You're mic'd up.
Testing, I am.
Okay, we got it. Katrina, guys, thank you very much for joining us today. Thanks for coming through to walk us through the strategy up to FY 2030 and how we should think about the business. I think we've got an hour and a half.
Hour and a half. Precious time.
Cool. Why don't you kick off, and then we'll open up. Expecting plenty of Q&A across the floor. We've got a bunch of people that are zooming in as well. They will be sending questions to Carolyn, who then will flip between the floor and questions online as well. Everyone will get a turn. Katrina, over to you. Thank you.
Great. Thanks, Tim. Thank you to all for being here today. Delighted to see so many familiar faces. A special shout-out to everyone online. Delighted to have so many people dialing in today. Context for first-time listeners today. Look, as you may recall, Webjet Group de-merged from the bigger Web Travel Group last September, 30th of September it was. New entity, new CEO, new CFO had been in the business. My team here today and I, who I'll introduce shortly, kind of got given the keys to the car, if you will, if you remember those references. It has been a very busy six months. We have been really focused on, I think, trying to realize the opportunity that this de-merger brings.
That is to take an already excellent business, which consistently delivers, and give it the time and investment that it really deserves to make it even better. That time and that investment is a dedicated balance sheet, dedicated board, and a dedicated team who are on a mission. Pretty excited to share with you what that mission is today. I will just turn to the team that's sitting over here on, I think, with the reserve, they call it the child's table. It's a reserve table over here. Just first here on the left is David Galt. David Galt is the CEO of the OTA division. He's been with Webjet 18 years. Yes, he started with the business in shorts. He doesn't look that old. Dave, there's nothing he doesn't know about our OTA business and the travel industry in Australia.
Introducing a new face for our executive team, Nathaly Norton. Nathay, give a wave. Nathaly spent the last 20 years in travel, hospitality, and tech, mainly driving growth and sales and commercial. A really nice addition to our team as we build out our team going forward. Very lucky that she joined the business late last year. Layton, our CFO, who's known to many of you, 12 years in the Webjet finance team, previously of KPMG, and the creator or owner of our beautiful balance sheet. Great to be joined here today with my incredible team. Agenda. We're pretty excited to share a few things with you today. We've been scrolling away in secret on quite a few things, as I said, to really take the opportunity to sit back and go, right, we've de-merged. This is an opportunity for this group.
We're pretty excited to share something with you that's quite significant. That says our plan to FY 2030 and how we are going to be delivering on that. Let's start with the end in mind. These are the key messages that we think you should take away from today. Firstly, the market opportunity within travel and for Webjet, it's highly compelling. That is unchanged. What has changed is we've completed a very detailed and rigorous, I'll call it substantive deep dive into the business. Wanted to confirm in a robust way some of my hypotheses. What we found is this: this is not a business that's ex-growth, and it's not a business that can carry on at market growth. We think there's significant opportunity for growth. We'll talk you through why we think that and how we're going to deliver on that.
A key enabler of this, and that we talked about a lot last year in the de-merger process and in the half results, a key enabler of this is the revitalization of our OTA brand, our hero brand, and our marketing. I mentioned to many of you that we undertook some market research and some speaking to customers and non-customers last year. I want to share with some of you the insights to that, because that shows you the opportunity that's in the gem that is ready to be polished. I guess the key thing that we've always come back to is we have the focus, the discipline, and a balance sheet to back us into a growth period.
Because I know you'll all be asking, just by way of trading update, since we have you all here, look, really, as telegraphed at the half-year results, we are on track. We remain on track to deliver our FY 2025 broadly in line with FY 2024. Pleased to be able to do that in a tough market. All right, our FY 2030 plan. You've seen this page before. This is the investment thesis, if you will. I think the key takeaway here is the foundations are really strong. We've got the iconic brand in the OTA. We've got the leading brand in our Airport Rentals and Motorhome Republic brands. One of the core competitive advantages of Webjet is we've got this long history of taking really complex tech, bringing it together and making it really simple and digestible for customers.
mix and match matrix, if you will, is what this company over the last nearly 27 years was built off the back of. It's a highly scalable business model, excellent CapEx, cost control. It's a super efficient business. Also, it's got those inbuilt tailwinds, which, even though it's a softer market, we really get the benefit of. Travel, the TAM for overall travel is continuing to grow. We know that the shift online is accelerating. The online penetration for this total category in Australia is significantly lower than that in the U.S. and the EU. Every category is moving online, and we seek to take advantage of that. We should have probably taken more advantage of it, but now we've really got our eye on that prize. International outbound capacity is continuing to grow.
For those of you who love a bit of ABS stats, you would have seen their latest results showing that outbound, or Australian travelers returning from overseas holidays, is up 11% year on year for last December. It is continuing to grow. Obviously, we got the benefit of, thank you, Layton and Dave, no debt, really modest CapEx, and relatively low working capital. What I believe is an incredible team ready to deliver and to go forward on this mission. Foundations are strong. We know that. If we look at the TAM, and for those eagle eyes, you'll go, "Oh, 103 billion. That's a bit higher than what you presented last year." Damn right, because we've done the work to make sure that it's fully inclusive.
What we took with some one or two reports, we have done the work to make sure we've included every sector and every supplier on that, whether Australian-based or not. The market opportunity here is huge. If you look on the right-hand side, we play in one space: flights and of that, domestic. We're number one in domestic OTA flights. We know that. We're not number one in international. That says to me, this is a lot of opportunity. Probably more than we thought last year. Why? Because we've done the work.
At the end of last year, and someone said to me, "I wondered why you were beavering away so much at the end of last year." We took a team, an internal team, and we brought in an external management consulting firm, a leading global strategy house to work with us, an internal and external team, because we wanted robustness, we wanted objectivity, and we wanted speed. We know there's opportunity to de-merger. This is a gift. You don't get this very often. We really want to, and we really believe in this business. We're like, "Okay, so let's really invest and make sure that we have a good, hard look at ourselves, the market." We looked at everything: our products, motorhomes, cars. Where is it going internationally? Where is it going domestically? How will AI change this business? How do we use AI to disrupt?
Where was our brand? As part of that, we did research with three and a half thousand customers, sorry, three and a half thousand consumers, some of them Webjet customers, some of them not. For those of you who don't live in marketing land, that's a really significant sample. Most people go out and survey a thousand. We did that. Coming off the back of that, we had 10,000 transactions that we analysed. They told us about their trips, three of them, each one of those people. We could analyse who they booked with, why they booked with it, what that person was, how much they spent. We've got this really detailed database, not only our own, but now this real insight to the consumer. We haven't done that for a really long time.
In fact, I think Dave will say we've never gone out other than to our own customers. We sure do do a lot of booking, so we know a lot about our customers. It is really important to understand the whole context. That was part of that. We looked at everything and went really deep. This looks simple, or it looks, "Oh, okay, yeah, I understand that." It was an incredibly intense process. It was robust. That was for a reason. We wanted to have a really solid fact base so that we knew where we were going, so we could understand what's going to turn the dial, what's going to turn the dial fastest, what's going to give us the best ROI, what's going to create the best long-term value, what's going to print off cash.
We looked at all of those and balanced out all those things. The outcome is, as I said earlier, we think there is significant opportunity for this business, more so than we thought last year. There is, we think, quite a few opportunities and adjacencies that have not been mined. Now the output of that is we have a really robust and detailed five-year plan to go get them. I think based on that, here is the result. Our plan has us going from our FY 2024 TTV of AUD 1.6 billion to AUD 3.2 billion. You guys can work it out in terms of that is a substantial CAGR and substantially higher than I think what we would do if we were not investing. The strategic priorities are there. I am going to go through those now and talk about how the plan delivers.
At this point, I just think it's worth talking about the alternative. The easy way out here would be to amble along, to consistently, this business consistently produces beautiful cash flow every year and continue to sweat the asset, if you will. I think there's a really strong case here to challenge that dynamic and to invest for growth. We're going to be smart about it. There's lots and lots of moving parts. We'll make sure we're clever as we go through. What we can see, and from our work, we've been incredibly thoughtful, but also conservative. As someone said to me, because of course, the report's out there already and there's views, I don't think this is aiming for, what does it aim for, the stars and fall in the moon? We don't think that.
