I would now like to hand the conference over to Haydn Long, Investor Relations Manager. Please go ahead.
Good morning, everyone. Thanks for dialing in for our half-year result presentation. Shortly, you'll hear from Adam Campbell, our CFO and the CEO of our Global Business Services Division. Chris Galanty, our Global Corporate CEO. James Kavanagh, our Global Leisure CEO. And Skroo, who will start things off with an overview and later provide some closing remarks. We're also joined today by Mel Elf, our Corporate COO, and Greg Parker, our Supply CEO, who will participate in the Q&A later. I'll now hand over to Skroo to start things off.
Thanks, Haydn. This first slide is an overview of our business. And as we all know, we're a diversified global travel business with four key divisions. That's Leisure, Corporate, our Global Business Services Division, and Supply. And we also operate in four key regions: Australia, New Zealand, the Americas, which includes Mexico, Asia, and EMEA, which is Europe, Middle East, and Africa. We see our diversity as a strength, and it distinguishes us significantly from other travel companies. Most of our peers are either leisure or corporate-focused. We, on the other hand, have a very large scale of corporate and leisure businesses, and there are advantages and synergies in having those two. Within our four divisions, we have a mix of established as well as emerging brands.
We put these into three horizons: Horizon One, which is our established brands like Flight Centre, FCM, Corporate Traveller, and in the corporate sector, in our luxury travel business, which is predominantly Scott Dunn and Travel Associates. These are our major profit engines, and each contributes generally more than $50,000 or $50 million a year in profit. Our emerging or Horizon Two businesses include various specialist and independent businesses, which are in JK's division. These are brands like Envoyage, Ignite, Travel Money, and Jetmax Online Businesses, plus a few others. In the corporate world, this includes Stage and Screen and FCM Meetings and Events. We also have a small number of startups, including Cruisea bout, which we are currently investing in. I won't talk too much about current year results, but I know Adam's going to cover off that shortly. But we're generally quite proud of our TTV growth record.
Since we listed 1995, we've improved on the prior year's TTV result 28 times in 30 years. Obviously, COVID was in the middle of that, and from 2019, the next year that we beat the 2019 result was 2024, I think. The growth record probably highlights a couple of things. Firstly, the strength and diversity of our business, and secondly, the overall travel sector's resilience. COVID-19 was, without question, the largest challenge we've had, and certainly that our industry, our travel industry, has ever faced. We have re-emerged from this pandemic in a stronger position, although we still have a lot of work to do to rebuild in certain areas. Our business today is generally more efficient, more productive, with our building blocks in place to deliver stronger future returns, we believe, with a lower cost base and strategies in place to grow top and bottom line results.
Our aim is to deliver above-market TTV growth and market accretion, leading to a sustainable year-on-year profit growth. You can see our TTV growth on the next slide. The table on the left of your screen shows the post-COVID period with pre-COVID on the right. Now, our third slide. If you're looking to financial year 2025, and without stealing too much of Adam's thunder, we've generally been able to deliver first-half growth across most of our key financial metrics, including TTV revenue and underlying profit. It was, however, very much a tough two quarters. There were headwinds early in the year, including very significant airfare deflation in Australia, which affected our super overrides and our margins. Conditions and results were much stronger in the second quarter, giving us some fairly reasonable tailwinds heading into the second half, which is our business trading period.
Margins generally steady in the first half and are now starting to pick up, as we would expect, as a result of increased volumes and scale benefits in our peak trading period, and also as a result of efficiency and productivity gains that we're starting to see. Adam's new global business services area will also play an important role in us maintaining cost discipline. In corporate, we're again delivering record TTV and ready for a significant productivity uplift, which Chris and Adam will both talk about. While the leisure business is now more productive, more efficient, more profitable than pre-COVID, as you will hear more about from JK. Overall, we believe we've got pretty solid future prospects. Accordingly, we've reconfirmed our full-year guidance, which is for an underlying profit before tax between $365 million and $405 million. I'll now hand over to Adam. Adam.
Thank you, Skroo. Good morning, everyone. I'll just start this morning with a few of our KPIs at an overall level before talking to some of the drivers behind those half-one results in a bit more detail. TTV for the first half finished at $11.7 billion, just under $400 million or 4% growth over the prior period. Given TTV was flat after the first quarter, our 7% growth in the second quarter was good to see. We've continued to see TTV growing in the early stages of the second half. Our underlying profit for the half of $117 million was a 7% improvement over the prior year and again was heavily skewed to the second quarter, which was up 14% on quarter two 2024.
As Skroo mentioned, overall margins remained relatively flat year on year, with revenue margin at the group level of 11.4% being negatively impacted by the flow-on effect of quarter one soft TTV growth onto our override revenue, which was particularly seen in leisure. The continued success of our profitable but lower revenue margin businesses such as Travel Money and our independent businesses also impacted the group margin. This was offset, however, with the TTV growth that we saw in the second quarter starting to flow into overrides, as well as increased component attachment in Flight Centre, growth in our tour and cruise sales, and improved ancillary revenues in corporate.
Now, most of you will recall that when we spoke about our first quarter results to the AGM, we highlighted that there had been marginal year-on-year improvement across most of our key metrics and that we'd seen somewhat patchy and inconsistent trading conditions up until September. That then had flown through to lower than normal TTV growth for the quarter, which in turn had impacted our override revenue. And we spoke about the reasonably strong ticket sales in Australia that we'd seen in that first quarter being offset by around 9% deflation in airfares. Pleasingly, as you can gather from my initial comments, the second quarter of trading saw more rapid TTV growth, with ticket sales still being strong and airfares stabilizing, although still being below prior year pricing.
This TTV growth delivered better economies of scale and operating leverage for us during the quarter, which in turn led to profits growing at higher rates than our top line across both leisure and corporate. I'm going to leave both Chris and JK to talk specifically to the drivers of the corporate and leisure first half results. And we have included a slide in Appendix Two that highlights the key components of the other segment, both the operating businesses and the head office costs that are included within that segment. We've also included our geographic segments in Appendix Five. And I will highlight that we've had some strong growth in the ANZ region with 7% TTV growth and 16% profit growth for the half. In the Americas, we had nearly 20% profit growth and 7% in EMEA.
