Skift Take

Who’d have thought not annoying your customers was good for business? On the other hand, the supposed turnaround just happens to fit in nicely with a potential sales process.

For years, Spanish online travel agency eDreams has been notorious for its questionable pricing strategy.

The headline airline ticket price, used to lure in customers, was not always what it seemed. Consumers sometimes found that the site assessed service charges that would increase prices by 25 percent.  

The company’s tactics brought it into conflict with airlines like Ryanair and EasyJet, which took umbrage at this lack of transparency. The UK’s aviation watchdog eventually investigated eDreams.

The Civil Aviation Authority’s inquiry led to eDreams and Opodo (both part of the eDreams Odigeo Group) making changes to their websites.

The tweaks were expected to hurt the Barcelona-based company because fewer people would be drawn to its multiple websites by ultra-low airline ticket prices. But as it turns out, customers liked them.

Speaking on an earnings call after the company’s first-half results, CEO Dana Dunne said there had been a “short-term softening” of sales due to pricing changes, but it had been outweighed by other benefits.

“We can confirm today that the early data from the price transparency initiative shows that our assumptions were correct,” he said. “There is no long-term impact on the business and in fact there is good upside.”

Web traffic returned to previous levels after five months, and there was a double digit improvement in conversion rates, eDreams said. Also, the company’s trust pilot score increased 24 percent.

“All in all, we are delighted with the early results and based on this positive response we have taken the decision to gradually roll out the new model across most of our key markets,” Dunne said.

Strategic Review

During the call, there was no real update on the company’s previously announced strategic review, which could lead to a potential merger or acquisition.

“Everything we said at the beginning of the month stands,” Chief Financial Officer David Elizaga said. “We have, I think, a very professional process run by Morgan Stanley and I think it is imperative that we keep it going.”

“It has no effect on the day-to-day operations of the company and at the board and top management level there is a parallel process of evaluating those options and helping the board to take the best decision on behalf of all the stakeholders in the company.”

Net profit during the first half of its current financial year fell by 46 percent to $7.7 million (€6.5 million), mainly because of reorganization costs associated with its businesses in France and Italy.


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Tags: earnings, edreams, edreams odigeo group, mergers and acquisitions, otas

Photo credit: An eDreams promotion on November 24, 2017. The company claims tweaks to make its pricing more transparent has helped its business. eDreams ODIGEO

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