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Travelzest profits rise by 19%
Monday, 26 Feb, 2009
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Online travel group Travelzest achieved a £600,000 rise in pre-tax profits in the year to October, 2008.
Profit was up by 19% from £3.2 million to £3.8 million.
This was despite £3.6 million in costs incurred from a number of items including an aborted takeover of the group and the closure of the international operations of Holiday Express, with website domain names licensed out.
Total transaction value increased by seven per cent to £181.9 million, and revenue was up by 15% to £44.3 million.
This brought in an operating profit of £5.1 million against £3.8 million a year earlier before amortisation and separately disclosed items.
The group, which closed the in-house operations of Holiday Express in the year, reported an “encouraging performance” from its portfolio of UK specialist tour operators and continued strong performance from Canadian online travel retailer, itravel2000.com
Travelzest also acquired a second Canadian business, The Cruise Professionals, last June.
But the unsolicited takeover of the whole group was abandoned in November due to financial market uncertainties.
Canada now represents 60% of group business and helps protect it from UK economic uncertainties and European currency fluctuations.
Operations within the group are reporting a mixed impact of the economic situation, with those to euro-linked destinations such as VFB and Best of Morocco not faring as well as Turkey specialist Tapestry, naturist holiday firm Peng Travel and UK luxury house rental form Wow House.
Chief executive Chris Mottershead said: “We have demonstrated the delivery of an improved underlying result in a difficult economic environment.
“We have also taken the right decisions for the business with the closure of the in-house operations of Holiday Express.
“We will continue to review our strategy in 2009 to ensure that it continues to be appropriate given the global financial turmoil through which all businesses must navigate over the coming year.”
Motteshead told TravelMole that the current climate made it a good time to consider acquisitions but banks are reluctant to lend more money and the group does not want to take on extra debt.
Describing the situation as “Catch 22”, he said: “We would love to do more acquisitions but the financial environment is not up for funding new acquisitions and that puts a constraint on our development.
“There are acquisitions out there but we can’t get them because the funding is not available.”
In the meantime, the geographical spread of group business meant it was continuing to make profits year-round.
Chairman Mark Molyneux, announcing the results, said: “Inevitably, in the current economic climate, the travel market for 2009 is uncertain and it is hard to look forward with our usual confidence.
“We are reassured that our diversified portfolio provides resilience to the worst of any downturn.
“In the UK, our customers are booking nearer to their departure dates, resulting in sales below those of last year.
“By contrast in Canada, while it is early in the winter trading cycle, overall sales to date are encouraging.”
He added: “The crisis which engulfed global financial markets in 2008 and the ensuing economic recession has created trading conditions which leave very few businesses unaffected.
“It is not yet clear how changing consumer confidence will impact on future demand for the products offered by Travelzest group companies.
“However, Travelzest remains committed to owning a decentralised portfolio of low risk tour operating businesses in the UK.
“We have no over dependence on one destination or type of customer. We sell to a high percentage of clients over the age of 50.
“We believe that this strategy means that Travelzest is well placed to weather the uncertain conditions we may experience in our markets.
“In addition, our retail businesses in Canada continue to provide counter-cyclical profits and cash flows from a different market, further diversifying the portfolio of the group.”
by Phil Davies
Phil Davies
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