, the cost of living crisis. How how do the how is that playing out and the demand for travel with you know, with the cost of living crisis at the moment.
Yeah, Well, it's a really interesting trend and I think Jerry Harvey said it the best in the Financial Review the other week. You said people are prioritizing travel over buying their next couch or their fridge. Funny thing is travel pre COVID. I think, you know, most people think about a discretionary item. Post COVID, people are thinking about it like a non discretionary item. People are giving up other things to travel, and that's what we're hearing from
our customers. People are looking for bargains though. So one of the great pieces of tech that we have is on Webjet dot com, dot AU, dot co, dot nz is our mix and Match matrix. What this allows you to do is to fly one way with an airline to fly back with another. And people love that because it allows you to get on one ticket. You don't have to go to seventeen different sites and figure out
what is the cheapest. It's all compared for you on our site and you can pick the best timings for you and the best pricing, and that allows people to mix and match and save. So how it's playing out in terms of the cost of living is I think people are still prioritizing travel that particularly prioritizing international travel. You may do one less trip domestic, but when you
are traveling, you're looking for bargains. You're looking for how I can be really efficient with my money because it's shifted, like hybrid working. You know, no matter how many big CEOs tellers, we're all coming back into the office. My personal view is the world has moved on and I think that you know, there's been a cultural shift in that, and I think there's been a cultural shift in the way people think about travel as well, so they are
prioritizing that against other expenditure. And that is absolutely what we're hearing from our customers. They're still looking for bargains, but they're still going.
And how about with the ability to buy across so many different suppliers, how do you maintain I guess the trustworthiness and as well the cost elements for your customers.
You know, most people in the travel industry will have preferred relationships where will push a provider or not. Webjet has always been agnostic. We are airline agnostic, were supply are agnostic, and we think that's an important part of our value proposition to customers. And I think why we're
still number one. You know, there's plenty of tried and come and failed, but we have still maintained our number one position as you know as a way to buy a travel online because of that ability to make sure we present all the options with no preference. So that's a different economic model and you take risk with that. But what we have found is by delivering to customers the ultimate choice and the ultimate convenience that they have been we're being rewarded well with their loyalty.
Yeah, and so trends wise, you've talked about supply increasing which could potentially bring price prices down.
Is that what we're hearing.
That's correct. International prices are coming down. So that's one of the key trends is international is starting to become more audible again. Other key trends i'd say is that you know, people are unbundling their travel, just like airlines have unbundled the seat, so now you have to buy the seat, the bag, the meal. People are unbundling their trips, going off like one airline, flyback on another to save money.
And the other key trends I think people don't think about one holiday every two three years now they think about their annual holiday, the domestic one and an international one, you know, if they're fortunate enough to start thinking about that. Really, people are building it into their lifestyles. We're seeing the booking window, which means when you book as opposed to your travel. That used to be quite short, you know, like two to three months. Now the booking window is growing.
People are stigning to plan their time and their holidays better.
That's soup interesting.
So now let's flip to some questions for people, you know, who may be looking to invest in the webject group or people are investing. You mentioned in another media interview that I see saw that people like dividends may be part of the future.
Yeah, we're really excited about returning to dividends. It's been a request from our when we're a broader group shareholds for a long time. But we've obviously been investing that money. But given we are you know, you know, very consumer fakers focused e commerce business and we'll be trading around that ASX three hundred level, we look forward to delivering
dividends to our investors probably in FY twenty six. We are in our new groups, so we have a separate tax identity, So we need to build out some franking credit first, but we'll be able to give more updates about that at our four year results next May.
Yeah great, and so you're about to go into a period of blackout. Do you just want to explain that to our investors and what they can expect through that period.
We have a different financial year. Ours is from a first April to end of March. Who our first half results come out in November, So we go into a period where I won't be able to talk to you song yeah and give you any information and we'll stop communicating with the market whilst we prepare the half results.
Thanks so, and hopefully the voice gets a chance to recover.
Yes, indeed, that's probably why I need blackout. But we've been unundated with requests to speak and to share the story and to share our growth plans.
Is there anything else in the future trend space that you want to discuss before you count anymore for a few weeks.
The other way we're using AI is within the business to make it more efficient. So, for example, we're using AI to summarize up our case notes for when a person calls up and wants to inquire about changes or anything like that. We use AI to summarize it so when you call back next time, you don't have to restate your whole story again, which we all know is
just a big pain. So you know, that means that the time to resolution is much quicker for a customer and our average you know, handle time as quick as well, So we're using AI for efficiency. Another key trend is servicing. Obviously, we have twenty four seven servicing, so you can call us at any time and we know will help you
out wherever you are in the world. But increasingly we're using WhatsApp, you know, every social form of communication to communicate with customers because it turns out Generation Y and Z don't really want to talk to us. We're not taking it personally, they just want to communicate via messaging. So you know, that's a big trend we're seeing in terms of servicing as well.
So just before we wrap up any travel hacks.
Book early and plan, Like, the pricing right now for next year is really for going overseas is phenomenal. It's the first time I've seen such sharp pricing in four years. It's look bad. And my last travel hack this is My favorite is make sure you always have two sets of toilet trees. I have one set of Melbourne where I go to work. I have one of toiletoes in my suitcase for when I'm traveling, and I never pack it. It's always just there, ready to go. Say so much time?
Yeah great?
Well, thanks thanks for joining us today, Katrina and letting us peak under the hood of it around what's been going on with weibjen and how you see the future and how that might evolve. So for everyone else, thanks for joining us and thanks for tuning in. You can watch Shared Lunch on YouTube or on our favorite podcasts on your favorite podcast app, leave us a rating and comment about what you'd like to hear around next. So thanks again Katrina for joining us and all the best.
You're so welcome. Thank you.
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