This is what we've built as a robust plan to get here. That is our ambition, and that is our plan. Let's talk about how. I'll just set this up first. Then I'm going to ask the team who are driving this out and owning these spaces to give you a bit more color. I think just in terms of where are we today and what is this going to look like in five years so you can get some real meat around the bones on how this feels. The first big move or the first big initiative in the plan that we have is around expanding our share of international flights. Our market share of outbound and taking that online. Today, it's about 20% of our bookings are outbound or international.
Where we think we can get that to is between 25-30. That is still continuing to hold our own in domestic. That is a big amount of growth. How we are going to do that, Dave will go into a bit more detail, but it is centered around four different things: content, the tech, engagement, and the reach. The next piece. Today, we have a beautiful hotel offering. Go on, I encourage you. Go and check it out. It was replatformed in COVID. We sell double the amount of hotels that we sell today than we did at COVID. Guess what? We do not do any, really minimal, marketing on hotels. Most of our efforts are spent on flights for good reason. However, we think there is a significant opportunity there in terms of how we package that up and significantly scale hotels, but also packages.
Nathaly, who's driving some of the growth initiatives and the new pieces, she'll have a talk a little bit more about that. Now, here's a really exciting one for the business: business travel. Turns out, and many of you know, we serve quite a few businesses, so SMEs, small to medium-sized enterprises, and some large ones. We serve them in a really unstructured capacity. We don't change our model for their needs. I'll talk a little bit more about this later, but we think there's a significant opportunity given that we're doing it already to capture more of that market. Lastly, we've talked about the brand. I'll go into that. We did the refresh on the Motorhome Republic and the Airport Rentals brand last year. Now it's time for the OTA brand based on insight and research. I've talked about the glow-up.
It's time for the refresh. We look forward to sharing that with you later this year. The goal here is to make us more top of mind. Dave and I will talk you through a little bit around the brand and loyalty later. That's the big moves. That's the big plans. Each one of these has a really robust work behind them. As a team, we're pretty excited and pretty passionate and pretty determined. Dave, I'll get you to just come over and talk a little bit more about flights.
Thanks, Katrina. Can everyone hear me?
Yep, perfect.
All right. I think as an extension from the de-merger roadshow that many of the faces here were in the room there, we called out international as an opportunity. I think the market dynamics are favoring it more and more as we go on. I was just chatting earlier with some people about the price of domestic holidays. My favorite comparison is to go visit my brother-in-law in Kalgoorlie in Western Australia. I can take my family of four to Rome on Qatar Airways for the same price on airfares. Domestic travel is really expensive. The average nightly hotel rate on the Gold Coast is double what it was in 2019. It is getting really expensive for families to travel domestically in this part of the cycle. Conversely, international, we are seeing markets like Japan just explode with demand. The FX works in favor there. It is a great destination. There are many markets like that.
I think as you look at this slide, you might think, "Well, what's different?" Compared to previous iterations of us talking to the OTA business and international flights, the difference is the level of investment that we're making going forward. We are able to prioritize projects that have been on backlogs that with the smaller CapEx footprint that we've had in IT, we haven't been able to prioritize. We are able to bring opportunities to market faster than what we have in the past. It's a big market, outbound flights from Australia, the addressable markets there. The research tells us 8% CAGR on the out years through 2027. Again, really good dynamics. I think one of the things to touch on there is the type of capacity that's coming into the market in international or outbound flights.
We've got heavy growth in LCCs in our part of the world. Looking at through APAC, you're seeing low-cost carriers come back with their aircraft that they can fly fuel efficiently, lower cost-based than the traditional airlines. They're turning into network airlines. Fly from Australia into Asia and then on to a further destination. That's quite different to where they traditionally have just competed as sector-based airlines. The other piece is what we're seeing in the full-service market is capacity coming in to really challenge the national carrier. A good example of that is the Qatar and Virgin Australia partnership that's been approved. That is world-class flying experience paired with the Velocity Loyalty Program. It'll be a compelling price point. Another example there, Turkish Airlines, who only recently started flying to Australia. Next year, they're launching direct flights from Australia into Istanbul.
That will take on project Sunrise. Big airlines around the world are making big bets in Australia, bringing more capacity in. It is also the diversity of airlines that is really interesting. That is quite different to the domestic market at the moment with a duopoly in play with the three brands under two ownership structure there. As we look at it, I might just talk through a few examples that we have got on the right-hand side here that we are working through. Trip Ninja, many of you have heard me talk about Trip Ninja and the work that we have done on that in the multi-stop flights. As a reminder, the opportunity there was about 10% of our international flight searches that customers did were multi-stop flights.
Now that we've got that live and optimized, we're looking at other use cases for that technology, bringing that on to flights from Australia to Europe to the U.S., where there's no low-cost carriers that directly service those markets out of Australia. They are full-service airlines. You fly on a Qantas ticket there and back. When you go onto any website, you would just see single airline itineraries paired together at a price point. We're using Trip Ninja to combine one-way airfares on full-service airlines to those continents paired with another airline coming back. What we see is there's directional load imbalances from airlines. They will have a really cheap one-way flight from Europe to Australia, but their flights from Australia to Europe might be full. When you shop that as a return search, the overall itinerary can be quite expensive.
We can take advantage of one-way airfares and we'll combine them under our Mix and Match banner that we're known for on domestic. Circa 40% of our customers on domestic Mix and Match airlines. Our customers are used to seeing us bring content together for them from different airlines. We're really excited by that opportunity. That'll be live in May, June. We're developing that now. NDC, new distribution capability, is sort of the top 20 airlines in the world driving this through with IATA to replatform their technology and really modernize what are legacy systems. We've worked for the last five and a bit years. Qantas was the first airline, and it was a bit painful being the first cab off the rank building parallel to Qantas and their partners. We've done all of that work. We take our Qantas content through NDC.
We take Singapore Airlines through NDC. Now we also take Qatar Airways. We have three really big airlines. What we are seeing is when we cut over to NDC, we are getting access to better content, cheaper fares, or better fare classes than what those airlines are putting in the traditional distribution systems. The airlines are using their content to favor the technology that they want the industry to move to. We are leading there. All of the work we have done there sets us up to roll new airlines onto NDC quicker in our environment as we see the dynamics through this. If they are doing content differentiation on NDC and we have volume, we will prioritize them and bring them to market. We have a bit of a decision matrix on how we do that. The next point there, new tech and UI enhancements. UI is user interface.
I'll just share verbally an example. Over the Christmas break, we've got our technology to a point where we can run split tests in the way that user journeys through the site. Airlines are really focused on paid seats, paid bags. I'm sure many of you know Qantas charge even their Platinum Frequent Flyers for seat selection now. As you come through, we ran a split test to test the way we present paid seating. Some airlines have free seats and then you pay for better seats. That split test that we ran showed us that we got double the attachment rate of paid seats with a UI change. We reached statistical significance really quickly. We rolled that out across 100% of traffic, and we've seen that uplift hold.
Having that technology base and getting better and delivering that through more of our user journeys is really what is going to enable us to accelerate the growth in this space. That's just one example that I wanted to share. Look, we're going to talk to marketing in a bit more detail. I might just leave that for a couple of slides' time. Another part of Trip Ninja, and again, we've delivered the core that we wanted with them. We're looking at other ways we can use their AI pricing engine. Typically, we've only used it on the constructed fares on multi-stop international flights. We've got a bit of work going on with the Trip Ninja team that will take us a while to develop, but we're going to bring their pricing engine over all of our international flights.
That will help us in real-time test price sensitivity, driving to a conversion outcome. Look, what we've seen on multi-stop flights gives us the conviction that this is an investment and a pathway that will deliver great returns over our whole international flight business in the out years. I think just sort of in summary, Katrina touched on the offline to online, the work that we're doing, the diversity of airlines. Customers know that there is a plethora of choice for them out there now on outbound flights. The need for comparison and to use the standard of the comparison engine online us has never been more present. That will be underpinned by the marketing that we'll talk to in a few minutes.
I think the message to leave you with on international is by continuing the focus and investment and enhancing that, we're able to bring some of these great experiences and products in front of customers sooner than what we otherwise would have if we didn't have the extra capital to invest now. That's it for me. I'll pass to the next speaker, who's Nathaly.
Dave. Oh, just jumped on. Hi, everyone. It's a pleasure to be here to talk to you today about expanding our hotel and package offering. I hope you all know that you can book hotels and packages on our website. A lot of our customers maybe don't, and that is why there is a big opportunity and why I'm here today and excited to talk about it. Historically, we've always been a flight-led business.
