An Industry in Flux

lowcosttravelgroup
Paul Evans
Search and Rescue
CONFIDENTIAL
Page 1
doom and gloom all around us...
CONFIDENTIAL
Page 2
holidays still selling...for now
Strong Q1 results with seasonal loss from operations
improved by 52% to £27.4m (2007: loss of £57.3m)
Winter 2008/9 bookings had improved significantly in
the last four weeks, particularly in continental and
northern Europe
While it is too early to read the Summer season in
many markets, trading in the UK is encouraging with
10% less left to sell than at the same time last year
CONFIDENTIAL
Research by TUI Travel: same proportion of people
(87%) intend to take an overseas holiday this year
as in 2008, despite the recession.
TUI said winter 2008/09 is in line with its trading
update in November, with ‘strong average selling
prices being achieved’.
In the UK, average selling prices are up 10% on
last year
Page 3
lowcosttravel’s response....
invested £1m in
new technology
acquired resort
hoppa
launched new
lowcostholidays
web site
Invested £0.5m in
on line marketing
CONFIDENTIAL
Page 4
group overview
Ranked Top 20 travel site
2 Call centres
Homeworker network
Affiliate network
50 trade accounts
retail and wholesale distribution
Top 5 bed bank
CONFIDENTIAL
80% trade / 20% direct
Acquired January ’09
Fully integrated April ‘09
Page 5
business overview
direct
retail agents
CONFIDENTIAL
wholesale
Page 6
lowcosttravelgroup
High growth, low risk business
Sales growing at 180%
Margins increasing
Advanced technology platform
Diversified distribution
Increasing share of customer’s wallet
Strong management team
In place for 4 years
Wide range of experience – corporate, start up, growth, restructure
Recession has created significant opportunities for upside
Product extension
Product diversification
Consolidation
CONFIDENTIAL
Page 7
new technology platform
Enabled simple and light overhead
Reduced cost of transaction
buying
team of 4 direct
overseas buyers
destination
focused
over 3,000 hotels
35 airlines:
- charter
- low cost
- schedule
pricing
&
packaging
commercial
trading team of
10
daily/weekly
focused
intense
competitive
analysis
dynamically
updated special
offers /cms
distribution
operations &
back office
team of 4
team of 15
50 seat call
centre
integrated
straight
through
processing
Homeworker
network
trade and direct
sales team
CONFIDENTIAL
automatic
reconciliation
Page 8
new website
Superfast and easy to use
Now accounts for 70% of all
bookings
Average transaction value 23%
higher than lowcostbeds.com
Ranked on top 25 travel agency
websites < 2 months
Conversion ratio 1% and climbing
Call centre conversion >20%
Natural v paid traffic nearing 50/50
CONFIDENTIAL
Page 9
supported by brand campaign
CONFIDENTIAL
Page 10
continued growth in trade
Trade sales up 25% YoY
Major trade partners growing –
Jet2, OTBeach, Travelrepublic
New trade sales focus – major
accounts
Deep integration with Jet2:
Cross sell of Resort Hoppa
averaging 60% direct, trade
growing
CONFIDENTIAL
Page 11
Lowcost Business Overview
traditional
industry model
new
industry model
hotel+
flight+car
hotel+
flight+car
tour
operator
travel
agent
The winners will:
be the lowest cost producers
offer the lowest prices
have the widest possible distribution
on line
tour
operator
recognised brands
easiest to use
own stock
customer
customer
CONFIDENTIAL
Page 12
we are going for growth…
ORGANIC
ACQUISITION
Industry in retrenchment/ negative
mentality
Low multiples 2 – 4, down from 6 - 10:
high expectations remain
Overhead cuts v sales led
Synergistic
Diversification
Product extension
Multi channel
Counter seasonal
No over dependencies
Scale
Role of banks / credit card companies
in current world
Ego!
Low interest rates
Management of shareholders,
suppliers, staff, and regulatory
Focus
CONFIDENTIAL
Page 13
summary
Business has grown from zero to £50m in 4 years, will grow to £80m-£90m
this year
£1.6m of investment
Profitable
Diversified but focused, no dependencies
Recession beating brand and model
Recession beating.....management attitude!
CONFIDENTIAL
Page 14