Some pretty strong growth results in those regions, particularly given they were skewed to the second quarter in particular. Our Asian regional results have been a drag for us overall and for corporate in particular, with the region being impacted in the first half by airfare deflation of up to 16% in some countries, some client down trading in the region, and higher provisioning levels taken up from an accounting perspective as a result of system changes that we implemented regionally ahead of Productive Operations coming in. We do expect the region to return to profitability in the second half. We've got some specific detail in relation to the P&L balance sheet and cash flow included in the deck. But for now, I'll turn my attention away from the last six months and towards the future.
We remain focused on the journey to return to a 2% profit margin, and particularly after the first quarter, we do acknowledge that there's certainly work to be done for us to get there. TTV growth will be a key driver for us, with a direct impact on both our operating leverage and our revenue streams, including but not limited to override revenue. Airfare normalization, the stabilization of macro conditions, our investment in SME corporate growth drivers, the growth in our H2 or emerging businesses, and our initial trading conditions in the second half are all factors that give us some positivity around the future TTV growth levels. Similarly, the progress of our corporate productive operations program and the initiatives underway within the Global Business Services Division will ensure greater efficiency and productivity so that this TTV growth converts to higher rates of profit growth.
Finally, while we will continue to service our customers in brands and channels that they want to use, we will continue our focus on incremental improvements in profit margin for our lower margin but higher growth businesses such as FCM, Independence, and Travel Money, and we'll also specifically target strategies to grow TTV in our higher margin businesses such as Corporate Traveller, Flight Centre, Scott Dunn, and Travel Associates. Overall, we believe that we've got the building blocks in place for a much stronger second half and indeed beyond that into 2026, including the strategies I've spoken to and that JK and Chris will elaborate on, some good momentum from the second quarter that's continued early into the much larger second half trading period, and the work that we continue to do on strengthening our balance sheet by growing cash, reducing debt, and buying back our convertible notes.
We estimate that we're currently tracking at the low to mid section of our guidance range. We once again expect our earnings to be heavily second half weighted given our peak booking months are typically between January and June for both leisure and corporate. Last year, around two-thirds of our profit was generated in the second half, and in 2019, that was 70%. The current year's second half skew may well be impacted towards a higher weighting given the stabilization of airfare pricing, improved macroeconomic conditions, operational efficiencies that we expect to see coming through, and the momentum that we're seeing in the last few months. So all in all, after a soft start to the year, we're pretty happy with the second quarter and January's trading, but it is too early to narrow our guidance range at this stage.
I'll now hand over to Chris to discuss the first half corporate results and to update on his key strategic initiatives.
Thanks, Adam. I'll now give a brief trading and strategic update on our corporate division. We have two multi-billion dollar TMCs in our corporate division, FCM led by our COO, Mel Elf, and her global team, which focuses on the large-to-enterprise segment and operates in 100 markets, and Corporate Traveller led by Tom Walley and his global team, which focuses on the startup to medium market and operates in six markets. We address the market with two brands as we believe the customers in these two segments have very different needs and problems to solve, and operating brands that specialize in these segments gives us a competitive advantage.
As you can see from our structure on the page, we have our two global winning brands, each of which have their own services and products in the market, each of which has their own global proprietary customer technology, and each of which has their own industry-leading organic growth system, which focuses on acquisition, onboarding, and retention. Both brands share productive operations, which is our implementation of a single global operating system. Both brands also share a supply partnerships and proprietary aggregation, which we share across the group with leisure, and both are built upon our people and culture, and what this means is that both brands have independence, where it gives them a competitive advantage, but both leverage corporate and group capabilities, where it gives them economies of scale, so looking at our market share growth, we are a materially larger business with an increased global market share.
Our first half TTV and volume growth was in line with the overall market. And what this means is after our first half, we are now 143% of our 2019 levels and way ahead of the overall market over that period. And you can see we have TTV and revenue recovery year on year. Our global corporate market share has now increased from 4%-5%, and this highlights the success of our Grow-to-Win strategy. And it also highlights the scale of our future opportunity for growth, as we only have 5% of a very large and globally fragmented market. Our existing clients have typically maintained, or in some cases in our larger customers, reduced travel budgets over the first half, but we have a very solid pipeline of new account wins coming on board to fuel future TTV growth.
I'm particularly pleased to say that FCM alone has signed over AUD 800 million of new business year to date. Corporate Traveller also had a good period of wins over that first half, particularly in the USA, which is our largest target market. I can reveal that those wins have meant that in January, we saw a growth of 19% in TTV in Corporate Traveller USA alone, which is very pleasing to see. Some other highlights: well, our geographic diversity, our larger businesses, USA, Canada, Australia, New Zealand, U.K., particularly EMEA, have all seen very solid results, particularly in the second quarter. Our results were dragged down by Asia, as Adam mentioned earlier, partly due to cyclical down trading and airfare deflation, but largely driven by very conservative high provisions for doubtful debts arising from a result of a local system change, which we deployed in financial year 2024.
If you exclude Asia, the second quarter in particular, we saw some very strong results with PBT growth of over 31%, which is really great, and hopefully that will flow into the second half. But we are also optimistic about a bounce back in Asia. We have moved the region into our Productive Operations strategy to really focus on those systems improvements. And Asia also has been the largest beneficiary of new wins. So we expect our other regions to continue performing very strongly and Asia to bounce back. We're very pleased with our investment and expansion of our specialist businesses, Stage and Screen and Sports, operating under the auspices of Corporate Traveller. And I'm pleased to welcome back Tiz Gallippo as the Global Managing Director of Stage and Screen and Sports.
Tiz is based in London, and he and his global team will focus on our growth in the specialist area of business travel for the entertainment and sports sector. FCM Meetings and Events led by Simone Seiler based in Sydney focuses on the MICE area, which is a very important offering for our existing customers in FCM and Corporate Traveller, but also an opportunity to win new customers to our business. These two specialist divisions are on track to deliver over $800 million of TTV this year with high margins and good profitability, and we are aiming to grow them to over $1 billion next financial year. I'd like to call out our growth in hotel sales and revenue as well.