Hotels, packages, and any products have been a secondary add-on. Our goal with this strategy is to ensure that we bring hotel and packages to the forefront of the business, drive significant growth, and drive better value for our customers. You can see here that the market is absolutely huge, AUD 40 billion in total addressable market, most of which is made up from the hotel space. We know that it is a growing market at 6% CAGR. We also know that hotel-led brands drive 4% more engagement than a flight-led brand. Why this is interesting to us is because we know we have an educational piece to educate the market that we do actually sell hotels and we do actually sell packages. Further to that, 74% of customers that we surveyed said that they would like to book all their travel in one place.
We have the market size. We know we need to do a bit of an education piece, but we also know that our customers want to book this full suite of packages with a full suite of products with us. This is why this opportunity excites us, and this is why I'm excited to be here to help drive this business and help really grow this area. We truly believe that if we can leverage the current booking, truly leverage the current brand and give a real dedicated marketing focus behind it, we can really shift the position of Webjet from being this flight-led business and encompassing all the products and really drive growth for our customers, really drive growth for the business and offer better value for our customers. We also know that we need to invest in new tech and UI enhancements.
This is critical to our success, and we know that we can execute well in this place. As Katrina mentioned at the start, we have done significant investment into the hotel platform. We've looked at optimizing pricing and merchandising, so getting smarter, giving customers better deals if they log in, giving customers better deals if they book a hotel in package in one place, 20% discount. We've also looked at enhancing our search and filtering. We need to make it more intuitive for our customers so they experience the booking process as they want to do it. We've elevated our user experience, so really brought them on the journey, given them more visuals, made it more exciting because booking hotels and booking packages is far more exciting than putting a bum on a seat. We really need to elevate that piece. We also increased our booking flexibility.
We brought in book now, pay later, deposits, and we made the post-booking piece a lot more seamless. Customers can now jump on and easily change, cancel, or do whatever they need to do with their booking. These technology enhancements, as Katrina mentioned at the beginning, have made a real significant shift in our business. They have grown their hotel area by 35%. That is a significant upshift, a significant shift in our business. How we did that was purely through technology. We had no marketing behind it, very little focus in the business on this area. We had one product person that looked after hotels, packages, and all other products, not just that was not based in the flight area.
There are some clear gaps there, some clear opportunities that we know if we can get that structure right and we know that we can start building that out, we have a real opportunity. We know we need to enhance our content and our offering. In this space, we are looking to really focus on packaging because that presents a high-value opportunity for us. The more components that we can put into a package offers a higher yield, a higher value per booking. Not only that, it offers higher value to our customers. They know what they are booking, they are excited, and they want to commit to it. We currently book packages. You can jump onto the site and you can book a hotel and you can book a package and you can book a flight in one package.
This is brought out in dynamic pricing where it's live availability. What we're looking to do is to shift that dynamic package strategy into a more static package. By building out more components where we might add a hotel and a flight at one price to offer better value for our customers, or we might put a hotel with a user unique experience and bring that to the market with one price. What that then does is offer higher value to us because the more components we can put into the package and offer a flat price, we're obviously increasing our value per booking, but the customer is also getting more value. They know what they're booking and how they're booking it. This content piece is really key.
54% of all customers looking to travel to Asia in the next 12 months have told us that they would consider booking an all-inclusive package. We do not book all-inclusive packages. So we are not capturing that market. They are going elsewhere to book those kinds of packages. Along with that content piece, we are also looking at bringing in multi-day tours. Whilst you can go to anywhere and book a multi-day tour, you can go direct to the supplier and lots of other OTA service this. What we want to do is capture more of the customer's travel wallet. We want to make our customers sticky. We want them to consider us to book the full experience. We have got a little bit of work to do around that consideration.
From the survey that Katrina mentioned at the start, only 5% said that they would actually consider booking a hotel with Webjet. 12% said that they could consider booking a package with Webjet. We have a massive, massive opportunity there. If we can bring that consideration up, we can really change the results. We're already on that journey. We're already talking to our customers, understanding their needs, and we're doing this right now through post-booking surveys. Every time a customer books a flight, they receive a post-booking survey, as you will have experienced in most booking processes. How was your booking experience? Do you have any feedback? We're building this out. We want to know what else the customers are booking, how they're booking it, and why they're booking it. The facts are pretty confronting, actually. We are losing a lot of our customers to other platforms.
They're coming to us and they're booking their hotels and they love us. Our MPS scores are fantastic. We're getting good feedback on the user experience and our customer service, but they're still going elsewhere to book the accommodation. We offer that accommodation. We offer the same price and we offer the same hotel. We offer a very, very similar user experience, but we are just not grabbing hold of that customer. We need to keep that customer in our ecosystem, and we need to make sure that we get smarter on that UI experience. As I mentioned, that's around the tech focus, and we need to make sure they know the content that we have. We're just not talking about it enough. We're just not sharing about it. One of the key areas that we know we can do better is that post-booking conversion.
Right now, we lose a huge chunk of those customers. Once they've booked that flight, we don't hold on to them. We just let them disappear. We can focus on that customer retargeting. We really can bring them back into our business and make them a whole lot more stickier. I truly believe we're in a really strong position to execute this strategy at scale and with momentum. We can do this right from day one. We already have a really strong database of customers. Customers that Dave spoke to are our flight customers. We know when they're travelling, where they're travelling to, and who they're travelling with. They are travelling to key destinations: your Balis, Thailand, Fijis. We're not booking the accommodation. We need to make sure that we're grabbing hold of those customers and attaching a whole lot better.
We need to drive better conversions. As I keep saying, they need to be aware that we can actually book all these products in one place. We truly believe by leveraging existing demand, we can seamlessly turn the traditional flight booking that Webjet is traditionally known for into a full travel experience. The one thing I do want to mention is we are not looking at going head-to-head with the major global competitors out there. We are not looking to go head-to-head with Booking.com, and we are certainly not looking to outspend them in the marketing space. What we are doing and what our strategy is, is to make sure that we grow our market share. If we know if we can capture that market, just 1% will significantly shift our business in a big way. I am excited to be here.
I truly believe we've got the foundations. I truly believe that we can really drive results. I know that hopefully we'll be here talking to you about how we've really lifted hotel and packages to make a massive impact on the business. Thank you. Over to you, Katrina.
All right, guys. I thought I'd tip in on this one because I just think it's a really significant opportunity, and that's business travel. As I mentioned, we serve this in a fairly unstructured capacity today. We already do this. We spend a bit of time going, "Okay, so let's find some customers, have a little chat." I just wanted to share this story. We spoke to this customer, and they've now left Webjet, and they don't book their business travel for us.
We were like, "Okay, let's find that out." Just to give you some context and some sizing, it's a really small example, but they were spending AUD 125,000 a year with us and their team, their office manager booking all the travel. We said, "Oh, why did you do that? Why did you do that? Why don't you go somewhere else?" They said, "Look, we really trusted your brand, for starters. We loved the flexibility. There's a fly-up one, fly-back. We loved that mix and match matrix. We love the fact that you're transparent. There's no nasty surprises later. You're very clear in terms of what I can get, the price, etc." The transparency really appealed. Super efficient. We want a digital solution. We don't want to call anyone. The most important thing was they appreciated the proposition for what we deliver.
That real choice. They had choice within their hands. We said, "Why did you leave?" They said, "Oh, trick is we started growing." I'm like, "Yay for you because most me's or success rate not so strong." They're like, "We really started growing. We started to get a lot bigger, and we just scaled, and we needed the things that you didn't offer, like expense management, the backend, approval systems, etc." Now, with their new provider, they're spending AUD 12 million a year in terms of travel. That was a missed opportunity for us, AUD 125 to AUD 12 million. That said, we know there's a significant opportunity there. They wanted to do it with us. We just didn't give them the pieces of tech that they needed. What are we really good at? Tech.
That was why we got sort of pretty excited about this and going, "Well, this is a really strong leg for us to stand on and to go and capture." Look, the market is significant, AUD 22 billion in terms of how we size it for Australia and New Zealand. The majority of that spend is obviously in our bread and butter, domestic travel, domestic flights, domestic accommodation that we know really well. As I said, of that total TAM, 65% is spent by the smaller end of the market. It is growing strongly. What we also learned from all our research was that 30% of the travellers, they prefer a digitally led experience. Okay? We got pretty excited about this and said, "Okay, why do we think we could win?
