Media Watch: the Australian puts a "c" in Webjet

Quick media watch moment his morning. Front page of the business section of the online version of the Australian newspaper contains a piece speculating on Fairfax media (owner of newspapers that compete with the Australian) might be considering a move on Webjet (#1 online air agency in Australia). Unfortunately the front page sub-editor has stuck a "c" in Webjet and is running the headline "Fairfax had Webject on board" linking to story headlined "Fairfax held Webject stake last year". Second photo below and full story here.

PS- as regular readers know I am probably the last person who should be pointing out typos.

The BOOT at Asia Pacific Aviation Outlook Summit 27-30 July - Sydney

I will be speaking this week at the Australia Pacific Aviation Outlook Summit 2010 at the Four Seasons hotel in Sydney. The conference runs July 27-30. Day three of the conference (July 29) is the "Travel Technology & Distribution day".

Also speaking on the Tech and Distribution day are:

• Richard Noon (CEO Webjet);
• Claire Hatton (Head of Travel, Government and Local for Google);
• Steve Sherlock (MD Oodles);
• Shashank Nigam (SimplyFlying) and
  
• Martin Symes (CEO Wego)

I am in two sessions

Solo at 235 pm on

The role of airlines and distributors in the “inspiration funnel”

* What are the four phases of online travel?
* How consumers get from an idea to going away and making a booking
* The role of airlines, tourism authorities and OTAs in the inspiration funnel

and on a panel at 440 on

Leveraging social media to create customer interaction and brand awareness

* Making better use of existing channels vs investing resources in newer distribution avenues
* How well do suppliers understand the value proposition of social media?
* Brand management through social media
* Integrating User Generated Content into the booking path

Hat tip in advance to Martin Collings of the Shearwater blog who first introduced me to the role of airlines in the bow tie/inspiration funnel.

Webjet to relaunch hotels with a GDS backed retail model. Three reasons why I don' think this is the best plan available

Webjet are having a great time selling domestic air in Australia. As we have discussed before their tech leadership in developing the Travel Services Aggregator back in 2004 enabled them to sell multi-carrier domestic air including low cost carriers before anyone else. Even though other sites now have similar functionality, Webjet continues to enjoy customer loyalty and growth (despite charging dramatically higher fees per booking).

The company has made a number of attempts at diversifying their
revenue with land product. In mid 2003 they launched Bookabed as a standalone hotel brand. In 2006 they revamped the product under the new name Lotsofhotels. Then in June 2008 they announced plans to take Lotsofhotels onto the eBay platform. Unfortunately none of these efforts have developed traction in a very competitive market.

In their recent results they announced the launch of new hotel product called "Stay and Pay" (Travel Weekly story here). This new product moves them away from merchant sales to the retail model (consumer pay at the hotel, Webjet collects commission from hotel). They are launching two twists on the retail models you see from big players like Booking.com and Venere. Firstly there is no negotiated inventory. The inventory is drawn from the publicly available rates distributed through a GDS feed from Travelport. Secondly there is a service fee of $10 per booking charged up front by Webjet.

I like the fact that Webjet are trying hotels again. Fees on air make up 97% of their operating revenue (just down from 98% last year). They need to have other revenue streams to compete with packaging experts Expedia and Zuji (Travelocity) and the Wotif group owned air intermediaries Travel.com.au and Lastminute.com.au (not to forget the Orbitz owned hotel only players HotelClub and RatesToGo) [disclosure]. That said there are three reasons why I don' think this is the best way to go about hotels for Webjet:

1. Webjet will struggle for Rate Parity: The GDS companies (Travelport included) have done an admirable job working with the Chains and some independent properties to secure rate parity through GDS distribution. By that I mean working with hotels to have the rates that are loaded in the GDS be on par with the negotiated rates provided to the OTAs. However the rates in the GDS are never cheaper and by charging a $10 booking fee, Webjet will end up with pricing that is almost always more expensive than any other channel. There will be a convenience factor for consumers but this will be at the margins compared to the consumers who will be turned away by the higher price on Webjet;
   
