Online travel business Lastminute.com Group is turning its attention to potential deals outside of its core European market as it considers further travel acquisitions to help boost growth.
The company, which has been pretty active in the M&A market in recent years, buying up both small and medium-sized companies, is looking at “potentially entering the Asia-Pacific market in terms of the flight business” Sergio Signoretti, chief financial officer, said on an earnings call on Thursday.
Another possibility is on the metasearch side, to sit alongside the Jetcost and Hotelscan brands. Signoretti said these wouldn’t necessarily be big deals but would primarily serve to “expand our geographical footprint out of the markets where we’re present today.”
With the company improving its earnings performance over the first-half of its 2019 financial year — pre-tax profit rose 938 percent — Signoretti suggested that the company could look at even bigger transactions in the future.
“Of course with this performance we are in a position … [to] look potentially in the medium to long term … of doing something bigger in a market which in our view will go towards further consolidation,” he said.
In 2015, the then-named Bravofly Rumbo Group completed a deal to buy Lastminute.com, it then took on the latter’s name.
Package Holiday growth
Lastminute.com has previously talked about wanting to take on the established European tour operators with their own package holiday product.
Much of the growth is coming through dynamic packages, where customers combine their own flights and hotels, as opposed to a traditional package, which a company puts together itself.
Revenue in this sector rose 48 percent to $44.1 million (€39.4 million) during the first half of Lastminute.com’s financial year and the company still feels there is substantial room for growth in this area.
“The package market is quite significantly shifting from the traditional tour operator to the online tour operators,” Signoretti said, with the change being more evident in the likes of Germany and the UK.
One of Lastminute.com’s most eye-catching moves in recent years was to partner with travel behemoth Booking.com to power the latter’s package holiday offering in certain markets.
Although this is only a minor part of the company’s revenue growth, talks are taking place with other players including Kiwi.com.
Lastminute.com’s package holiday push over the last couple of years came at a time of declining revenues in its core flight business.
Plenty of online travel agencies have been looking to diversify away from flight-only sales, toward higher margin products.
However, in something of a surprise — and after three years of decline — flight revenue actually grew again in Lastminute.com’s first half.
“We have recovered our performance thanks to a comprehensive reorganisation and major changes implemented to the business model,” said group CEO Fabio Cannavale. A significant part of this improvement came from the upselling of ancillary products in addition to the flights themselves, a technique many airlines are using themselves to increase revenue on a per passenger basis.
In a tricky European market, Lastminute.com enjoyed a pretty impressive start to the year. Pre-tax profit rose 938 percent to $21.1 million (€18.9 million). Mostly this was down to increased revenue, up 19 percent to $192 million (€172 million).
“After the excellent performance from our first quarter, results from our first half confirm a positive trend and reports figures significantly stronger than the same period last year, and even well ahead of our initial expectations for the current period,” Cannavale said.
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