You've got to be able to—what's your right to win here?" We already do this. We know that they really like us. We just didn't meet their needs as they grew up, if you will. We think this is a really untapped opportunity because the research said that they really want a digitally led experience that has got fair pricing and no nasty surprises later. We have upfront fees, and we're very transparent. The opportunity here, we think, is to lead with a digitally led business OTA. We think that's pretty untapped because these SMEs, they want to remove the friction that comes with some of the big TMCs and do so with minimal fees. Our target market for this is those tech-savvy SMEs who want a local provider.
If they get into real trouble, there is a phone call away, similar to how we serve flights today. Pretty much all of it is online. If you get into trouble, we have our beautiful, very high-rating 24/7 servicing. It is something that we already know well. There is a disruption opportunity here, which we are quite excited about. That is where we have just always done well. Also, it brings to us some really network benefits. Obviously, if you are selling—these customers are really high value, right? I do a lot of travel between Sydney and Melbourne, flying up and down. These customers travel frequently. They are doing the full package in terms of flights plus accommodation. They are price-sensitive in this bucket, but they also prefer the online experience and the self-servicing experience.
This is a higher lifetime value of a customer than many of our customers, which are transactional or leisure. That gives us network benefits as well. If we're selling a lot more of our favorite airlines, that gives us network benefits from that and obviously brings back to the group a bigger volume of which you can leverage. That's why we're excited about it. The second piece of that is there's a number of pathways to execute. There's lots of different options that we can choose here to deliver this for our customers. I think that's the key things I want to talk with here. We think this is a really significant opportunity. It's got different speed. All these different opportunities have different speeds. This one we're going to be a bit more considerate about and very disciplined with.
It is something that we think is a significant opportunity for us and a really natural adjacency that leverages our strengths. We already do. Even if you did not miss the retention piece, even if you missed the attrition piece, you would be doing pretty well. All right, Dave, I might have you come up and talk to Brand again and all the insights that we got. Come back.
Long walk from over there. Look, I have been with Webjet for nearly 18 years. In the last few years, we have made big investments in a program that we call Voice of Customer. Many of you may be aware that we have migrated our customer operations platform into AWS. We are using some other survey tools with our customers.
What we have had over the history and the journey of the OTA business is we've had deep insights from our customers and what's gone well and what hasn't. That's really shaped how we've optimized our user journeys, where we've identified opportunities and so on. That was insights that were gleaned just from people who were already transacting with us. Late last year, after Katrina joined the business, we did our first, and as far as I'm aware and definitely in my time at Webjet, our first significant external research of customers, but primarily of non-customers. We worked with BDA Research. We commissioned them to go out and pull together a fairly substantial survey to go and talk to these three and a half thousand consumers. Again, just to reiterate, the majority were not customers.
Really, what we wanted to know was what they thought of Webjet. Fundamentally, and some of what Nat was touching on was really, what do they use Webjet for and why? Importantly, what are they using other travel businesses for and why? What we were after was the insights into the rest of that TAM chart from the first early slide and why are people transacting with other businesses when we have these products. I'll go into some more detail about that. I think one of the key things, and if I reflect on when I started at Webjet and I would say, "I've joined Webjet to barbecue," people would sort of look at you and you have to explain, "It's an online travel agency.
We compare flights and go through the whole piece. Thankfully, now you say you work at Webjet, they're like, "Oh, yeah, I look at Webjet." That awareness is an incredible asset that we have in the business. Up in the top right, you'll see our iconic mouse plane. It's had the red wording stripped off it, the URL stripped off it. Part of the question was unprompted with our logo and competitors' logos had the same treatment. Identify the company. 73% of the respondents unprompted knew that was Webjet. As a brand, people see the logo, they know it's us. That rated really highly compared to our competitors. The flip side of that then is the 21%, so the stat a bit lower. The context to that is being very familiar with the brands.
Other brands had people that basically other brands were top of mind. Whilst people knew the Webjet brand when they saw the logo, when asked questions about where they go to book accommodation or a package, Webjet was not top of mind. What we have is a big asset that we have built up over the years. You would not have been able to drive around Melbourne or Sydney without seeing a Webjet billboard in the last decade. We have made those investments over the journey. It identified some opportunity. Another stat to share there was awareness amongst, and this is looking at demographics, so age brackets, and I will be careful with my words, in the over 55s bracket, we had great awareness, 85% awareness. People who have been exposed to our brand over the journey, and especially pre-pandemic, 85% awareness, which is awesome.
If we look at our 18- 34-year-olds, that awareness dropped to 60%. Whilst they're aware of us, nowhere near at the same rate as what the, and again, I'll be careful with my words, the upper end of the demographic are. We've got an opportunity to refresh the brand. It is an iconic brand. We're not throwing the baby out with the bathwater here. This is leveraging the assets, but using the insights that we have and making it relevant to today's travellers and the future generations of travellers that are going to have, not burdened by mortgages and so on. Really, that is the research has pointed out the strengths and the assets that we have, but also really highlighted opportunities and where we have weaknesses that we can leverage to take us a lot further in the years ahead.
Just in the middle of a slide there to look at what people found or what they really wanted from an online travel agency, so not just Webjet, ease of use ranked really highly, the easy comparison, and we know that. That comes back to the domestic matrix that Katrina touched on, which underpins the core of the business. The ability to book all travel in one place. Nat had the stat on that. That ability to book all of their travel in one place is something that people are looking for. We have the products, but they're not aware. We lack that top of mind for when people want anything other than flights. We're definitely there for flights. We all know that. It's the other products. I just thought I'd include three of the verbatims.
The bottom one hurt me a little bit, but I'll just start with the top one. I think it mostly does flights. That's exactly what that really high unprompted awareness stat tells us. People know us as the flights business. Our logo is a combination of a mouse plane and a jet. That's a fairly obvious one. Trusted company, easy to use, cost comparison. I really like that quote because it basically sums up what we've tried to achieve with our brand marketing over the journey of Webjet. Trust is really important. It's the reason we invest so heavily in customer service. It's the reason we're all obsessed with MPS and customer effort scores internally. They're easy to use. I've talked a lot about UI and UX. That's important. The comparison element, again, that's what an OTA does.
We aggregate content and we bring it all together and make it really easy for people to make a buying decision. The last one, which, as I said, hurt me a bit, was old-fashioned, dated. That goes to, I think Katrina calls it a glow-up, is the need and what we're doing with the brand. Fundamentally, we have had very constant and consistent branding. We're not going to throw away the assets there, but we are going to modernize it. We're going to make sure that we're relevant to the younger audiences and to a broader set of consumers. I'll just move on to the next slide. Really building that familiarity, we are going to increase the marketing spend. Many of you who covered the Webjet business pre-pandemic would be aware that in the flights OTA business, we spent 2% of TTV on marketing.
It was a bit bigger if you include the exclusive packages business, brought it up to 2.5% of total TTV. What we are going to do is, sorry, I should go back a step. Part of the work that we did late last year was a lot of analysis on five years' worth of our data looking at, and we took out a few months because of COVID interruptions and so on. Looking at our marketing spend, all of our internal ROI metrics, and in that period, we had periods where we spent a higher percentage of TTV and periods of a lower, etc. The upshot is we're leaving money on the table in a growth sense. We've ratcheted back to 1.5% of TTV when the pandemic hit in March 2020.
We never got down to zero, but we pulled back and we stabilized at that 1.5%. We were trading on the brand equity that we've had in the years. We've done a lot of performance marketing. We've got incredibly efficient at that. The change is we're going to increase the marketing spend. Underpinning that will be investing in the brand to reach those demographics that I talk about where we have some opportunity. Also, to really have compelling messages out there about our other products. Nat talked about how awesome our hotels engine is. We haven't done brand marketing for that. We've really just been trying to convert flight customers to buy more hotels. We'll be making those investments. We have a strong set of internal KPIs that we'll monitor.
We are really robust with our conviction in increasing this marketing spend because of the work that we have done. We are upgrading our MarTech. This is a process where we have gone out to market. We have looked at what is best in practice in other e-commerce verticals, taken the learnings from there. We are not just looking at what is working in the travel space. We are well down the pathway on this. We have already made some changes. Look, some of our, as an example, our post-booking emails have gotten a lot better at cross-selling ancillaries. We have a lot further to go there. Also with our member program, getting more people logged in gives us more insights and data and much deeper retargeting capability. We are making those investments.