2. Webjet will not have access to important Inventory Types: Again the GDS companies have worked hard to expand the range of hotels and properties available. However there is still a bias towards chains and a bias towards geographies with a history of GDS distribution. This means Webjet will be missing important independent properties and have less coverage in the Asia Pacific, Latin American and Middle East regions than the negotiated hotel agencies and OTA competitors; and
   
3. Webjet will miss out of the the best Specials and Promos: In this "year of the deal", hoteliers are providing deals and promos the likes of which have not been seen since 9/11. Most of these come with conditions, specifically a range of cancellation options ranging up to non-refundable. The GDS is not able to support this functionality as well as the negotiated inventory providers. Means that many of the great deals (especially last minute ones) will not be in the feed accessed by Webjet.

I can understand why Webjet went down this route. It would be very expensive for them to build a hotel contracting team from scratch. Impossible in fact if they wanted to gain coverage outside of Australia. Therefore they need to work with partners to access inventory. However my recommendation would be to work with an inventory provider with negotiated rates rather than the GDS. [disclosure - I work for a company that provides negotiated hotel rates]. It will provide them with a fix to each of the issues above.

The new Stay and Pay product is due for beta-launch today (18 Aug 2009). Will put in a functionality review post later.

Update - make sure you check out the comments where Richard Noon (Webjet CEO) puts his side of the story

Update 2 - I thought of one more reason why this product won't give consumers as good an experience as a negotiated provider will. The room type description and hotel content on the GDS is not as clear or attractive as those from a negotiated provider. Here is an example of a room type for a Sydney hotel in a GDS " PREMIER ROOM CITY VIEW 1 QUEEN OR 2 SGLSNON SMOKING LCD TV HI SPEED INTERNET FOR A FEE".

PS - last year at TRAVELtech Webjet CEO Richard Noon gave his estimates of the turnover of the various Austrlaia online air intemediaries.

Cheapflights.com.au launches in Australia - but this is not meta-search as it should be

It is supposed to be interesting when an international online travel company launches in the land of the barbecuing shrimp. So here I am on staycation leave quietly reading my newsfeed and blog email address when I spot care of m-travel and an email from Steve Sherlock of Oodles that "Cheapflights have launched an Australian and New Zealand version of their site". I should be excited by an international launch in Australia but Cheapflights is not exciting for two reasons.

Firstly, as I said back in July 07 when the rumours first started of Cheapflights coming to town (where 2008 was the planned launch date), this market (online air in Australia) is already too crowded for a domestic market with 2/3 carriers. OTAs like Webjet, Travel.com.au (owned by Wotif), Flight Centre, Expedia, Zuji (Travelocity) and Bestflights and regional meta-search player Wego (part owned by News Corp) are fighting for scraps left over by the online air dominance of the major airline websites (Virgin-Blue, Qantas and the Qantas owned Jetsar). Granted those scraps are getting bigger and bigger but still this is not an easy market to enter. Secondly, the Cheapflights product is simply not good enough to be of value to the consumer.

For those that don't know, Cheapflights is a quasi meta-search company started in the UK way back in 1996. Even describing them as "quasi" is generous because to me the hallmark of a meta-search business is an integrated display of up to date results in one place. The UK version of Cheapflights has the integrated display but the results are not up to date. Have a look at this extract from a London to Paris search

Notice where it says "updated 9 minutes ago" next to the BA quote and "updated 2 days ago" for ebookers. Also have a look at the URL for the page

It is a static landing page - http://www.cheapflights.co.uk/flights/Paris/London/ - rather than a dynamically generated page based on the timings of my specific search. The results are not timely or up-to-date. I clicked on a few of the links and they ended up on either dead search pages or some other destination page where the results did not match the search terms. In short the UK version Cheapflights - the oldest and most established version - does not work on a stand alone basis nor meet the minimum criteria for a meta-search player.