Global Hotel Product, HotelSource, has been deployed across our business over the last 18 months or so, and it now delivers best-in-class hotel content to our customers via both our corporate hotel program and also aggregation of multiple content sources such as OTAs. In the first half, we delivered a 14% revenue increase from hotel sales, and this is above our natural growth. So pleasing to see and a lot more opportunity to come with hotels. We've maintained our investment in our proprietary digital platforms, Melon in Corporate Traveller and Platform in FCM, and this will continue to deliver better customer experience and obviously better unit economics. Melon, in fact, now is the largest booking platform in Corporate Traveller and accounts for over a quarter of Corporate Traveller transactions in the northern hemisphere markets of USA, Canada, and U.K., where it's been deployed.
And you can see from the next slide that both of our products deliver great customer value propositions, so real benefits for our customers, but also commercial benefits to us. So by deploying them and getting increased customer usage is a real win-win for the customers and for ourselves. And just focusing on Melon, if you look at our Melon adoption stats for last calendar year, they're really pleasing, as you can see. Active customers up 65%, monthly active users up 109%, transactions up 182%, and TTV growth of 164%. So we're seeing real exponential growth in the use of Melon, and we expect that to continue into 2025, calendar year, and beyond. Our productive operation strategy is all about growing our productivity. We are building a single global operating system for both brands that drives every activity through the right channel, lowering costs, growing income, and delighting customers.
This is through automation and personal service. Three main areas of focus. Firstly, the digitization and standardization of our operations, moving to a single global operating system. Secondly, enabling self-service capabilities to really make it much easier and user-friendly for customers to solve their own problems using our digital platforms. And thirdly, improving and increasing content access and distribution. This is particularly important in the world of NDC, but also with hotel aggregation. This means getting the right content into our customers' and consultants' hands at the right price at the right time. So the main key results we're looking for in this area, firstly, increasing consultant productivity. We've already seen good growth in productivity over the last few years, and we want that to increase and continue in the years to come. To increase self-service, our customers are solving more problems themselves using our own digital platforms.
These two things together will reduce our costs. We also intend to grow revenue margin because of improved content access, distribution, and pricing. We want to increase touchless transactions, so more transactions flow through our operating system without any of our people touching them, and also to improve the efficiency of our support systems. An important part of achieving this is our investment in AI. As you know, FCM was a leader in AI in our sector when we launched the Sam product a few years ago, and we've also invested heavily in the last 18 months in our AI Center of Excellence, and this team will focus on three main areas. Firstly, customer products. I'm pleased to say that both brands will be launching global AI products in the next two to three months.
I'm not allowed to say any more about these right now, otherwise I'll be in awful trouble with my chief marketing officer, but watch this space. Business productivity, Productive Operations means that our business is AI-enabled. For example, all of our consultants in FCM have already been launched onto our Consultant Workspace product, which is built on the Salesforce Cloud and enables us to use generative and agentive AI to improve the productivity and quality of the service that people deliver. And all Corporate Traveller consultants will be rolled onto this in the coming few months. And then thirdly, disruption. We believe because of our expertise in AI and because of industry expertise, we have the opportunity to launch some disruptive business models based on AI into our segment in the coming months and years. So finally, our future growth drivers.
We want to continue focusing on organic sales growth, so higher customer retention rates and more customers coming on board. We want to continue investing in productive operations, the largest project that the group has ever undertaken. It's going well. We have a lot more work to do, and then we will start to see and achieve benefits, particularly productivity benefits after this investment. Both these things lead to greater efficiency and scale benefits. And then finally, we want to continue focusing on margin improvement through new revenue streams and also better pricing and margin improvement through content. So all in all, it's been a solid first half with big momentum building in the second quarter, which we believe is going to flow into the second half and then into 2026. So on that note, I'll hand over to JK to give an update on leisure.
Thank you, Chris. Good morning, everybody. Today, I'll take you through three key areas. Firstly, where we stand today and the momentum that we have in leisure. Number two is what's fueling our success, our shift to a more profitable, efficient, and scalable model. Number three, why we are confident in our future growth. Our leisure business is stronger than ever. It's more productive, more diverse, and more efficient with solid momentum heading into the second half. The highlights of our strong first half performance show that TTV has grown 7% across our diverse portfolio of brands, and you can see the mix in the slide pack that's available. This is really driven by our luxury specialist and independent brands. These now make up over 50% of our TTV, which is up from just 33% in FY 2019 and 45% in FY 2024.
Underlying profit before tax is now 10x pre-COVID and double FY19, which has really proved that our transformation is driving strong profits with greater efficiency. Momentum is accelerating into the second half, and after a soft Q1, our Q2 TTV and profit growth rebounded and finishing strong, and January was even bigger, which was an all-time record for our Australian division, and we're seeing very good signs in February continuing as well, which is a clear sign of our ability to drive higher margin growth with greater efficiency, so what's fueling our growth? Well, the key drivers that's fueling our success, they include number one, our operating leverage and productivity, particularly in Flight Centre, where we saw same-store sales up, which is benefiting from bigger basket sizes up 12% and more attachment sales, including Bundle + Save and the Captain's Pack.
Online growth is delivering with flightcentre.com and Jetmax, now Australia's largest OTAs combined, and our independent agencies and independent division now contribute 19% of TTV, which is up from 3% in FY19. This business really leverages our market-leading content and tech. Our business mix is shifting towards fast-growing business models with a scalable cost base, and you can see the business mix shift in the pack and towards much higher margin products. Number two is that luxury travel is really taking off for us, and Scott Dunn had a strong October through to December, and they hit record profits in the month of January, and February is looking good. Combined, our luxury division now will contribute AUD 55 million profit before tax this year alone and is set to continue growing into future years, which really means that more high-value customers are choosing our unique premium experiences.
Number three is about cruise and touring, and this really is a game changer for future growth at the Flight Centre Travel Group. Our cruise and touring sales surged 25% year on year, and this follows a full-year lift of 25% in FY 2024 in Australia alone, and our results, while they look reasonably flat from a profit perspective, is due to the fact that we've strategically invested AUD 4 million to scale up our Cruiseabout expansion, Cruise Club, our recent UK acquisition, and the launch of a new industry-first 371-day global cruise with 24 individual itineraries called Explorations, and you can see a visual of the itineraries that we are creating in this sector. We've also now advanced our technology in cruise, which is now fully bookable on flightcentre.com.
