Australia’s Flight Centre Bolsters Online to Complement In-Store Sales

Flight Centre Travel Group reported record travel booking inquiries for January and February, pointing to a continued uptick in performance in 2023 for Australia’s largest travel agency as it sees marked recovery from previous losses in 2022. The company is juggling a greater emphasis on online sales while reducing costs for in-person sales.

James Kavanagh, Flight Centre CEO for global leisure travel, said the company’s numbers show a month-to-month increase with repeat customers and a 17 percent rise in holiday spending. He presented the company’s leisure travel performance as part of the group’s overall results for the first half of the 2023 financial year, released on Wednesday.

The group reported profitability across its global leisure and corporate travel divisions for all geographic segments except Asia, which it said broke even for the six months to Dec. 31, 2022.

Flight Centre’s leisure business contributed 44 percent to the group’s total performance, adding a $526 million contribution from its online division and a new focus on lower cost leisure.

In 2019, 84 percent of sales came from employees in store, whereas the latest results show a shift to 68 percent in store, 19 percent online sales and a further 13 percent from independent agents.

Leisure reported a performance of $3 billion, more than five times when compared to the same period for 2022 (almost 450 percent increase). The company also saw a profit turnaround of $29 million underlying earnings before interest, tax, depreciation, and amortization (EBITDA) after a $95.6 million underlying loss during the 2022 financial year.

Since 2020 the company has been on a mission to transform its operating model and will continue to do so by reshaping its student travel market positioning, various package holiday product offerings and its foreign exchange businesses, to boost its supply chain with a “diverse range of valuable customers,” added Kavanagh.

The company intends to continue its “differentiation to retain its market lead in Australia, New Zealand, and South Africa, while fast-tracking growth plans in the UK and Canada.” Its recent acquisition of Scott Dunn, as previously reported by Skift, sees the group make a concerted play for the luxury segment as it expands its footprint into the U.S.

The Flight Centre Group further pointed its leisure market performance to strong pent-up demand, as well as its investment into new tools across its business during the pandemic. Competitive flight pricing, which was tracking 7 percent lower for international travel than the previous year, yet still much more expensive that pre-Covid, continues to play a significant role for recovery, especially as the Asian market continues to come back online.

Flight Centre Group reported higher-than-expected underlying EBITDA of $64.9 million in its results for the first half of the 2023 financial year. The group’s total transaction value (TTV) was up 203 percent in the first half of the 2023 financial year and tracking at 80 percent of its record first half results for 2020, up from 26 percent compared to the first half of 2022.