The Australia version of Cheapflights is even worse. It may be just early days for the product but the AU version is many steps behind the UK product which itself is steps behind competitors Kayak and TripAdvisor.

To give them some due, meta-search in Australia is not easy. As I discussed here in a Webjet vs Wego post (another Steve Sherlock tip) it is has proven very difficult to facilitae multi-carrier domestic meta-search in Australia. Wego has tried a work around (again go back to this post for more) but Cheapflights are not even trying. Have a look at this shot below of Cheapflights.com.au

This is the results of a search of Sydney to Melbourne. Rather than being presented with a set of even un-integrated (or disintegrated if you prefer) results I am given four options, four different websites that I can click on. Each click generates a new pop up with search results from the named party. If I want to do what meta-search is supposed to be for - comparing multiple sites - I have to open all four sites and looked at the results one by one. In other words do exactly what we used to do before meta-search came along. In some other words, it adds no value to the standard surfing practices of a regular internet consumer. In some more blunt words, next to useless.

In truth I don't think even Cheapflights think of themselves internally as a meta-search company. They target more of their effort and energies in their Travelzoo style Hot Travel Deals newsletter. Am undecided if there is value here,

Either way I am not predicting success for this product. The product in its current form adds little to the market and the competitors have more money to spend on marketing.

Told you I would get tough again? Am I being too tough?

Webjet vs Wego: sometimes an OTA is better than meta-search

Steve Sherlock of Oodles sent me me a email pointing out a very interesting quirk that can give OTAs a functionality advantage over meta-search. Typically I would have thought that top notch meta-search are going to be better at delivering customers to the top fare combinations versus OTAs. The OTAs would have the advantage in packaging, customer rewards, content and community and other retail elements but that meta-search would have the lead in the search and user friendliness.

But in the Australian domestic market the airlines have structured their fares in such a way that they are very user unfriendly for meta-search. The results list is full of all the fares you would want to see on a typical Australian domestic city pair (say Sydney/Melbourne) but you have to book the outbound and return separately. There are two click offs prompted by the metasearch. Here is a shot from Wego to show you what I mean



Clearly this is something on the airline side, not within Wego. Meta-search results are dependent on their source material. Since the vast majority of domestic in AU is sold as one way segments then a meta company needs two searches and two separate results to produce a fare. The bulk of long haul is still defaulted to return so they have different value. I suspect this may even be a deliberate limitation that the airlines are using to drive customers back to the direct sites of Qantas, Virgin-Blue, Jetstar and Rex.

Webjet are the largest Australian OTA (by gross bookings). They have found away around this problem through the design of their underlying technology (called the TSA or Travel Services Aggregator). They are able to capture all of the segments from multiple carriers. The customer's card is collected once and then sent to all of the points of charge. For a multi-carrier fare this may mean that the card is charged three times (once by the first carrier, once by the second and a third time by Webjet for the fees) but the consumer has only had to enter the details once. In the battle between Online Agents and Meta-search, when it comes to domestic Australian flights it seems to be advantage OTAs.

Anyone out their from Wego or Webjet care to comment - would love to do a follow up post with your views? Anyone else know of similar consequences in other domestic markets?

Update - please read the response in the comments from Ross Veitch, Chief Product Officer at Wego.com

Disclosure - in the past I provided some consulting services to Wego. The work is finished but I remain a long term fan.

TRAVELtech: Webjet CEO Noon calls the AU market sales of Expedia, Zuji and more

Final speaker of the first session was Webjet CEO Richard Noon. Had a great slide that I was able to quickly copy down to share with you. He showed his estimation of the annual Gross Bookings of major full service OTAs in Australia. Here is that graph as I copied it.

If you are interested in the Australian turnover of Webjet, Expedia, Bestflights, Zuji, Lastminute.com.au, travel.com.au and online for flight centre check it out.



