Thursday, March 26, 2009

Profit for AsiaRooms, losses at LateRooms???: Reading the TUI Online Destination Service Groups results announcement

Early this week I posted an interview with AsiaRooms Head of Marketing John Fearon. Was AsiaRooms first major press comment post their acquisition by TUI (if ever). It was a deliberate part of Fearon's plans to bring AsiaRooms out from behind the secrecy curtain. Co-incidently, yesterday parent company TUI published their results for Q4 2008 (ie quarter ending 31 Dec 2008). In the announcement (pdf here) there is a small paragraph on the Online Destination Services group at TUI (ODS) which includes AsiaRooms and UK stable mate LateRooms and the Spanish based Hotelopia.

The paragraph is a mixed story. It says that the ODS group is profitable - generating £1.1m for the quarter - but this is down from £4.2m from last year. And the business delivered £1.2m in synergies. If I read this right I see two things. Firstly that without the synergy cuts, the combined ODS business would have made a loss. Secondly Fearon stressed that AsiaRooms is profitable. Assuming he was referring to the business of AsiaRooms rather than the whole of the ODS group (John correct me if I am wrong), then it likely means that either or both of LateRooms and Hotelopia have slipped into the red and are losing money. If all true, then this provides further evidence of the pain in Europe right now.

Here is an extract of the entire paragraph (again full pdf here).
Online Destination Services Sector
"ODS reported an underlying operating profit of £1.1m, down £3.1m on the prior year (Q1 08: £4.2m). The sector delivered £1.2m of synergies in the quarter (Q1 08: nil) from the integration of the former TUI and First Choice businesses in our incoming agency division, primarily in Spain. The offline businesses, however, suffered from a decrease in volumes in the quarter due to the capacity reductions implemented by tour operators. Additionally, the agencies in Euro destinations experienced a reduction in excursion revenue due to the strengthening of the Euro against Sterling and as a result margins tracked behind last year. The online businesses continue to perform well."


Anonymous said...

Tim your going to get me into trouble.

I don't know the specifics about the accounts of the other ODS companies. I am also not aware what has been written off etc.

I have heard that things are tough in Europe (I guess this is across the board for everyone) at the moment so this could be a reason for the lower profits.

I know that Asiarooms is doing better than in the past (I can't give details).

One day Asiarooms will be a bigger line item and then you can get all the financial information on us.

Tim Hughes said...

@john - thanks for quick response. Appreciate the challenges in saying more.

Anonymous said...

generally I think profitability reports dont give the whole picture.

for example a company could become profitable but only after having a significant drop in sales and cuts in spend.

guess depends what funding is available and if the burn is deemed worth it.

but if a model is not working so well (i.e. low repeat user rate) then perhaps thats when budgets get cut, sales drop but profits could rise.

so i reckon good metrics to determin long term value/profits are growth in direct url traffic, conversion rates, repeat user rate and value of each customer PA.

Anonymous said...

Hi Steve,

I have to agree on the accounting profit stuff. Your 100% right its about building your long term brand and customer base.

From what I can see in terms of third party reports (Alexa/Hitwise etc.) the Asiarooms brand is doing well at increasing its exposure in Asia.

Can't comment on the other players in the market maybe Tim can give us an analysis on how he thinks things are going?

Over to you Tim.

Anonymous said...

I think I should also point out that ODS does not only compromise of the online businesses.

Anonymous said...


Interestingly it includes the HotelBeds business too...

samdaams said...

It includes a whole pile of companies. Kind of hard to get a complete list as it's tucked away in a drop down, but here's the list as taken today (26/3/09) from ~ Acampora Travel ~ Aeolos Liban S. A. L. ~ Aeolos Malta Ltd. ~ Aeolos Travel LLP ~ African Travel Concept ~ Aitken Spence Travels Ltd. ~ all4ships ~ AsiaRooms ~ Bedsonline ~ Danubius Travel Agency S.R.L. ~ Expomundo ~ First Choice Meeting ~ Flexi Conferences ~ Gulliver Travel d.o.o. ~ Holidays Services S.A. ~ Holiday Travel Israel Ltd. ~ Hotelbeds ~ Hotelopia ~ Inter Cruises ~ ~ Medetours ~ Meridian ~ Mex-Atlántica Tours S.A. de C.V.
no link ~ Pacific World ~ Pollman's Tours and Safaris Ltd. ~ Ranger Safaris Ltd. ~ SummerTimes Group - Manahe Ltd. ~ Tantur Turizm Seyahat Ltd. ~ Travco Dubai L.L.C. ~ Travco Group Holding S.A.E. ~ Travco Oman L.L.C. ~ Travel Scotworld
no link ~ Triaena ~ TUI Bulgaria OOD ~ TUI China Travel Co. Ltd ~ TUI Dominicana S.A. ~ TUI España Turismo S.A. ~ TUI Event Management ~ TUI Hellas Travel and Tourism S.A. ~ TUI Portugal Ágencia de Viagens e Turismo S.A. ~ TUI Service AG ~ Tunisie Voyages S.A. ~ Turismo Asia ~ Ultramar Express ~ Ultramar Express Event Management ~ Ultramar Express Transport

Tim Hughes said...

@Anon and @Sam - thanks for digging into the members of ODS - will do another post.

Anonymous said...

Oh and don't forgot TUI's companies that are producing Made for SEO sites:
links to > . Owned by TUI.

Murree Hotels said...

I think I should also point out that ODS does not only compromise of the online businesses.