Asiatravel hit by weak travel demand, rising competition

CATALIST-LISTED Asiatravel.com Holdings has seen better days. The firm's losses for the year ended Sept 30, 2014 widened to S$9.6 million from S$5.7 million a year ago on the back of weaker travel demand to the group's core destinations.

The online travel reservation firm suffered a loss per share of 3.36 Singapore cents from 2.37 Singapore cents on the back of a 4.4 per cent increase in revenue to S$90 million.

The revenue growth in the online businesses was offset by the decrease in revenue from its offline wholesaler business.

The firm attributed the weak results to "many adverse events" which weakened travel demand, chiefly the political unrest in Thailand, the missing Malaysia Airline's jetliner and the downing of another one of its aircraft in Eastern Europe, and travel controls imposed by China authorities on outbound tourists.

The entry of many new meta-search players to the online hotel reservation channel has also made it more costly to acquire new customers and to retain existing customers.

"To protect and maintain our market share in terms of hotel booking volume and room nights, while we continue to develop and grow the online B2B, tours and packages businesses, the group has to bite the bullet and incurred huge advertising spending," it added.

In line with that, its advertising and promotion spending increased from S$2.5 million in financial year 2013 to S$6.6 million in the year ended 2014.

While the firm has been badly hit by drastic adverse events and costly changes in the distribution chain model, it expects its financial position to improve in the coming financial year.