He prepared a formula using comparative page views and PhoCusWright estimates of the Australia online travel market. He took the page views of each of the players locally and then apportioned gross bookings from the PhoCusWright estimates of total Australian OTA sales.

Later during the panel session these numbers were put to each of the bosses of Zuji and Expedia.

Expedia AU MD Arthur Hoffman dismissed the $80mm estimate for Expedia saying that this was a very pessimistic view. That actual number was "far north of that".

Zuji CEO Scott Blume - "took the fifth" when asked about the $30mm estimate. Saying that they do not break out their bookings.

Ryanair hates Kayak - promises to cancel tickets booked through meta-search

eyefortravel are quoting Ryanair CEO Michael O'Leary as saying that he will cancel all bookings made on Ryanair flights through meta-search. As he puts it

"We want to cause as much chaos for the screen scrapers as possible"

This news comes a week or so after the coverage of a looming issue between AirAsiaX (long haul offshoot of Asian low cost carrier AirAsia) and Webjet (Australian based OTA that uses an aggregation engine to combine non-GDS available fares) over Webjet's reported intentions to screen scrape for access to AirAsia X fares.

I understand the argument of the carriers here that meta-search or aggregated search based engines end up pounding the websites (or rez systems) of the carrier, especially where the connection is based on a robot/screen scrape rather than a direct connect. But on the other hand when an airline opens itself to the internet and search engines and enjoys all the benefits of being indexed and discoverable by consumers, they cant then complain when people build mechanisms for more effective forms of search.

In the case of Ryanair, I am sure they are down on their knees and grateful to the SEO leprechauns that they are the number one for organic search result for "cheap flights london dublin" (see shot below)



To then turn around and complain about other search players wanting to build indexes as well is a bit like trying to have your un-fetted search cake and control it at the same time. This is especially true if you are a low cost airline. If as an airline you believe that your prices are the best and are the definition of your product then you should embrace aggregated/meta-search as it will prove your case every time. Seems like O'Leary now likes Expedia but hates Kayak.

BTW - what is Etihad doing bidding on Google.com.au for the keywords "cheap flights london dublin". I know the UAE airlines seem to have unlimited marketing budgets and an insatiable desire for growth but surely the clicks from this are a complete waste of money. Whoever their SEM agency is needs to be roused from the marketing conference bar room and put back to work.

Update - if you want to hear a different view check out Timothy O'Neil-Dunne's post on the same subject "Ryanair clams down on Screen Scrapers - Agents too?"

Winner of ticket to Eyefortravel Asia Pacific

I have been running a competition for one free two day (bronze) delegate pass (normally A$1,395) for a lucky BOOT reader to the eyefortravel Sales & Marketing in Travel Asia Pacific conference at the Shangri La Sydney on 29 and 30 July.

The competition was for the best question in the comments for a conference speaker.

Prize Winner

Jonathan's question for Martin Symes of Wego (see below)

First Reserve

Gath's question for Andy Conroy of Lonely Planet (see below)

Second Reserve

Adam Vance's question for Richard Noon of Webjet (see below)

What Next??

Can Jonathan and Gath please send me their contact details to timsboot [at] gmail [dot] com? If I hear from Jonathan by noon Sydney time Wednesday then he wins the prize. If not it goes to Gath. If I have not heard from Gath, then it goes to Adam (Adam I have your details).

I need your Name, Job Title, Company, Email and Phone numbers.

Here are the questions.

For Martin Symes of Wego With price parity increasing in popularity, do they perceive the decreased volatility in accommodation pricing as a threat to their business model, and if so then how do they plan to react/adapt

For Andy Conroy of Lonely Planet As free downloadable city guides take off (eg for iPods, iPhone, Amazon kindle etc) how is LP planning to keep up production on their guides as revenue from book sales diminish.

