Ebookers is unlikely to make a profit again this year, with the economic slowdown in Europe outweighing the benefits of shifting its thirteen European businesses onto a single platform.
Recently-appointed CEO of Ebookers’ parent company Orbitz Worldwide, Barney Harford, told analysts this week that “given the difficult economic situation in Europe, we don’t expect Ebookers to meet its goal of being profitable in 2009”.
Harford is seven weeks into the role and was talking through Orbitz’ Q4 and FY 08 results. Three months ago, Harford’s predecessor, Steve Barnhart, told Wall Street in its Q3 08 call that it would be ‘more challenging’ for Ebookers to get into profit this year, given the economic situation in Europe.
When asked on this week’s call directly about the benefits to Ebookers of the move onto a single platform, Harford said that the primary focus of the project, completed at the start of this year, was “a reduction in the cost of maintaining multiple platforms.”
He also talked up Ebookers ability to present a consistent message to suppliers by working with one connectivity system.
However, he admitted that there “wasn’t a significant step-up in transaction volumes resulting from that.”
Overall, his initial impression is that “in Europe, some of our businesses are in a stronger strategic position than others. It’s tough to gain share when you are behind, especially when you are significantly smaller than the competition. We recognise that.”
The acknowledgement came in a question about Orbitz’ international footprint. Harford is looking closely at the Hotelclub business. “We see this as a global, primarily international business, run out of Sydney but with a global footprint in terms of its customer and supplier base.”
Earlier on in the call he said that any international expansion would be via Hotelclub rather than rolling out ebookers. He plans to visit Hotelclub next week, and promised an update on future calls. Its hotel product is a strategic priority, although he is aware that there is “significant competitive pressure in the accommodation-only sector”.
Another area of the business which has piqued his interest so far is the success of its dynamic packaging product in the US. “In the current environment, we are seeing a significant increase in the number of packaging discounts offered by our supplier partners compared with this time last year.”
He added: “In recent weeks customers buying travel on our websites have been saving on average over $300 versus purchasing the individual package components separately.”