Dynamic packaging the future for Lastminute.com

Dynamic packaging will make up a quarter of Lastminute.com’s total transaction values in three to five years.

The prediction came as the online retailer revealed a 250% growth in the value of dynamic packaging transactions in the peak three months of summer, ending September 30.

The quarterly rise amounted to £24.5 million against £7 million in the same period last year.

Following an on-site survey in June which revealed that 65% of customers prefer independent travel, Lastminute said today: “This gives confidence that dynamic packaging will be one of the major growth products in the coming years.

“Based on current trends, dynamic packaging is on track to be at least 25% of total group transaction value in three to five years.”

CEO Brent Hoberman said: “Whilst demonstrating continued improvements in most key areas our financial performance has fallen short of expectations.

“Our acquisition strategy has given is the necessary scale to compete across our core European market but this has come at the expense of a higher cost base.

“However, the full integration of the acquired businesses is underway. We have identified significant cost savings that we will deliver in 2005.” 

The company has acquired Med Hotels, Travel Bargains, First Option, Gemstone Travel, Online Travel Corporation and the lastminute.de operations in Germany since December last year.

A “streamlining” of senior management and integration of UK marketing and production teams has led to the loss of 45 jobs and savings of £4.5 million. A further 205 jobs have gone from all centres and customer service areas generating savings of £2.5 million.

But the company had £5.4 million in redundancy payments and revealed a “one-off” charge of £2.2 million relating to “operational inefficiencies” due to relocation of UK finance and operations to Camberley. It also paid out £3.7 million due to various reorganisations, £1.9 million of project management fees relating to integration and £2 million in property provisions.

Lastminute’s commission payments to travel agents also rose steeply to £35.7 million, against £17.1 million the previous year. This was attributed to the addition of Med Hotels and the growth in sales of Holiday Autos products.

Overall sales and marketing costs, excluding agents’ commissions, came in at almost £70 million, compared to £45 million the previous year.

As already announced, lastminute aims to reduce staff numbers by at least 355, cut the number of offices by 12 and reduce operating costs to generate savings of £13 million in the 2005 financial year.

Report by Phil Davies