For Richard Noon of Webjet Due to the current economic climate in the US, we are seeing a number of major online travel agents rolling back the plethora of fees they charge in a bid to attract travellers away from the main airline websites. Given that comments in the past have indicated that up to 60% of your revenue comes from these types of fees/charges - what impact would this have on your business model and how could you mitigate this potential risk moving forward as the economic climate cools in Australia and consumers become more aware of how to "beat the system"? Would you agree that it's not a matter of "if" but "when"?

WHOOT: deal done, Wotif to do flights, David Clarke of Webjet is relieved

FINAL WHOOT series update - WHoever Owns Outright Travel.com.au

Travel.com.au, Lastminute.com.au and Lastminute.co.nz are now officially owned by Wotif.com. Deal closed today. Interesting tid-bits of news around the closing of this deal

• In TravelWeekly Wotif.com CEO Robbie Cooke announced that Wotif.com would have air functionality within six months. I am still trying to figure out what it means for Wotif as a brand to try to shift to air. It is well known that efforts by Expedia's Hotels.com to sell air have been a complete failure. Wotif itself tried to sell land packages back in 2004/5 but found that did not work. I am not able to think of another example of a land product online travel brand successfully adding transport (let me know if you can);
  
• From the same article - planned integration savings will be $1.5mm. I don't think that is enough to indicate a shut down of the Travel.com.au Sydney office (Wotif is Brisbane based) butit is big enough to presumably make a few people in that office a little nervous; and
• In the Australian Webjet MD David Clarke sad he was relieved to have missed out on buying Travel.com.au. Of course one would say that if one was the failed bidder but he is right when he says that the integration efforts that confront Wotif are going to be challenging and by no means guaranteed to work.

Book Review: 50 Great e-Businesses and the Minds Behind Them

Is turning into a bit of a book week here at the BOOT. Recently we had the launch of the Tips from the T-List book (download your copy here). Now I have (finally) found time to read and review a book sent to me some time ago called "50 Great e-Businesses and the Minds Behind Them" by Emily Ross and Angus Holland. Emily was kind enough to send me the book many months ago and I have been slow to get to it. But having read through it now I am very glad that I made the time and wish I had looked at it sooner.

The book aims is to provide start-up advice, management advice and tips on innovative thinking techniques through an analysis of the background and numbers behind top ecommerce companies and service providers. The challenge with attempts at writing profile books on online companies is that the stats and figures are out of date months before the book is published. Ross and Holland have managed this limitation very well by stressing the history and thinking behind each of the companies chosen rather than the numbers. This focuses your attention on the genuinely interesting stories behind successful companies and the entrepreneurial insight from key players rather than the temporal accuracy of the numbers.

For example in the entry on YouTube I was caught up in the story of the founders, fund raising and feature changes and therefore did not care that the intro lists the start-up costs as $3.5mm rather than the total amount raised by YouTube which was $11.5 ($3.5 first round, $8 in the second).

The second challenge in a book like this is to pick 50 companies. Holland and Ross also had to find a balance between Australian and International companies. That have met this challenge by using the word "Great" rather than "Best" to define the entrants. That lets them get away with some quirks such as including the small scale independent property service Stayz (that Fairfax bought for $12mm) on a list that includes super-heavy weights Google, eBay and Amazon and start-up A-list 2.0ers like Facebook, Digg and Twitter.

A number of travel players get a mention - Webjet, Stayz, Kayak (no Sidestep) and Wotif.

Book is well research, with Holland and Ross gaining access to inside knowledge on every company profiled. This made the story behind the companies profiled intriguing as well as being well written. You can get a copy here on Amazon "Available where all good books are sold".

Disclosure - was provided with a copy of the book at no charge but was not obliged to profile positively or at all.