What we expect is revenue recognition to begin in FY 2026 and FY 2027, but we are positioning now to win in this sector. Another call out is specialist brands like Travel Money, which is also booming, which Adam touched on. They're actually benefiting from about AUD 300 million contribution from a new wholesale division that we set up and is on track to deliver AUD 1.2 billion worth of TTV this year. A big credit to all of our team for these exceptional results. Looking at longer-term objectives and our future outlook, as we move through H2, we expect to see a significant profit uplift, which is driven by the usual seasonal demand, operating leverage, and a laser focus on our top five big moves, which are highlighted in the pack.
Some callouts of our key growth drivers include one, scaling our winning models, and the focus here is on expanding Flight Centre, the retail footprint in underrepresented areas in the U.K., New Zealand, South Africa, while also upstaffing many of our stores. We're also expanding our specialist offerings such as Flight Centre Business Travel, along with differentiating a range of new products with exclusive cruise and touring packages, luxury travel gems, and also our newly launched Flight Centre Insurance range, which is gathering pace with great customer attachments. Other areas of focus for us here include increasing customer loyalty, and we've been investing in solutions that will drive retention, personalization, and bigger basket sizes. Productivity and efficiency remain a key focus, and we saw a good uplift this year with the launch of a new digital quoting tool, and that alone has improved the consultant quoting process by 30%.
We've also launched an AI trip planner, which is in beta testing for about 50% of our customers on flightcentre.com, and the first version of this is based off AI models that are trained using our proprietary datasets that provide our customers with smarter curated travel experiences. Now, version two uses multiple AI bots that are working together to return trip information to customers, and version three will have booking capability. We've also upgraded the mobile app to a new native app experience, and hotel sales alone are up 32%, and holidays are up 100%, albeit from a lower base, so in closing, as we move through the second half, we believe we're in a position of strength. Momentum is high. We're seeing high-margin products that are scaling up, and our AI and digital innovations are set to drive efficiency and conversion into the future.
In leisure, it's not just about transformation that's driving top-line growth. It's about becoming a more profitable, efficient, and future-fit business. And I'd like to thank all of our team and our leaders who are helping with this particular journey. So now, over to you, Chris.
Thank you, JK. Before we go to that Q&A, I'll just quickly recap on a few key things from our Flight Centre Travel Group. Firstly, there's some very important months to come, the next four or five months, but we have a really positive outlook for the second half after building on that strong growth during the second quarter of last calendar year. Secondly, our corporate business continues to deliver record sales, and now looking at significant productivity gains to deliver a stronger profit result.
Also, we're seeing positive signs in leisure with TTV and various businesses and brands either approaching or exceeding record levels in early second half trading. Globally, the strategies in place to achieve our group-wide objectives are TTV growth year on year and margin accretion, which is our PBT TTV percentage margin growth. One of our long-term goals is to get that up to the 2% that we've talked about before, which obviously leads to underlying profit growth. One of the factors that helps us to grow TTV in the travel industry, particularly out of Australia, is the fact that Australians are the propensity to travel is very high in Australia. Just for example, there are about 44 million, sorry, 44% of the Australian population in terms of trips travel overseas, despite those costs of living pressures.
This is based on about 12 million short-term resident departures, which obviously some people have multiple trips. Also, we've just completed a global customer intention survey, and obviously, this comes from our own website, but it showed that 90% of respondents intended to travel internationally in the next 12 months. So generally, that's pretty good news. So things can obviously change, but some of the lead indicators look pretty good as we welcome the second half of this financial year. Thank you.
Ready to go to Q&A now. Thanks, Chris.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. The first question comes from Lisa Deng at Goldman Sachs.
Hi. Thanks for taking the call.
Please go ahead.
Hi. Can you hear us?
Yes.
Yes.
Hello. Oh, yes. Sorry. Just two questions. One is on the discussion around the corporate productive, sorry, the cost optimization, the productivity optimization. We talked about 15%-20% improvement over the next two years from FY 2024 to FY 2026. Can we understand if that means it's a 15%-20% off the CODB? And what's the phasing, please?
Chris, do you want to start things off there?
Sure. Yeah, Lisa, what we're highlighting there is that the plan over the next couple of years is to keep growing our top line, so our TTV and our revenue, but to reduce staff numbers through productivity gains. So that 15%-20% is our expectation of where we'll end up in the 2026 financial year.
We really just see that as a benefit from productive operations, so automation, customer self-service. Our headcount reductions are going to come a lot through natural attrition, but there will also be some targeted reductions in staff as well. It's really just the plan that we've been highlighting for the last 18 months or so. We believe financially 2026 is the year we'll actually see the real benefits. We are seeing some benefits already, just to be clear.
Just so I understand, what's the 15%-20% off as a base so we can quantify it, I suppose?
The base is the financial year last year, so the end of financial year 2024.
Yeah. So we have 910 cost of doing business, and so it's a 15%-20% off that as an absolute. Do I understand that correctly?
Yeah. It's actually the calculation we're referring to is actually productivity. So it's TTV divided by FTE, full-time employees.
Okay. Maybe we'll take that offline separately so we get that. The second question is, can we talk a little bit more about pricing, airfare pricing trends sort of in the 2025 calendar year? How have we seen airfares trend in the last couple of weeks, and what's the volume sort of sensitivity expected from that? Thanks.
Yeah. No worries. So as Adam sort of alluded to and spoke to about pricing, particularly out of Australia and what we've seen over the first six months, the first quarter we were hit pretty hard just in terms of overall pricing reductions. The split on that would have been about 6.3% down in July, 4.7% down in August, and about 3% down in September. And then it started to trend into positive territory.
So when you look at airfares to Europe alone out of Australia, it was a 6.5% reduction over that same period. We are now seeing that it's positive trends moving through in terms of overall airline yields. So that's the Australian part of the business. Looking globally, I think it's important to know that the global yields for the out of all the businesses we operate in leisure and corporate, they're actually only down over July to December of 0.4%. And we're seeing positive trends come through out of all regions with airfare yields as we're trading into January and February.
Okay. Got it. Very clear. Thank you.
All right. Thanks, Lisa.
The next question comes from Mitchell Sonogan at Macquarie . Please go ahead.
Yeah. Good morning, team. Thanks for taking the questions. And apologies if you've been through. This is jumping between a few calls.
Just on the PBT guidance for the second half tomorrow, just give me a little bit more color, I guess, just in terms of some of the underlying assumptions that are built into that to get to the bottom to middle end of the range, whether it's the macro conditions or expected uplift in business profitability? Thank you.
