boss hints at European shift remains committed to its full service online travel agency model, although chief executive Ian McCaig has acknowledged that the “sweet spot” is hotels.

“Hotels are the most underpenetrated online segment in Europe, it’s the fastest growing and the yields are pretty good,” he said.

McCaig was speaking at the Captains of Industry lunch at travel trade show World Travel Market in London. He explained that’s travel business is fairly equally spread across all its categories – flights, dynamic packages, hotels and tour operator packages.

He added: “You have to manage the product mix relentlessly to concentrate on where the yields and margins are. You’re not going to make great profits from seats, but we need it because our customers expect it.” operates in 11 European markets, with the UK accounting for around half its business.  He also told guests that its lifestyle products such as theatre tickets, days out and festivals, accounted for around one in three transactions but a significantly lower percentage of revenues.

Revenues  during 2009 are ahead of 2008, McCaig said. For 2010, he expects consumers, particularly in the UK, to remain cautious.

McCaig said the company will continue to focus on “simplifying the business and taking costs out”, although he hinted there could be opportunities on continental Europe, “where we might invest proportionately more than we have done.”

He suggested  that the Italian, Spanish and German source markets still had “30%, 40% growth potential” whereas the UK, Nordics and France are mature.

More information:

* WTM: Find the customer’s “sweet spot” to generate sales (Travel Weekly, November 10, 2009)

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