WHOOT: Another step towards Wotif.com winning the race for Travel.com.au

WHOOT series update - WHoever Owns Outright Travel.com.au

The Offer period for Webjet's run at acquiring Travel.com.au has come to a close and according to the filings this week Webjet has not received any significant acceptances. Webjet ended up with a "relevant interest" in just 20.53% of the stock. Under the pre-acceptance agreement following Webjet's original bid Webjet acquired "relevant interest" in 19.8% of Travel.com.au's shares - being a right to get 19.8% of the stock from lead shareholder Co-Investor if some conditions were met. Those conditions were not met so the pre-acceptance agreement is terminated and the stock stays with Co-Investor. Presumably the gap between the 19.8% and 20.53% in the filing is explained by a small number of acceptances of Webjet's offer.

The Wotif.com offer period closes on December 17 (here is the TVL board recommendation of the Wotif bid - also called the Target's statement).

So unless Webjet (or someone else) makes another bid then they are out of the running for Travel.com.au and we can presume that it will be all quiet on the TVL front until Dec 17. Or can we...?

WHOOT: Webjet bidders statement - 10 ways of saying we are offering more money

WHOOT series update - WHoever Owns Outright Travel.com.au

The Wotif Bidders statement is out for Travel.com.au (TVL). This is the official statement passed on to all shareholders of TVL from Wotif indicating why shareholders should accept the Wotif offer. There are ten reasons listed but as predicted the main one is words to the affect of "we are offering a lot of money, you'd be crazy not to accept". It came out a few days after the TVL board had categorically rejected, unrecommended, threw out and junked the Webjet offer with a target 's statement headed "Do Not Accept The Webjet Offer" (in big capitalised red lettering).

What AOT will do in response to the Wotif Bidders Statement is still the great unknown in this deal.

WHOOT: AOT climbs to 19.9% and Webjet claims it is back in the hunt

Time for another The WHOOT series update - WHoever Owns Outright Travel.com.au.

Long term Travel.com.au (TVL) shareholder and director Daniel Droga has sold more than 9% of TVL stock to the "quiet accumulator" AOT - who can now claim 19.9% of the stock. This is not enough (yet) to completely end the Wotif charge for TVL ownership as Wotif have made it clear tha they would be happy with 75% - bit it is close.

Webjet have also come back swinging claiming that with recent increases in Webjet stock value, the Webjet offer is now worth more than the TVL Board recommended Wotif offer. We are still yet to see the official Wotif bidders statement.

WHOOT: Webjet are out - it is all over bar the AOTing

It seems smooth sailing now for Wotif in their chase for the Travel.com.au ownership title. The Travel.com.au board have backed Wotif, Wotif have their hands on 19.5% of the stock and Webjet have just announced that they are pulling out of the running. Webjet MD David Clarke is quoted in Travel Today as saying

"We wish Wotif the best. Time will tell whether the value Wotif attributed to the business is prudent. We did not believe it was for our shareholders but Wotif’s shareholders and board may have different perspectives."

This does not mean that we at the WHOOT are calling it all over in the battle for WHoever Owns Outright Travel.com.au. There is still the matter of AOT's shareholding and if this battle has taught us one thing it is that ain't over 'til its over.

WHOOT: Wotif takes the lead, gets backing of the Board and buys out netus

Wotif has taken the clear lead in the battle for WHoever Owns Outright Travel.com.au (WHOOT). Filings today confirm not only has the Travel.com.au (TVL) board come out and unanimously recommended the Wotif bid but that Wotif is already a substantial shareholder having bought out venture firm Netus' 19.5% stake as well as holding commitments from executives for a further 9.4%.

Wotif have amended their offer to two tiers depending on whether or not they gain 75.1% or 90% acceptance. Presumably a tactic to both entice AOT to sell their almost blocking stake and provide protection if they don't AOT engaged. At 75.1% they have more than enough for control.

Range in valuation of Travel.com.au and Lastminute.com.au is thus $55-57mm depending on which threshold they reach. Market cap before the announcement was $61.4 mm so in theory is a discount on market. But in reality this is bid is almost 40% above the price range prior to Webjet's first bid.