Yeah. Adam here. Look, there's a few swing factors in that guidance. I mean, certainly, if you look at the momentum that we took in that second quarter that's sort of coming through into the second half, particularly through that January period, we've seen that continue through, which has been positive for us. There's a few things that will impact and swing through that guidance range, though. Things such as the airfare pricing that Greg's spoken about will have an impact, without any doubt, through our key markets.
TTV growth, particularly over the seasonally busiest periods. I mean, as Skroo mentioned, we're always heavily skewed to the second half, probably a little bit more so this year than other years. But certainly, seeing that TTV growth come through is going to be really important for us. That has a direct impact on revenue, not just our overall revenue, but other revenues that flow through as well. So that's important for us. The cost control that we've got in place at the moment is really important in terms of that guidance and whether we start to see or when we start to see a bit of that productivity flowing through later in the half, even more than we're seeing at the moment.
As Chris mentioned, productive ops, we are seeing some benefits from that, but they will accelerate as we get towards the end of this year and certainly through 2026. So that's going to be important. Attachment rates in Flight Centre Brand and how we continue to drive that is going to be one of the factors that will determine how we finish. And things like the proportionate growth rates in some of the lower margin versus the higher margin businesses as well. We don't want to pull back by any means in those lower margin businesses growing. But that TTV mix between the lower margin and the higher margin businesses will be a bit of a swing factor there as well. So we're reasonably comfortable about those things.
And as Skroo mentioned, we've got some good momentum going in and some areas for us to be positive about as we sort of face up to the next four or five months. So there are some of the things that we think are going to impact on that guidance range.
Yeah. Thanks, Adam. And just a final one from me. Just looking at the corporate business, obviously, we continue to have really strong momentum, particularly in FCM, some really big business wins. But I guess when you look at the revenue, TTV, and profit performance in that first half, yeah, versus your expectations, I guess, is that where you're expecting? And yeah, can you maybe just give us a little bit of a better understanding about how you see that trajectory, particularly in corporate sales in the next five to eight months? Thanks, guys.
Cool. I mean, from a profit perspective, actually, most of our, if we divide the world into four regions, three of our regions actually performed pretty well, particularly in the second quarter. But even for the first half, Americas, Australia, New Zealand, and EMEA all performed in line with expectations. We had a particularly poor profit result in Asia, which dragged the corporate result down, which was frustrating and a bit disappointing. And I think a lot of, mostly it was down to a local systems change, which we put in place last financial year.
We're now reversing that out. We have some pretty conservative provisions in place. So we're expecting a much stronger second half in Asia and then a bounce back to normal profitability levels in the next two to three months. So with the TTV and revenue, it was probably a bit lower than we would have liked.
There's a bit of downtrading from certainly some of our larger customers around the world. But again, this tends to be cyclical. We see this come and go over time. Normally, our uptrading always is higher than our downtrading. It hasn't been particularly in the first quarter. Second quarter and slowing into January was stronger and was more in line with expectations.
Great. Thank you.
The next question is from Ben Gilbert at Jarden.
Morning, team. Just first one from me. So just can I just understand the first half, what's come through that might be one-off in nature or abnormal? So you've got AUD 4 million from the launch around Cruiseabout. I mean, a little bit from Cruiseabout the PCP, but it's about a AUD 4 million hit that in theory shouldn't come through in the first half of 2026.
And then just on that corporate side, so there's an $8 million swing in Asia in the first half. Are you saying you're expecting that to move back almost equal to + 4? So an $8 million swing in the first half of 2026. And then the third thing is, because you've started this Cruise business, there should be a little bit of earnings that come through when you realize that when people actually hop on and take the Cruise around the world. Is that fair? So if I build that, that's $12 million-$14 million that should come back almost equal in the first half of 2026.
Yeah. I think that's pretty fair. But I'll get JK out to talk about the Cruise side of it, and then Chris to talk about Asia. But I think it's a fair statement to make with it.
But JK, you want to talk about that Cruise investment?
Yeah. Hi, Ben. It comes from a couple of areas. Firstly, Cruiseabout stores. We've opened a few stores in this space, and we are getting the TTV that's coming through, but we don't recognize some of the revenue for that until it flows through when the departures happen or when the bookings are actually fully paid. So we'll certainly see a lag on revenue recognition in that space. We're at a slide in the pack that shows one of the new ventures that we've moved into, which is Explorations, a new cruise line. And a lot of the advertising costs, a lot of the actual selling costs and that in terms of staffing goes into that now. But the sales for that are not. We don't recognize the revenue for that out of FY 2027 in some cases.
It's a bit of a mix between which channel, but it's certainly a lot to do with the TTV revenue coming through a little bit later when the advertising and reservation costs are all incurred now.
Great. That's really helpful. Thanks. Then just the second one from me. Just on the revenue margin, I thought it could have been a bit better in the first half knowing the fact that you've got airfare deflation, your attachment rates are pretty good in leisure. As we look into this period, I appreciate overrides you don't get a great amount of visibility, but it's much better than it used to be five, 10, 15 years ago. How are you feeling about those revenue margins into the second half, particularly in the context of overrides with airfares net-net now starting to move up?
Because I'm just trying to understand, I suppose, why you've pointed us towards the low end of this guidance so early or mid to low end of this guidance so early in the year when the exit rates were pretty good. You've got a bit of a currency tailwind from translation and by all accounts, Northern Hemisphere looks like it's starting to really kick along in a big way. You look at Booking, Expedia, and all these guys are really talking things up, even Corporate Traveller domestically the other day.
Yeah. Look, I think a couple of things with that, Ben. And I'll get Greg and JK out to jump in as well. But certainly, I think from a revenue margin perspective, certainly impacted by those overrides, as you said. I'll get Greg to talk to that a little bit.
I think in terms of guidance overall, look, I think we wanted to sort of just highlight where we're tracking at the moment. There are a lot of swing factors coming into the second half, as we've highlighted, particularly the level of seasonality. I think we've tried to articulate why we're positive around the second half and why we think the second half will show that. But if you look at the first half in its own right, the second quarter was good momentum for us. The first quarter was not. So we think we're seeing that traveling through into the second half. Certainly, January, we saw that. But there's a long way to go. So I think we're just sort of trying to give an indication to where we're tracking at the moment and what we think some of those swing factors might be.