Overseeing all of this, for the first time, we're going to bring in a CMO role at a group level, so Chief Marketing Officer. Historically, we've had a marketing manager in the OTA business. Now, as we really enter these new verticals with purpose and momentum, we want someone to strategically help us take the Webjet brand across those for consistency and also to really make sure that we are holding our teams accountable on those internal metrics that I talked about, about ROI. I think the key piece, we would have loved to show you a sneak peek of the brand today, but Katrina Barry that. For competitive reasons, we're not going to show anything today.
In a few months' time, we really look forward to putting the new brand and library out in front of you and talking you through that and how we expect that to evolve over the years as well. With that, I'll pass back to Katrina.
What we can tell you is it's going to be fresh, it's going to be contemporary, and it's going to be relevant, but it's going to use our strengths. Look forward to that. Always another PR opportunity there. I wanted to come back to Loyalty and think about this from an overall group perspective because this really does cover both OTA, but also our Airport Rentals and Motorhome Republic in New Zealand. Now, you'll have noticed, for those of you long-time listeners, we're the Go See business in New Zealand, which comprises the two brands down there, Airport Rentals and Motorhome Republic.
We spoke a lot about that at the end of the first half of our results last year. If you think about it, that was one of the first kind of cabs off the rank in terms of focus for Layton working with the team down there, which was, what was their transformation program? You'll remember that we talked about the half, it was three things. The first one was right-sizing the business, restructuring the business to be appropriately sized. It was kind of like ambling along at its pre-COVID size, and we needed to be a bit smarter about that. We talked about some cost out there. That's their focus for this year, so take that out. The next piece was really a simplification process and making sure that to deliver that, we were really streamlining the business.
They've got some really good progress on that. The last piece was revitalizing their brand. Really talented marketer down there. The team have done a great amount of work in taking those two brands and revitalizing Airport Rentals and Motorhome Republic. We've removed the Go See brand, still on legal documents, but it's Airport Rentals and Motorhome Republic, part of the Webjet Group. I guess the last piece there is really driving that business to get it back to delivering really positive and strong EBITDA and to its former glory. Loyalty should be going across all these assets, the new ones that we're talking about today, but also the OTA, Airport Rentals, Motorhome Republic.
Now, this one, if we're really honest with ourselves, is probably an untapped opportunity that we haven't moved on in the past when we didn't really have, I guess, the investment to do so. We are really excited now that this merger brings us the opportunity to drive that and to invest in it and to grow loyalty. We know that a lot of our customers are quite transactional. Those business ones we've already talked about are really high on repeat. What we want to do is make sure that if anyone's booking travel, they come back to us. I always talk about to the team, there should be no reason. There should be no reason why I have to drive 10 km, 15 km, find a park and walk into somewhere and give all my money to a 22-year-old to book my travel.
I should be able to do it in my trackie dacks , that's track pants people, on the couch by myself and get it done in five minutes. That is where the world is going. We do not buy furniture. I guess it depends. I guess some people are still going to stores. A lot of people in the growing category are buying it online and getting it delivered. I have not been to a supermarket in years. Why would I? Somebody brings it to my door. Yes, my arms are not as strong as they used to be, but that is the benefit of online. Every category is moving to online. The penetration for travel in Australia and New Zealand is significantly behind what it is overseas.
We need to really drive that loyalty of that customer to keep coming back to us in their trackie dacks on the couch. The opportunity here for us is we've been really focused on member experience, particularly in OTA and with down our New Zealand business as well, taking that and making our member, so our member login opportunity. Logging in as a member. Why is that important? Because you want to have that intimate relationship with your customer. It's first-party data. Okay? You don't have to go and buy every customer. That's been very much the journey so far. Now the opportunity that too, we want to take that too is full-blown loyalty so that we are the first choice when you think travel.
Obviously, I think the return on this one is pretty obvious in terms of we're not buying our customers, we're bringing them back and becoming more efficient on that. We've got the brand strength to leverage in that. We currently interact with 5.5 million customers on a monthly basis. Okay? That is a huge amount. We have 1.4 million-1.5 million bookings a year. We need to make sure we're getting their second bookings and third bookings as well. To do this, this is probably the one we're earliest in in our journey. I'm just going to be as really transparent as I can be throughout the next few years. We are hiring ahead of the loyalty. We've got multiple choices to execute here. We want to be really smart and pretty diligent about that. The strategy works in process on that.
We've identified the opportunity, multiple pathways, and now we're working through in terms of how we do that. What we do know is that repeat bookings from all our survey work and the deep dive, we know that providers or OTAs with loyalty programs or travel suppliers with loyalty programs, they drive more value. No brainer. And consumers told us they want access to that. It was 25% in the survey. We think that's a lot higher given Australians' obsession with points. I think this one is pretty easy to sum up in saying there's gold and then there are hills. This one's pretty obvious. In terms of, okay, what's our supporting facts to know that we can do well on this?
You will have remembered we started talking about it, Dave and I at the roadshow last August and then our half results in November, that introducing our member-only offers has given us great results. We introduced this in September. We have seen in Australia like a 31% uplift in sign-ons during promotions and New Zealand like 52%. It is pretty significant that is developing that intimacy with that customer. Interestingly enough, during their campaigns, we thought, "Ooh, let's test it. We are going to get drop-off in terms of acceptance because I have to do it." No, because Dave's tech team is brighter than anyone else and have made it one click and make it really easy to log on. It did not affect our conversions. That was a really that is the groundwork you need to prove it going on.
I think this one's a pretty obvious opportunity and one that we're early in the journey on. All right. Those are the big plans and how we get to and how we have built a detailed plan to get to FY 2030. It's not a wish, and it's not a belief. It's a plan. Obviously, we're not going to give you full details today because you never know who's listening. We'll be as transparent as we can with you throughout the process and through this build period. We back it. Investing growth takes investment. I'll bring in the money man. He's starting to become a bit old man. He's jumped ahead. I'm telling him he needs to get glasses so he can see this. He's refusing. I'll do that for you, buddy.
Awesome. Thanks, Katrina. Good morning to everyone here in the room and those dialed in online. What's it going to cost to deliver these initiatives? The focus for us is very much twofold. We really want to capitalise on these opportunities, but also remain that sort of financial discipline that we have. Katrina touched on earlier, we're in a really strong financial position. We have significant cash reserves. We continue to generate consistent free cash flow and have a robust balance sheet. We're also committed to returning surplus capital to our shareholders. We've previously communicated that we expect to commence dividends in FY 2026. For now, we're focused on investing in that growth. In terms of the expected investment cost and the associated financial impact of that, in FY 2026, we anticipate investment spend of circa AUD 15 million.
That is made up of circa AUD 10 million of incremental OpEx investment spend, of which AUD 6 million relates to one-off costs associated with the brand refresh and also an additional circa AUD 5 million of incremental CapEx spend. That is on the development-related costs. I think importantly, FY 2026 underlying EBITDA is expected to remain broadly in line with FY 2025. That is due to the incremental revenue that we are expecting to see from those growth initiatives offsetting that incremental OpEx spend. Looking ahead to FY 2027 and beyond, further incremental investment spend is expected over FY 2027 and FY 2028. The scale and timing of that spend is really dependent on some of the strategic and investment decisions that we will make. We expect that spend to be predominantly CapEx.
In terms of margins, as we scale towards that FY 2030 TTV target of circa AUD 3.2 billion plus, we expect revenue margins to just sort of gradually moderate a bit and sort of land at that circa 8%-9% by FY 2030. The thinking around that is just really our thinking of the evolving product mix as we head towards FY 2030 and the sort of commercial construct and the competitive landscape there. However, on the flip side, whilst there'll be some EBITDA margin compression during that investment phase, FY 2030 EBITDA margin, underlying EBITDA margin is expected to exceed current levels. That's really due to the sort of scale efficiencies we're expecting and driving that operating leverage. I think ultimately, with the sort of return on those growth investments, we absolutely expect our absolute underlying EBITDA growth from FY 2027 onwards. With that, I'll hand back to Katrina.
All right. Let me wrap this up for you guys. Look, as I said, we have a really robust plan to get to FY 2030. We've got the plans. We've done the work. We've got the models. We've identified really strong plans around each of our strategic priorities to get to that AUD 3.2 billion. We think we've been not bullish, but conservative. I think definitely disciplined. We're respectful of our capital. We know what our job here is to do, and that's to deliver shareholder value, shareholder as well. We'll be very disciplined and appropriate with the planning. We'll give you more updates on that as we go through at each point and at each touchpoint. Now, you've seen this page before. This is our growth strategy on a page.
