Travel group hails ‘renaissance of travel agents’ in trading update
Shift to online sees Flight Centre leisure productivity hits record highs
Flight Centre Travel Group heralded the “renaissance” of travel agents to guide customers through the complexities of the post-pandemic era.
The Australian firm said its corporate business has continued to out-perform across key sales metrics such as transaction volumes and revenue.
Its leisure arm saw consultant productivity at “record highs” as it shifted between traditional and new models to achieve A$750 million in online total transaction value (TTV) and a fourth quarter profit of about A$10 million. Online captured a larger share of overall leisure sales.
The company reported a 29% reduction in annual pre-tax losses of A$361 million and said it had A$700 million in liquidity after repaying short-term UK debt in full. It achieved a A$35 million underlying profit in the final quarter of its fiscal year as recovery accelerated in all geographic regions with the exception of Asia.
The corporate and Europe, Middle East and Africa (EMEA) businesses were profitable for the year.
The rebound was driven by “rapid” sales growth globally after governments relaxed or removed international and domestic travel restrictions, with revenue up 154% to A$1 billion.
The added complexity of changing travel rules played to the firm’s strengths in both the leisure and business travel sectors and is fuelling a “renaissance” of the travel advisor as consumers seek expert advice.
As a result, the company is now attracting around 4,500 applicants a month in Australia alone “as the travel industry readily regains its appeal among jobseekers”.
It added: “Industry newcomers are quickly finding their feet, with novice sales averages currently tracking ab.over network-wide figures.”
Flight Centre has continued to target experienced travel agents who were displaced during the pandemic while also reinitiating its novice recruitment programmes “at scale” since July last year.
Referring to the leisure segment, the company added: “Work continues on Flight Centre’s brand evolution from a multi-channel travel agent to a modern omni-channel retailer with connected offerings that allow customers to move seamlessly between in-store, online, app and phone channels.”
While Flight Centre does not expect full industry recovery during 2023, it expects to be tracking close to monthly pre-Covid total transaction levels by the end of this year assuming conditions continue to normalise.
But it is too early to give specific guidance on future profit as the travel industry rebound is in its infancy and normal travel patterns are yet to resume. Various parts of the world, including China, are also yet to reopen while airline capacity and pricing – key drivers of supply and demand – and revenue margin are yet to stabilise.
Company chief executive Graham Turner said: “Travel demand has recovered rapidly since most governments globally moved or relaxed border restrictions and we have started the new fiscal year with strong momentum.
“Our corporate business is again outperforming, returning to gross pre-Covid TTV levels ahead of schedule and securing another strong pipeline of account wins to drive future growth.
“In the leisure sector, we are generally gaining share in our core markets, increasing productivity and capturing more sales through highly scalable channels and models.”
He added: “While the cost of living is generally increasing, very low unemployment globally and travels proven resilience are significant offsetting factors for our business with customers having both the means and the desire to make the most of their limited vacation time after being denied that opportunity for some two years.
“Corporates also continue to re-engage face-to-face to re-establish old business relationships or to create new ones.”
Flight Centre Corporate chief executive Chris Galanty said: “After the turbulence of the last few years, it is encouraging to see strong recovery across our global corporate business. This emphatic rebound signifies the importance of meeting people and customers face-to-face despite the enormous logistical challenges currently existing in the industry.
“The ongoing disruption impacting the wider industry has further reinforced the need for the support of a very professional travel management company to minimise these frictions.
“Alongside investments in developing highly personalised digital technology, we have also employed new staff to deal with anticipated demand. As a people-first business, our biggest priority is to look after our customers and continuing to deliver fantastic service despite the challenges.
“Near-term, clearly the global economy is not yet firing on all cylinders, and the industry will continue to be tested in a number of areas. However, the current frictions we are seeing in travel are improving month over month, and as the world adapts, we anticipate this will continue to get better.”