What will Wotif do with the business? Could we see the amusing situation where they maintain both the Lastminute and Wotif brands but with Wotif as the last minute brand - focusing on only 28 days out - and Lastminute is the "full service" brand that services 365 days a year. Air is clearly not the priority here (unless I am missing something).

Travel Today have the story here as well.

WHOOT: Travel.com.au Board drops support of Webjet but not yet fully in favour of Wotif

The WHOOT series update - WHoever Owns Outright Travel.com.au - continues.

The Travel.com.au have officially advised against accepting the Webjet offer but have not gone so far as to throw support behind the Wotif offer.

Two announcements out in the last half an hour. Webjet published their announcement first saying that it has heard from the Travel.com.au board that the Implementation Agreement is terminated. Then moments later news from the Travel.com.au Board confirming the termination and announcing that they

"change its unanimous positive recommendation for the proposed offer by Webjet .....[and] have withdrawn their support for the Original Webjet Offer but are continuing to consider the revised proposals from Webjet and Wotif and have instructed TVL’s advisers to explore the terms of the revised proposals with Webjet and Wotif."

Again shareholders are urged to do nothing until they hear from the Board. So we wait on the Board - or maybe for another round of betting?

WHOOT: Webjet pleads Wotif seethes

The WHOOT series update - WHoever Owns Outright Travel.com.au - continues.

Webjet has "stepped up" in the battle according to the SMH with a bidder's statement. A bidders statement is like the case/argument that a bidder puts to the shareholders of a target to convince them to sell. Usually it says something like - "we are offering a lot of money, you'd be crazy not to accept". This statement from Webjet is not like the standard. It instead says "I know we are not offering as much as the other guy but you should accept our bid anyway because you will become an owner in Webjet". Is a good story but nowhere near a killer blow.

Wotif on the other hand is a little perplexed. CEO Robbie Cooke is quoted in TravelWeekly's TravelToday as saying that he is a "bit frustrated" that the Travel.com.au Board have kept him waiting by asking the shareholders to do nothing until the Board makes a recommendation. Says Wotif are planning their own bidders statement (though he is not in a rush) which I presume will be more along the lines of "we are offering the most money".

So, we wait on the Board.

Introducing the WHOOT sub-blog - WHoever will Own Outright Travel.com.au

Over the next few weeks it is inevitable that the pages of the BOOT will hijacked at times by the WHOOT (WHoever will Own Outright Travel.com.au) as the battle for Travel.com.au between Webjet, Wotif and AOT (with more to join?) reaches its conclusion. Will try to keep you as updated as possible.

Latest just before the weekend break was the Board of Travel.com.au advising shareholders to do nothing (ie accept neither offer) while the Board considers what advice to give. No date for a recommendation to be delivered.

Seems the Board did have time to approve the issue of 175,000 shares to employees under the employee share program. Just in time.

The advice also contains a summary of the agreement between Webjet and Travel.com.au stemming from the original Webjet offer. Highlights of the Implementation Agreement" and the "Pre-bid Acceptance Agreement" include:

• Non-solicitation obligation: preventing Travel.com.au from looking for other bidders. Indicates that Wotif and AOT are acting independently of any prompting from the Board or TVL execs. This means Wotif and AOT have relied only on public data for their bids;
• Matching Rights: Webjet gets the right to submit counter-proposals to bids from others but the there is not absolute obligation on the Travel.com.au Board to accept a Webjet counter-proposal;
  
• Break Fee: If the Board rejects the offer from Webjet then Webjet is entitled to a $250k break fee (unless "the recommendation is withdrawn on the basis that an independent expert appointed by TVL has concluded that the Offer is neither fair nor reasonable" which would presumably be able to be achieved if there is a higher offer on the table but maybe not); and
• The Webjet Pre-Bid 19.9% is not as sewn up as they would like: under Pre-Bid Acceptance Agreement Webjet gains rights of 19.9% of the stock from lead shareholder Co-Investor. However, Webjet cannot enforce this right if another offer is received, accepted by the board and Webjet does not increase its offer within 10 days.