I always say with a business, unless you can put it all on one page, what you're doing, you're doing too much. Every single person in the organization, whether they live in Australia, New Zealand, or Canada, should be able to highlight what they're contributing to so we get full alignment and cascading throughout the organization. What we've spoken to today is some things that have added into that. There have been a few shifts here and various different tweaks. The things that we've highlighted today are what we've added into the strategy to take us from modest growth to strong growth. Okay? We've talked through all of those initiatives today. Here, back to where we started. What should you take away from today? Look, the fundamentals are really strong, guys.
This industry, sure, softening at the moment, but the tailwinds are there for us to take advantage of, particularly on the international piece and the outbound. That is, Australians are travelling more than they've ever had before. They are prioritizing this above other expenses post-COVID. We have a highly trusted brand in this space. With a bit of a polish up and with a bit of focused investment around our marketing, we think we've got the right to win here. We should own online. We've done the work. It was substantive and sometimes difficult. We've done the work. We found that there's a lot of opportunity in this. There's a significant opportunity for growth, more so than we thought. I really think we've got the team to deliver that growth. We're doing the brand stuff. We'll be investing in the marketing.
As I said, we've got the strength to do it. I think that is in terms of the key story that we really wanted to share with you today. Thank you for your time on that. We've got time for some questions now. I think, Tim, you're going to run the room. Yep. For all of those of you who are online, you'll be familiar with our long-standing investor relations, Carolyn Mole. Her email, carolyn.mole@webjetgroup.com. Is there an AU on yours?
No, just dot com.
Please, for those online viewers, thank you. If you would like any questions, please send them into Carolyn, and we'll cover those as well. Guys, I want you to come up to the sexy seats up here. Very happy to have some questions.
Cool. John, I'll come to you. I'll grab the first hand, then I'll pass the mic.
He's taking mic ownership here, Tim, stealing the first question.
While it's in my hand. Guys, question for me in terms of the hotel packaging. It's an opportunity that I've thought about for a long time. How do we think about the strategy there in terms of increasing the conversion rate? You mentioned getting a pretty decent discount off the back of that. Should we think about materially lower revenue to TTV for that extra add-on, but it's an extra bit of the pie that you weren't getting before, i.e., how much of that extra commission do we pass on to the consumer?
Yeah, sure. I'll take that. If you think about it in terms of the hotel space, right, as I said, we've done really well on that. The team's done a great job on replatforming. It's beautiful. We said, "I'll double what we did COVID." In the last year, with all the extra bits and pieces we've been doing, we lifted that by 35% again. The 35% includes the double for those of you who are eagle-eye. The opportunity here, when you go in there, you can get up to 20% discount off a hotel if you add it to your booking. Okay? Up to. The opportunity here is we do not do any marketing on hotels. Our customers do not know really that you can get that. They are all going off and buying it. They are not sleeping on the street. The first opportunity in this space is the marketing. The second thing is think about the margin. You guys have all got very clear on terms of our margins for products.
We've previously telegraphed for you around hotels are around that 8%-10%. Okay? Now, in terms of you can do the math on that in terms of we do get a wholesale rate on that if you combine it. There's a bit more of an economic arbitrage there. I'd be thinking about that in terms of it's the higher end of the range of the margins of all our products. Attaching that, the discount piece, it comes at a wholesale rate. It's a little bit there. The most important thing is that you get the whole part of the package. I think that's the greater high level of TTV. That is the absolute piece that drops down to the EBITDA.
Just one other one. Short-term spike in terms of brand refresh up to 2.5%. How should we think about longer-term revenue or marketing as a percentage of sales once we get out towards the FY 2030, 2028, 2029, 2030 kind of range? Is that in the low twos?
Look, at this point in time, what I can tell you for this year, we'll be doing our current 1.5. And then in the second half, moving to that 2.5. That's what we've locked into our budget. We've just been through the budget process for FY 2026 now. So that's all approved. Look, we're a daily business, right? The amount that you spend online on a daily business. And so the checks and the balances and the constant assessment of like, "Oh, it turns out that campaign performed better if it was lower case as opposed to upper case." We get that constant feedback on the ROI.
This year, this calendar year, is about the relaunch of that, get it up to market. I've relaunched one brand in Australia. I've been part of a team that launched. I've done one relaunch of a brand here in Australia in the travel space. I've done two total brand launches as part of a team. What I learned from that is you need to go hard for a short period of time, and then you taper. During that time, you're assessing your ROI and you're making decisions. At this point in time, we've got our model. It's got sensitivities. We won't share that until we get to, and frankly, we need to do the ROI, figure out where it's going, what's working well. Then we'll make an assessment for FY 2027.
Fair to assume that two and a half has got an element of one-off within it. There's two elements to this. One and a half throughout the year, and then two and a half ongoing. And then there's a piece at AUD 6 million that we've talked about is a one-off spike.
Thank you, Tim, and thank you, Ton. Just a couple of questions from me. Firstly, your comment around underlying EBITDA, I just want to make clear what you're talking about there. So what is the adjustment you're making for in terms of underlying EBITDA? Are you assuming that marketing is a one-off expense, or are you assuming that's a normal operating expense? That's the first question.
There's multiple questions. The first question in terms of underlying, so I refer you to the definition that we used in the first half. And that is how we calculate underlying. In terms of how we're treating the marketing, I'll let you deal with that, Layton.
That one-off AUD 6 million cost is included in above the line. It is included in underlying.
Treated as a normal expense? Correct.
It is in the OpEx for this year. For FY 2026, sorry.
Thank you. The second question was, if I sort of, if I'm understanding what you're saying correctly, and we go out to FY 2030, hopefully, I'll still be alive by then, and we can all go back and look at this plan. If we think about, you've said AUD 3.2 billion at least TTV, margins 8%-9%. If we take the bottom end of that range and say, apply a 30% EBITDA margin, it comes to close to AUD 80 million. Am I thinking about it the right way, or is that not the right way to think about it?
I think you're using the breadcrumbs we've laid out and doing your math appropriately.
Okay. Thanks.
At the end of the day, John, there's like, FY 2030 is a long way off, right? It's five years. I'm sure you'll be here still wanting to ask the first question at every meeting. I love that. You'll be here, John. I hope so. We'll be here with you. I think there's a long way out to that. We have a very detailed plan. Obviously, it's got some sensitivities in there and obviously lots of different drivers. What we do know is there's lots of different options to execute piece. Do I build this like A, or do I build it like B?
Do I do this one faster because that's giving me a better return, or do I build that one a little bit slower and speed this piece up over here? We have given you those indicative ranges based on what we think is appropriate from our plan and the various bits and pieces. There will be changes within that. We have given you those, obviously, stats so that you can work through your models. We will be giving you regular updates at each touchpoint so that you can make any assessments on that. I think the way that you're thinking about it now is the right way.
Thank you. Afternoon. What time is it?
It is afternoon. No. Morning. Still morning.
I'm still on Brisbane time. No, thank you for that. Lots of helpful detail in there. Maybe first question on the business opportunity. You've obviously got a lot of net cash as well. Potentially brings in the buy-versus-build question. Is there something that you can do to fast-track your capability there on the acquisition front, or is there something you're looking to sort of grow out organically?
Look, as we've mentioned in the past, as a team, we need to—there's lots of work to be done on the pathways to execute for each initiative. As we said last year, capital management is all on the table. M&A, it's all on the table. I think the most important thing about how we work as a team and with our board is we're pretty disciplined in terms of how we think about these things. We're all shareholders, and we're respectful of that.
In terms of capabilities, whether you buy it, borrow it, we call it buy it, borrow it, or build it, those are the strategic choices we're talking about. There are big ones of those and there are small ones. In terms of how you leapfrog and how you make a choice here to go faster or go slower here because this one's performing better, those are the choices that we're constantly making. I think there are lots of different opportunities to execute. We'll do the trade-offs between the initiatives, but also trading off within our overall envelope in terms of where we want to go. Thank you.
Thank you. The other one, I guess, just from your customer research or consumer research, in terms of the options to using Webjet or OTAs, what were the learnings in terms of, I guess, what those options are in terms of airline direct or using other OTAs or bricks and mortar? I guess, how did that change by age cohort? I guess, what's the sort of competitive threat for you guys? Is the airline direct a growing threat? How are you looking to, I guess, overcome that?