In terms of revenue margin, particularly an override impact on that, Greg, did you want to talk to that at all?
Yeah. Ben, look, with every year, there's obviously a bit of movement with overs and unders. So it's nothing uncommon. But probably one of the callouts would be Regional Express and the trading model we have with those guys. To date, we've been unable to recover any outstanding money, and we haven't managed to find anything meaningful in a new commercial arrangement with Rex. So our view is that we're now in a year of relative stability. But also, in the last six months of last year, there was a lot more additional capacity thrown in, particularly with the Middle Eastern airlines.
And there's some great opportunity with the additional capacity to be able to grow, which saw us get some really good higher top tiers in a lot of those agreements. And when you cycle through into the last six months, the ability to grow on those without the additional capacity wasn't there. So just in terms of the outlook now for, I suppose, the next six to 12 months, there is additional capacity coming back in. We are almost 100% out of Australia for international capacity. The Qantas Virgin Qatar Virgin tie-up, which is now being approved, is going to be positive with the additional 28 flights. That will play through into some really good opportunity, we think, over the next six to 12 months. So we are sort of in that sort of stable environment, I think, as we look forward.
Fantastic. Thanks, guys. All right.
The next question is from Tim Plumbe at UBS.
Hi, guys. Can you hear me?
Yeah, mate.
Sorry. Sorry. Apologies because I've also been jumping between a couple of results today. So apologies if you've spoken about this. But maybe one for Chris. I know that you mentioned productivity savings are largely coming through more of an FY 2026 story. Just thinking about the groundwork that's been done in order to get those productivity savings, can you kind of walk us through how far through that journey you are? Is it that you've done 70% of the heavy lifting and now it's just the last 30% to get those productivity savings, or is there actually a fair amount of work remaining to get those benefits in FY 2026?
Yeah, sure, Tim. So a lot of the work has been done. I don't know the exact percentage, but certainly well over half.
There are different elements of Productive Operations. Some parts have been fully deployed, actually, like a new digital phone system, Workspace, which is our consultant interface where they operate, which gives them productivity gains. It's fully deployed globally in FCM, and Corporate Traveller will be deployed in the next couple of months. Some of our mid-office changes and automation have happened in some parts of the world, but not others. The consultant, sorry, the customer self-service in FCM Platform and Melon has been well deployed. So I think, look, we're well underway. And I expect that although we've already seen some productivity gains, we'll see further gains this financial year. So between now and the end of June, we're seeing our staff numbers reduce month on month now, despite transaction and TTV and revenue growing. And that's largely at the moment through natural attrition.
And we see that carrying on into next year. So we have said from the beginning, we think financial year 2026 will be the first year where we see meaningful improvements in productivity. However, we are expecting to see gains in the remaining months of this year.
Got it. And just the other question maybe for JK. Thinking about June, it's the seasonally strongest quarter. It's pretty important. From memory, last June wasn't exactly a stellar month. So how are you guys looking at that? Is that just that was the beginning of that kind of softer consumer spending pattern, and now you're normalizing to that, or does that create kind of easier comps for you to potentially come back stronger at the end of the year?
Yeah. That is true, Tim. It happened June was soft and then July picked up and then August went soft again.
We went through a few lumpy months, then in that first kind of quarter. But if you look at the exit rate that we've had for this half and then starting the new year, it's looking a bit more positive as we go into the year. So we're kind of thinking that seasonal patterns are back to some reasonable sense of normality, and we expect June to be a reasonably strong month for us.
Great. Thanks, guys.
The next question comes from Michael Simotas at Jefferies. Please go ahead.
Good morning, guys. First one from me is just around supplier overrides, and just interested in your comments on how much sensitivity to your guidance there is on supplier overrides and what gives you confidence in your ability to deliver that.
Also, can you give us an indication of how much of a drag it was in the first half? I mean, I know this isn't a perfect way of looking at it, but it looks like an enormous headwind when I look at the contract receivables last year versus where you finished this year. Last year, you had AUD 330 million receivables balance. This year, it's only AUD 251 million. Is that indicative of how big the headwind was in the first half?
Yeah. Michael, it's Adam. It's not indicative. So the receivables balance is just a timing function around when we actually get paid for those overrides. And that will depend on different contracts, different timings, etc. So no, it's not a fair way to look at the impact of the overrides coming through.
Look, I think for me, the biggest driver is around TTV growth, particularly in some of our core businesses. For example, in leisure, the likes of Flight Centre Brand and Travel Associates, etc., will definitely drive that override revenue coming in. There's a lot of moving parts to that. It depends a lot on the carriers that we're utilizing, the agreements in place for those, etc. So there's a lot of moving parts to it. But certainly, I think from our perspective, TTV growth is really important to us from an override perspective. And that's the key area that we're focused on. And as you saw in the second quarter and through January, we've certainly seen some momentum picking up in that space, which is what gives us that feeling of positivity as we head through these last few months.
Greg, is there anything else you'd add in relation to that?
Yeah. Thanks, Adam. And yeah, G'day, Michael. The only thing I'd add to that is just probably our focus on selling higher margin products, which we had some good success in the last quarter. But leading into, obviously, selling a greater range of hotels, cruise and touring, and sort of insurance with our new insurance relationship with Europ Assistance as well. We have a massive focus in the organization to be able to sell more of that because air is our lowest margin product that we contract, air and GDS. So it helps to work through the pyramid to sell high margin products. So yeah, good initiatives in play there, mate.
That makes sense.
And within air, do you sort of feel like your consultants have the ability in the stores to see visibility of the type of product that helps to achieve the override targets?
Yeah, definitely, mate. We've got a lot of, I suppose, signpost mechanisms at a consultant level as to what product to sell. We work really, really closely, obviously, with our key airline partners to make sure the product offering is fit for our customers as well. So one of our strengths has always been channeling as a business, and that's still core to the way we operate.
Yep. Okay. Great. And then the second one for me on Asia, how much of the decline in the first half was kind of due to one-off accounting type measures versus underlying performance of the business? And what are you sort of thinking about those trends heading into the second half?
Yeah. I mean, the vast majority of it was down to the one-offs, and we're expecting a much stronger second half. If you actually look at our trading levels, so TTV and revenue, they're actually pretty good in Asia. It really is that a lot of it was driven by one-offs. There has been some downtrading from some larger customers, but then that's being offset by some pretty good wins in Asia. So the majority of it really is down to the one-offs that we've mentioned already.