Game on!

401 not out

Time for my "not out series" - a regular summary of the last 100 posts that I first started with 101 not out and continued with 201 and 301.

Without a doubt this recent period of posts on the BOOT have been dominated by consolidation and deals:

• Lonely Planet admitted that it could not meet the challenges of the Internet on its own and sold out a majority stake to the enterprise division of the BBC;
• Opodo shed Karavel with the story being broken by an blogger from the inside;
• TUI made a bad decision in buying asiarooms and once again search traffic predicted a deal;
• the battle for Travel.com.au (who now own the lastminute.com brand outright in AU/NZ) is not yet over with Webjet and Wotif at each others throats and AOT sitting not so quietly on the sidelines;
  
• Rakuten made some healthy profits and set itself for further expansion by selling out of Ctrip;
• the Flight Centre privatisation fell in a heap in an embarrassing way for the Flighties board;
  
• rumours flew that Priceline want Travelzoo and the comments section filled up with a debate on the merits of this idea; and
  
• we have the as yet to be confirmed rumour that TravelCLICK are about to be bought.
  

In other general news

• every media outlet there is ran a story about how bad the US air industry is prompting me to run my own series of the Airline Industry brought to you by BusinessWeek, the Legal Fraternity, Wharton, NPR, the Economist and Pizza Hut. Conclusions were that the US air traveller is stuffed and no-one is taking responsibility. In fact Marion Blakely quit as head of the Federal Aviation Authority to join the peak airline lobby group the Aerospace Industries Association;
• the T-List is soon to be a book. The BOOT submitted three stories:
• UGC vs Editorial. What's better? What's the balance? What's more 2.0?;
• Helping Airlines Stay on top; and
• the fourth phase of online travel - "too much information"; and
• it looks like Dead Herring for Red Herring.
  

and in quirky news

• one muppet shouted at two others;
  
• a lion, a crocodile and a buffalo tried to sort out their differences the old fashioned way; and
• the BOOT saved the world by defusing a jar of olives.

I hope you're enjoying reading because I am enjoying writing.

Wotif joins in the chase for Travel.com.au (updated)

Thanks to all the tipsters and commentators that added to my story on a new bidder for Travel.com.au. The mystery bidder is Australian online hotel giant Wotif.com (here is the AustralianIT story). The offer is $0.50 cents in cash or between 0.0893 and 0.1042 Wotif shares or about AU$49.8mm versus Webjet's original offer valued at $42.3mm. This is an aggressive play for Wotif. Not sure why they would want an air business but maybe they are ignoring the air part and seeing all of the value in the Lastminute.com.au business (now 100% owned by Travel.com.au). I see two main reasons why Wotif would want to bid. Either they are hoping to simply push the price up and force Webjet to spend more of their cash reserves on the acquisition leaving less for marketing. Alternatively it is proof that organically Wotif are struggling to find growth out of the Australian market and therefore need to find greater than organic opportunities within Australia to maintain valuation.

UPDATE - the Travel.com.au board have made an announcement to the stock exchange in response saying that it will review the offer and give guidance to shareholders soon but concluding that the Webjet offer is fair and reasonable. It concludes by urging sharehodlers to take no action (ie don't sell to Webjet just yet).

UPDATE 2 - Webjet is back with an increased offer.

UPDATE 3 - Wotif returns with a higher offer of its own valuing the company at just shy of $55 million. Market cap at time of this post (4 Oct 250pm) was $63.75mm. The Wotif bid notes that it values the company at 57.1% premium on TVL’s closing share price on September 5 – the day before Webjet made its first approach. Webjet’s new bid, released this morning, offers a 50.8 per cent premium.

UPDATE 3 - worth remembering that at its IPO Travel.com.au raised $52mm and shares closed the first day at $2.94. There is little to link the company now to then in terms of shareholders or management but a nice little reminder of the craziness of the dotcom boom