Sure. As I mentioned, we did this—and David might want to give a bit more color on this—but we went out to these three and a half thousand consumers. Then we asked each of them in a detailed way, like, "Tell us about your last transaction. Who did you do it with? What was it for?
How much did you spend? How long did you research? That gave us a really good body. You might think, "Oh, well, that's three. Okay. So that's just over 10,000. Not super useful." When you get who the providers were, why they spent it, how old they were, where they live, what demographic they're in, that's really powerful stuff. That is where we got all the brand insight out to make our kind of insight-led decisions and plans in terms of how it differs between age groups. I mean, all competitors are competitors to us. We look at them all equally. In terms of—I am not sure you were probably closest to the model. Was there any other insights that you think would be valuable?
I think it varied more by product than age demographic, I would say. That's a reason that these product sets are really interesting. International flights being a good example where you've got such a diversity of airlines and our desire to combine more than just one airline into the one itinerary, which then makes it really hard to compare to a direct channel. You'll see us over time produce more user experiences and products that make it hard to compare to direct channels. That's our opportunity.
Thanks, guys. That was great. I just wanted to ask on the corporate piece. It's an exciting opportunity for you guys. Maybe if you could detail a bit more what investment you're actually planning on making. Are you going to build out an expense management tool, or how should we think about that?
Yeah, sure. We have done the detailed work in terms of, okay, what do we offer and what does a business customer need? Our target is the lower end of that, those who are tech-savvy, who are really digitally oriented, who prefer online experience, and want the backup of a human if it all goes wrong. Then thought, what is the product set that I need to service that customer? We have, okay, here is the list of stuff. There are different ways you can solve for each one of those pieces. Do you plug in something? Do you borrow something? Or do I—there are so many different options of execution on that. Those are all what we are working through now. When we have got some more detail on that, we can give you a bit more color.
That's a perfect example of there's multiple ways to get it done. Speed is obviously a factor. We're here to have a good time and do this and do it well. Speed, trade-off versus quality. There are all those trade-offs that we're making. I think, yes, to answer your direct question, there's different ways that we can do that. Yes, borrowing that piece or partnering with someone on that piece is absolutely an option for this piece.
I'm just throwing an extra bit on top of that. When you look at what you need to build out for the corporate opportunity versus what you've currently got within your existing platform and apps, etc., is it like you've got 30%, the skeleton, and you need to build out the other 70%, or is it that you've got 70% and you need to build the remaining 30%?
Yeah. Think about it from a holistic thing. What are you doing? You do business travel, Tim. What you want is the flight and the hotel, hopefully the hotel close to wherever you're going, right? The problem is you've got a boss, these UBS guys, apparently they want to manage your expenses. Outrageous. I need expense management. I need approvals. I need back office. Matt, can you give me the list of things that we're looking at in terms of the pieces? I think in terms of an assessment of %, we've got the core, but there's these extra bits, which is why they leave them. It's important to understand what strategy we're executing and how big we want to go. Currently, we do service a number of these customers. We've reached out to these customers.
We've actually spoken to them, like Katrina spoke to you before. We know that they're looking for expense management. They're looking for bringing in their receipts into their site. They want it as easy as possible, but they want it really frictionless. What we need to make sure that we're doing is fulfilling those areas. It is about that expense management piece. It's about making sure that it's frictionless. It's all about the tech piece. They don't really bother about what happens in the back end. It's the company piece that needs to be serviced. Yeah. I don't know if that's—but I think we think about it as a percentage. We've got the core. What you need, flights and hotel, we got that. It's about building those out of the beats to make it, as Nat said, frictionless.
Just on corporate again. Are there minimum service levels that you need to kind of commit to for the corporate customers, or do they get serviced out of your kind of your retail customer service side?
That's the great thing. David's built a beautiful customer service that scores incredibly highly. Just on that piece, every one of us walks into the kitchen every day. You can see out there all the things, the MBS and what we're doing well and stuff. We've got that capability in-house that we can leverage. That's one piece that we know we can leverage already. There are different capabilities in that, but that's, I would say, standard to any core center. You've got specialists. You've got SMEs, subject matter expert, not small to medium-sized enterprise on the phones. You've got escalations and stuff like that.
We've got that kind of core piece, whether that meets the standard. To your point around minimum standards, we are focused on those tech-savvy people who don't want to go to a big TMC, who don't want to have that high overhead, and the cost of that. People who love—we've got to really play where we play well now, which is digitally led, online. That SMEs here with their price conscious. They don't necessarily want all their people flying conscious all the time. They don't want them buying the premium product. The minimum standards get set by every company. We know there's a series of tech delivery that we need to be able to play in and deliver to play in this game.
Yeah. On the AUD 3.2 billion target, does any M&A sort of feature in that?
Look, as I said, there's multiple ways that we can execute here and strategic choices that will be made. As Layton and I have telegraphed at the heart, capital management is absolutely something we're doing deep work on and considering. M&A, I think Webjet across its entire history has been very open for conversations. What we do have is our playbook defined with the board. We need to be really pretty disciplined about how we approach that.
Maybe just the last one. We spoke about packages before. Can you maybe explain how packages kind of differs from your Webjet Exclusives that you used to have?
Yeah, sure. Webjet exclusives for new people in the room was a business that delivered packages. It was a sub-brand, if you will, of Webjet that was closed down during COVID.
Look, there's a lot of things that Webjet Exclusives did really well. There were some things that did not work so well. That was one of the choices that the team had made back in COVID. We got a lot of learnings from that. We think we know how to do that really well from that piece. It will be, again, lots of choices. We think it will look at this point in time, based on our hypotheses, slightly different to that. We have that learning. Most organizations who go into this do not have that learning. We know how to do that and drive profitable revenue, not just revenue. We feel pretty confident about that space.
We have crossed online. I think there are a couple of questions. Carolyn, I will get you the mic. We will move back onto the floor again.
Thanks, Tim. Okay. There's two questions in this one. Why did Webjet lose so much market share in the first half with domestic bookings down 10% versus Bitradata up to over the same timeframe? The collapse of Rex wouldn't seem to bridge this gap.
Sure. I guess the high level on this one is it's been well documented in the entire space that there's a softening in the domestic market. If you've missed those macroeconomic trends, then you've been in a better place than ourselves. Webjet's not immune. In terms of domestic, I'll go through Dave and give us the detail on that one.
Yeah. The softening that we're talking to is in the leisure space. That's overall market stats. If we look at the dynamics, my flight up here from Melbourne was nearly AUD 900 on Virgin a week out. What we are seeing is that leisure customers are getting priced out of the market. Corporates, businesses, return to office happening, more business travel is coming back. The distribution of the capacity is different. Rex also on their jet services, they did not have a brand. They did not really spend on marketing. They used us to leverage our database. We were really overrepresented on Rex's, sort of not as simple as taking Rex's capacity and making a market share assumption. We sold an awful lot of Rex because we were effectively their marketing channel to help fill those jet services when they had them. Just as a reminder, as we get to the end of July this year, that is when we stopped looping that Rex capacity. In this period last year, Rex was still adding capacity on those jet services. Yeah. I think that answers that one.
Yeah. We'll be able to see that loop out in July on that Rex piece. Thanks, Carolyn.
Next question. Why is the hotel attachment with Webjet so weak when the business was owned by one of the world's largest bed bank globally until recently?
Sure. Let's just take a step back in terms of having a look at where Webjet was formed. This is where we started 27 years ago, and it was all about selling those flights. I sat on the board of the previous business. I think that board and that leadership team were very astute. They made very deliberate choices about where they invested the dollar. At that point in time, you invest completely logically in the fastest growing vessel. We invested significantly as the business into WebBeds. Flights was our bread and butter and Webjet.
You can see the consistent history that it's delivered. We have a great hotel offering, but it hasn't really been until, I think, post-COVID, with some changes in the dynamics and the revenue sources that came from airlines, that it became more of a focus. It was an option, but it wasn't a focus. If I come back to one of the things that I learned off Dave was looking at all our marketing. We do a bit of brand marketing in those billboards, bundle and save, save up to 20%. That is very much promoting our hotels. We don't spend any what I'll call performance marketing, very, very little on hotels. I think that is why the focus. The focus of the group, absolutely, was on what Webjet does really well. That is the point of the demerger.