Yep. That's clear. Thank you.
The next question comes from Sam Seow at Citi. Please go ahead.
Morning, guys. Thanks for taking the question. Just to make the point on overrides, I think one of your peers recently reported overrides are fairly material in Australia, albeit off a small base.
I just wanted to confirm, I guess, one, if directionally, that your line was positive as well in the first half, just a little bit below expectations?
Yeah. Look, I think from an override perspective, again, as you've seen through the commentary, it's linked to whether it's us or our peers, it's linked to sales and to TTV. TTV in our first quarter was flat. TTV in the second quarter, we picked up, as you saw. So the trajectory on TTV and therefore overrides certainly is upwards in terms of the year to date.
Okay. Cool. And then thinking about the second half, am I right to assume that Qatar and Turkish will be incremental to the first half and then maybe even any color on the impact of the American Airlines reversal in the second half as well? Thanks.
Yeah. Yeah. Qatar obviously will be good from a customer perspective because it brings in additional capacity to be able to sell. There's still a lot to work through with that alliance. But it is, as we've seen in the past, every time there's additional capacity comes through, it opens opportunity. The point on American Airlines and probably the US-based carriers is it's sort of normalized over in the Americas now. There's some really good, meaningful dialogue happening with all three. There's probably a recognition now compared to the past about what value distribution actually plays and what trade plays with those carriers. So not anticipating any fundamental change in that part of the world, mate, or with any of their alliance partners either.
Got it. And then maybe just on the first quarter, appreciate obviously your comments around the TTV and airfare deflation, but just, I guess, the underlying kind of patchy, inconsistent August and September, I think now in the fullness of time, would you hazard a guess of what really happened in that period and why it reversed so strongly in second quarter?
No, probably not. I mean, I don't know if Chris or JK want to talk to it for leisure and corporate specifically, but I think we saw that the latter part of last year and through that first quarter, it was just a lot of inconsistency there. So I don't know whether it's just as things were stabilizing back to a normal sort of run rate or not, but I'm not sure. JK, from a leisure perspective, any sort of thoughts around that?
I think it was a general market contraction during that period, so we saw the comp set and everybody else across all of our GDS sectors. We get a view on how are they performing, and you could see that there was certainly a dip across the board during that period, and then we saw a bit of an uptick as we were coming into the second quarter, so nothing significant to point out at that time, but probably a degree of uncertainty, political unrest, and a variety of different things that are going on, but now you can see that it seems to be more stabilized. Consumer confidence seems to be easing a bit more.
Yeah. Sam, I reckon that too. I reckon consumer confidence took a bit of a hit.
We had a good May, then a softer June, then a good July, then a softer August, then September. And August, I think, started okay and then didn't finish so well. Then September was soft, then October picked up. Since then, it's been a bit more consistent. I think maybe the interest rate cut will help. People don't come rushing into the shops the day after the interest rate cut and say, "Yeah, I want to travel." But I think if their confidence picks up a little bit and they've got a little bit more money in the pocket, it's probably a good thing for us. And confidence will pick up as the half progresses.
Okay. That's helpful. Thanks, guys.
The next question comes from Ben Wilson at Wilsons Advisory. Please go ahead.
Thank you. Morning, guys. Just firstly, just wondering if there's any, are you seeing any trends in the leisure business that could impact overall TTV? So I guess, for example, anecdotally, it seemed all these sort of preference traveling more to Asia over the recent summer than to Europe, which implies lower flight costs and potentially lower hotel costs as well. Is that something you've seen? And if so, is it looking like a sort of slightly more permanent trend?
Yeah. Hi Ben. Actually, it's interesting because we look back on our destinations as to where people have been booking retrospectively and also forward booking. And despite some talks around the Aussie dollar hasn't been performing that well throughout the year against the U.S. and the British pound, but actually the U.S. and the U.K. have still ranked number two and number three in our top 10 destinations.
And what we've seen is really a blend of short and long haul. So Australia was number one, but we did see a real surge coming into the back half of the year more into Asia. And certainly, Japan was incredibly popular. So you can see that with that shift going in, there's a little bit of shift in booking patterns, but there's not a major mix shift in terms of top 10 consumer choices.
Thanks, JK. That's really helpful. And then second one, not wanting to labor the point further on productive ops, just I guess notwithstanding lower supplier overrides, etc. across the business, I had been expecting slightly lower cost margins in the first half.
Just wondering, can we weave into that that you're having a little bit of difficulty in terms of early traction from productive ops, or is it really just a timing issue and potentially with the impact of Asia play a real part there as well?
Yeah. I think that's a fair summary. I mean, I think we tried to explain that productive ops, we would start seeing incremental gains, which we are seeing, but it would be the next financial year that we'd really start seeing meaningful benefits. And I still think that remains the case. I mean, Asia has knocked us. There's no doubt about that. That has been a disappointing situation. But again, we are very optimistic about the bounce back that we'll see in the second half.
So I think Asia's not going to have a great year this year, but it will have a much better second half than it did first half. And we think it will have its building very strong momentum for a strong year in financial year 2026.
Thanks, Chris. If I can just squeeze one more in quickly, just on store opening, I think you guided at the full year results for about 35 openings across the full year, sort of balanced across Flight Centre brand, Cruiseabout, Travel Money, etc. Just wondering how they'd be going. Are you still on track for about that number of openings, and are they sort of ramping up to expectations? Are you still seeing quite a few customers starting the booking journey online and then going in store to complete the booking? If you can just give a bit of an update there.
Yep. So we're sitting at about 13 stores overall net growth on the half. And as we go into the year ahead, we're plotting out we've got a few more signed that will be opening up in the next half. So reasonably comfortable around the growth in that space. But really, we're looking at, well, what do the next few years look like because we believe we're underrepresented in a few areas. And it's actually showing that the shop model is very important to us. Customers are still walking in. And customers are no longer just shop customers or online. They choose the channel for the transaction that they want, and it does vary across the board. And I think we're well positioned, the fact that we've got a good diverse spread of channels for our customers to be able to access.
So you can see that the apps have become really important for us now, and we're getting a lot of engagement with our app, and online visitations continue to grow as well. So it's not one channel over the other. I think customers are multi-channel, and they choose what they want for the experience that they're looking for.
