Web travel group tightens its belt

By PETER GRIFFIN

Travel web portal Travel.co.nz faces further cost slashing and job cuts as its Australian parent tries to stem losses across the group's transtasman business.

Travel.com.au has posted an ebitda (earnings before interest, tax, depreciation and amortisation) loss of $778,000 for the three months to September 30, attributing half of that to the struggling New Zealand operation.

Despite Travel.co.nz's high level of exposure from its sponsorship of the television show that carries its name, Travel.com.au chairman David Williams said brand awareness had not translated into website traffic and online bookings.

"In Australia when we get exposure it sticks to the website, in New Zealand it doesn't quite stick as well."

The New Zealand operation was coming to grips with the departure of founder Greg Southcombe and the removal of travel brokers from the Travel.co.nz business model.

Previously brokers had supplied the operation with tens of millions of dollars in revenue, but it was unprofitable business for Travel.co.nz.

Administrative and accounting functions will be moved to Australia to cut costs. It was unclear how many jobs would be shaved from the New Zealand operation as a result.

Williams said New Zealand was 12 to 18 months behind Australia in terms of buying travel over the internet. Even in the Australian market, business was sluggish.

September's revenue had been particularly disappointing, he told shareholders at the company's annual meeting in Sydney this week.

Further cost cutting would reduce spending on search engine technology Travel.com.au is developing with ticket booking company Amadeus and a review of IT costs.

Williams said the company would maintain its New Zealand presence, however. A New Zealand version of Lastminute.com would be launched within a couple of months and would focus partly on selling package holidays to Australia.

The quarterly loss followed a loss in the year to June 30 of $6.8 million.

Travel.com.au's chief financial officer and company secretary, Warren Hart, will leave the company at the end of this month.