The last leadership team, they knew that. That is why they said, "Okay, all right. We're going to make sure you're really strong. You've got really strong capital balance. Should anything unforeseen happen again, but so that you can go and invest and give these assets the time and the focus that they deserve." I think that is why it was not a focus. It has been a small focus, and now it is going to be a big focus.
I think just one point to clarify. The OTA business never sourced and sold the WebBeds content through our site. Just so everyone's on the same page. I think that is important context.
Spot on. How is the AUD 10 million investment split between your segments? Can you go back and clarify for us, I think. I'm assuming they mean by product.
I will not know. If I think about the 10 by segments, I think about it as OTA versus our wheels businesses. The majority of this is focused on OTA. If I think about product, it's pretty even across them for this year. There will be divergence in that in later years. Layton, I didn't know if you wanted to add a bit more color for this year.
Yeah. No, that's spot on. I think in this sort of initial year one investment period, a lot of that 10 million is obviously in that marketing spend. Over the flights business and then the hotels and packages space will be the predominant spend there.
Okay. Microphone's go. Carolyn's got one more. She's got one more.
Sorry. You have a large amount of cash on your balance sheet relative to your market cap. You don't have a strong record of acquisition. The most accretable use of your cash would be to return it to shareholders via capital return or share buyback. Why are you not doing this?
As I said, capital management, it's absolutely on the table. We will be able to give you a full sum update on that at the full in May. Look forward to discussing that in more detail here. That is not what we are here to talk about today. I think about this as the benefit of what we have got here is a team that knows this business. You have also got new team members here. Respectfully, I think we will ask for a clean track record. I look at Trip Ninja. That business, I think, was certainly well overdelivered multiple times to the business. Take on board the feedback on behalf of the longer-term organization.
That is why we have been so specific with our board about being really strategic and really disciplined and making sure that we are respectful of shareholder capital. Our job is to deliver shareholder value here. Part of that is delivering back a cash. We have said that we are due to have dividends commenced in FY 2026. Some shareholders want that. Some do not. That is what we will be doing. All capital management will update in due course.
Hey, guys.
Hey. You need to follow on.
Oh, okay. Sorry. I do not know if it is hard to disaggregate the AUD 1.6 billion of incremental TTV that you are targeting this way. How should we think about its split between the buckets that you have spoken about today?
We have very detailed in-house split between the buckets, but there is a reason why we are not sharing that with you today. Because there's little swings and roundabouts in that, depending on strategic choices, but also a little bit commercially sensitive in terms of where we're pushing things out. Also, each initiative has different timing. There'll be pivots and assessments made by this team and the board as we go through. This is a long-term investment. We're not playing here for a couple of years. We're playing here for the long term. How I'd be thinking about it right now is take the you can work out the CAGR from here and then think about the initiatives that we've spoken about. There'll be ebbs and flows in terms of how those initiatives weight. You know from the past what the margins are on each product. You know where we're strong. You can make an assessment on that. I'd be focusing on the end game. We will come back to you and give you more detail in due course as we get closer to delivery and telling you a bit more about the wins and the green shoots on these bases.
Thanks.
Microphone's coming in.
Thank you. Just in relation to the hotel opportunity, one of the advantages of Booking.com is that you do not have to pay until maybe a week before you travel. Will you be requiring people to pay upfront, or do you have that same option?
I think the great thing, one of Webjet's incredible propositions, is we have got multiple ways to pay. Natcham and I am, we already offer that. And that is awareness with our customers. That was part of the enhancements that we spoke to. You can book now, pay at the hotel. You can book, and you can deposit. That is just, we already offer it. It is about building that out and making the customers more aware.
You have the capacity to reserve those hotel rooms for that far out? Yeah. There is no cost if you cancel?
No, absolutely not. Unless the hotel imposes the cost, absolutely. If it is a book now, pay later. You can cancel up until X date before booking. Dave, remind me of the year that you booked that in in terms of the flexibility around the booking and the 17 different ways to pay.
I believe that was 2021 that we implemented that change where we would show both types of rates for pay now and a pay on arrival, effectively. We do have Afterpay and other buy now, pay later products as well on top of that flexibility just in that as well.
Katrina, at the end of your presentation, you said things are softening. Is that just the Rex that you're lapping, or is there something a bit wider than that?
No, I think it's been well telegraphed that there's the macroeconomic conditions of Australia. There's been a little bit of softening to the overall market. As indicated, we came out and told you at the half where we expect to land this year. We're on track for that. We've absolutely factored that in. We're on track to deliver as we said in line with FY 2024 and our delivery there. I think if I look at the competitors, I look at the broader market, there's definitely a cost of living crisis out there. We're not immune. We're just being smart with how we think about that.
Historically, the election cycles, has that kind of softened things as well?
It did in Turingland, and it did in retail and hospitality and all my other sectors, Dave.
Yeah. The main variance we saw, there wasn't really a consumer demand change through those periods. When we were buying TV, we saw rates go through the roof, and we withdrew from the market in those periods. Our out-of-home or billboard commitments are already longer-term, so we won't be affected in the same way.
Here's an interesting stat for you, given I spend quite a bit of my time finding information from everywhere. The bigger impact has actually been January 2022. We all know what happened there. There's been some real dives into that destination and out of that destination since January 2022. We may be affected more by what's going on in the US than our election cycle. We can give you some update on that in the half. Sorry, in the full in May.
Nice. Any questions from the floor? Any questions online?
I've got a couple of extra ones. Oh, I've got loads. He's the host. He gets to do all the best ones. I'm checking if anyone else has got a question before I jump in. Just to clarify, when you talk about AUD 10 million of incremental investment, that's net, right? I think you had AUD 4 million of costs going out throughout the Go See business. AUD 1 million of that was going to be incorporated into FY 2025 guidance. Is that 10 plus the 3 of savings? Yeah, this is all incremental. Got it. Any questions?
Okay. Just in terms of the inventory that you can use on the hotel side of things, can you remind us, are you guys using multiple providers of that inventory, or is it all sitting with one provider at the moment? With that, do you have the capacity to go out and directly book with hotels to be able to get better rates to then pass on for your set deals where it's like, "Over to Fiji, stay in this one hotel, and we'll give you a monster deal."
Yeah, we have one partner that we also own hotels at the moment. Being speedy, we're now pretty excited about our focus on this category. Our partnering is really well with us in terms of the future. We're pretty excited to focus on that one now. What options are in many years to come, I think we'll assess that then.
Do you do any direct contracting?
Not today.
Is that part of the strategy?
I mean, you'll get materially better rates if you're going to do one deal with one Fiji hotel, one deal with one Ali hotel. Yeah. Look, I think if you think about the strategy and where we start today, there's a lot of low-hanging fruit before you could go there.
Guys, I got one more. Sorry, just to clarify because
I'm Carolyn, are you counting the number that Tim gave?
I'm not sure if I understood it. When you talk about 2.5% marketing, does that include the AUD 6 million?
Yeah, let me clarify for that. Because it'll be important for the modeling. 1.5% until the second half. From the second half, 2.5%. In the middle there is a splash. Okay, and that's the AUD 6 million. So I want to be really clear on that. Okay? You add those together, it goes up to around—we're smoothing out, obviously. That is how we have structured it. Having done this a few times, you want to go out hard for a short period of time and make sure you become that top-of-mind brand. That is a short burst. That is how we've done that. Then we want to sustain it for the rest of the year. We can make assessments on that and pivot throughout and go, "Okay, let's turn off that piece. This is performing better here." We can make pivots throughout the year. That is the plan, the current plan for FY 2026. That is what's budgeted for.
Sorry, I'm not repeating yet. Just is it, so 2.5%, is that underlying marketing? Then on top of that, you're adding branding?
Spot on.
Yes. Okay. 2.5% is the run rate. And there's a one-off of six.
Yeah. We currently spend 1.5. All your models will be 1.5% of TTV on marketing. For the second half, that should flip to 2.5%. We'll make an assessment, and we'll come back to you to confirm FY 2027. In the middle of that period, spread across a few months, is AUD 6 million and that is to relaunch the brand. Okay? Sorry, is that helpful?
No, that's fine. I just didn't understand it properly. Thank you. I appreciate that. Guys, unless there's any other questions, I think we're out of time. Sorry, I've taken us a bit over.
Lovely. Tim, love your questions. Thanks so much, everyone. Look forward to continuing to update you. And thanks for being on the journey with us. We're pretty excited. Thanks, everyone, for coming. Thanks, Tim.