Okay. Thanks, JK. That's helpful. Thanks for taking my question, guys.
Next question comes from John O'Shea at Ord Minnett. Please go ahead.
Can you hear me okay, guys?
Yeah, mate.
Yeah. Thanks very much. Sorry, I've been juggling calls too, so apologies if that's a bit askew. But I just wanted to touch on your point there. I know you mentioned about the luxury side doing pretty well within the business with Scott Dunn, etc. Is that an area that you guys would obviously like to get bigger in?
Perhaps maybe you'd talk about some of the strategies that you're sort of employing to kind of grow that business globally. Perhaps it's maybe a JK question.
Yeah. Hi, John. Look, it's definitely an area of focus for us. We made a strategic choice a couple of years ago to shift the diversity of the portfolio with a laser focus on mass market, luxury, and independence. With luxury, we can see now that Scott Dunn is really taking off, and January they had their best month ever. So the focus for us is to grow the U.K., also the U.S. Asia, while it's a lot smaller, is a ticket to play in the future. We can see that while we're getting TTV growth in this space, it is a high-margin business for us.
The growth rate doesn't grow as rapidly in terms of significant share on the top line because of luxury being a little bit more niche, whereas we can see that the margins are better on the bottom line. We're focused on Travel Associates in Australia and New Zealand, and you'll see that we're starting to take some of the lessons learned through Scott Dunn to be able to see how can we transfer some of those models across into this sector as well. So it's a very important part of our future, and you'll see a lot more focus on growing this space.
Thanks very much, JK.
The next question comes from James Bales at Morgan Stanley. Please go ahead.
Hi, guys. So I just wanted to make sure I understood how to think about the second half improvement versus where you're at at the first half, or even year on year if that's easier. So if we think about the TTV growth, excluding the override component, so just on a base commission basis, versus the incentive improvement that you expect versus the cost control element here, can you maybe give us a pecking order in terms of the relative importance to achieving the second half outcomes that you're after?
Yeah. I might start with it and Skroo might jump in as well. But I think for me, the important thing for us to remember about us is we're a growth company. So TTV is important. It's always going to be important for us.
For me, I think the number one priority for us has to be growth, and particularly growth in some of those businesses that are higher margins that probably haven't been growing at the levels that we want. There's a number of strategies that we're looking at in leisure and in corporate to ensure that we're growing those, not just beyond this year into 2026, but in the short term as well. My view on it, James, is TTV growth has got to be our priority. There is no doubt that we continue to have an absolute focus on cost and ensuring that we're investing where we need to for the short, medium, and longer term, but we've got some pretty good controls around that, and we're prioritising that effectively.
Control of our cost base as it currently sits and ensuring that that doesn't grow in the short term as we're bringing in that additional TTV and revenue is going to be important for us as well. And then I'd say some of the other initiatives that we talk to, such as Productive Operations, some of the other work we're doing in the Global Business Services Division, certainly we will see that flowing through. But again, that's an ongoing and increasing impact, but probably later this year and into FY26. So I think that the key to me, for me at least, is that TTV growth and the mitigation of our cost growth in this next few months as we're picking up in that space. Skroo, any of that or just Skroo it?
Yeah. I think in the next six months, a lot of our major brands look like they're going to go reasonably well, and we're going to be relying to some extent on areas like FCM, which is a major growth brand of ours in the large corporates, and growing that net PBT %, profit before tax % in FCM, particularly in some countries, particularly, for example, Europe and North America, and obviously, Chris has spoken quite a bit about Asia as well, which we're pretty confident will improve a lot this year, so that's one area that I think is going to make a significant difference over the next six months. Also, in leisure, we have quite a lot of TTV in what we call independents, which are third-party independents.
And growing that net margin is also going to make a significant difference to these results in the six months if we get where we're aiming at there. So those are a couple of the areas we're focused on. Obviously, we're fairly diverse in both leisure and in corporate and even geographically. So it will be a bit different in each place. But I think our major brands look pretty good. And if we can get better margins, net margins on some of these other high-growth areas, I guess that's why we're looking pretty positive over the next four or five months, and the start's been pretty good as well.
Got it. And then maybe just extending on that trajectory out five years or so, you've spoken a fair bit about these AI initiatives and some of the other efficiency initiatives that you've got going on.
Maybe could you help us understand the growth rate that you expect in TTV relative to headcount, and how much of that improved efficiency you expect to hold on to versus pass on to corporate or leisure customers?
I might start with that, James. And then I'll hand over to Chris for corporate and JK for leisure specifically. But I think from our perspective, it's a little bit difficult to answer it simply because there are a lot of factors in there. I mean, certainly, depending on which brand we're talking about, for example, in the leisure space, from our perspective, the Envoyage independent brand is not an employee-based brand for us. So there won't be as clear a connection when you're looking at that. So the growth rates will make a difference.
But if you look at our core brands, we're certainly focused on how we leverage AI, but also how we look for further productivity improvements. And the focus, as Chris had said earlier in corporate, is that that is in our front line and also our support functions. How do we ensure that we are operating as efficiently and leanly as we can? But Chris, from a corporate perspective, do you want to expand just on what you think your view looking at sort of that four or five-year horizon looks like?
Sure. Well, the first thing I'll say is that there's two benefits to customers. One is customer experience. We believe that customers actually have a better experience when they self-serve because they can get accurate solutions to whatever problem they may have faster if they do it themselves using our digital products, which are enhanced by AI.
So we think that customer experience point is really important. But yes, it does also drive savings to them because customers pay lower transaction fees, for example, when they self-serve rather than if they use our people in many cases, not all, but in many cases. And it does drive much better unit economics for us. But the fewer people we have in either front end or in support roles to handle a transaction, the lower our cost base is. So it's a real win-win. And I think that we expect to see cumulative productivity gains, not just next year, but year on year, right after 2030. We are on a continual focus to improve productivity.
Great. I appreciate the color, guys. Thank you.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. There are no further questions at this time. I'll now hand back to Mr. Turner for closing remarks.
It's Haydn, of course. Thanks, everyone, for dialing in. We're around for the next few days, as I think most of you will know. So hope to see a few of you. And give us a yell if there's anything else that you need. Thank you.
The conference is now concluded. Thank you for participating. You may now disconnect.