Ladies and gentlemen, Welcome to lastminute.com Investor and Media Conference Call and Live Webcast on The Half Year 2023 Results. I am Sandra, the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. Webcast viewers may submit their questions in writing via the relative field. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Silvia Sanchez, Investor Relations Officer of lastminute.com. Please go ahead, madam.
Thank you, Sandra. Good morning, everyone. Thanks all of you for joining us today for the webcast and our results for the first half of 2023. The speakers today will be Luca Concone, our Chief Executive Officer, and Sergio Signoretti, our Chief Financial Officer. On the next slide, you can see the agenda for this call. Luca will start with the highlights, showing you the key developments in the first half of the year. Sergio will take you through the financials. As you may have seen in the press release, we provided you with some guidance for the full year 2023, which Luca will explain after Sergio's part, and we will close the presentation with the key takeaways. After that, we are happy to take your questions during the Q&A session.
You can post your questions already during the whole presentation or eventually during the Q&A session itself in the question field that you see next to the slides on your webcast screen. We will address as much as we can in the Q&A session following the presentation. If we run out of time and there's still open questions left, we will address them offline. Also, keep in mind that the session will be recorded and a replay provided on our webpage, so you can always re-listen, also in case you lose connection or something, something is missed. With that, I hand it over to Luca for the presentation.
Good morning. Thank you for finding the time on the 3rd of August to analyze lastminute.com results. As Silvia just said, I will start with the key highlights. I will hand over to my CFO, Sergio Signoretti, and then I will take back control, takeaways and our initial guidance for year 2023. In terms of highlights for the first half of 2023, as you know, I took the reins exactly at the beginning of the year, so this is my first six months, and we're happy of what the company achieved. We grew the holiday package business with seven new markets last year and five more this year. Now we offer our core product in 23 different markets. We have done a significant improvement in terms of payment.
Now, as especially those clearly buying our holiday packages can pay in full, which is always welcome, but can also pay deposit and balance and in installments. We have launched, we're the first European OTA to launch, a holiday products powered by ChatGPT. It is in our app, which I highly recommend you should download and use, and it helps you basically plan your holidays. There is a lot of added value. We have broadened our B2B partnerships. Essentially set up a huge just focus on B2B, then to see partnerships. It is very successful. It's already at a level which is more than double what was last year, especially gift cards. In general, the B2B partnerships have been a focus of the company, and they've brought home some very good...
Finally, we have decided during the course of 2022, to internalize the customer care. We kept that direction in the first half of 2023. Now we have more control, in terms of the quality, the service, feedback from the clients. Having now our teams internally, the teams are located in Bangalore, in India, and in Madrid, in Spain. We cover basically all the languages that our customers use to interact with us. We are now selling different countries. What has happened, I would like to say that, first of all, we changed the governance and we reorganized the company. This is not uncommon when a new CEO comes in, but in this case, was very needed, given what has happened.
We set up more stringent processes, control, audits. We basically, as if those of you who attended my previous call, I said, we went from a teenager to an adult company. Now we are focused on so dynamic packages, tour operator, hotels, cruises, flights, so that we have heads of business that have all the levers that they need in order to govern the business. At the board level, as you may remember, we have changed the board completely. New committees that now regularly monitor more strictly what's happening in the company. Financially, we have fully repaid in May the EUR 29 million of subsidies that were received during 2020, 2021 and 2022. We have reimbursed SECO for all the money they gave us.
We financed this with EUR 25 million of new credit lines in February. We also repaid EUR 50 million of COVID loans in February. Let's say we financed EUR 10 million in February with new credit lines from the business. As some of you may remember in the previous call, which was quarter one related, we announced that we annulled the Freesailor transaction. It was a transaction in which we were buying shares of our holder over the down payment of EUR 50 million, which was done. Financially, again, we, we, we got the money back. We are stronger. With Rya is still going on, not just with us, actually, they are in legal cases with the whole industry. That tells you something about their behavior, but with us, particularly, we, we won a very important case.
In terms of numbers, we are -2% in terms of booking vs 2022, very stable. The main reason is that we decided to focus much more on profits as opposed to growth. The number of bookings has been going down, the GTV been going up. The reason why the GTV is +21% with a -2% of booking is both product mix, we are selling more dynamic packages and package holidays vs flights. These are, have a higher ABV or average booking value. There is inflation. Same flights, now it costs more, you just have a higher GTV.
We have 15% more revenues than last year, which is very important, because that's basically our, our, our key metric, especially in the, in the OTA part business, and that should be read with the +22% of adjusted EBITDA. That tells you that we have a better operating leverage now, because 15% extra revenue is 22% extra EBITDA. Clearly, we, we improved our, our, what the, the shows is also that holiday packages now are the core of our, of our, of our company. The contribution margin is 68%. Most of those, we sell directly and, and part through white label agreements with a number of, of, of players.
Clearly, they became so important, and we've invested so much in technology to provide them to all the other players, that this makes us, by far, the leader in Europe of holiday packages. The net financial position is very strong. Sergio will elaborate with all the details, basically, even though we reimbursed the COVID loans, we reimbursed the COVID contributions, we are in a very strong financial position. I would say we are very satisfied with where we are right now. Also because in six months, the turnaround of the company, and this testifies to the quality of the people that work in lastminute.com. Having said that, I hand the reins over to Sergio, and I'll talk to you shortly after we finish discussing the financial results.
Many thanks, Luca. Good morning, all, and nice again to hear you back for this first half investor call. As Luca was anticipating, I mean, we have registered a very good first half in terms of growth vs 2022. Again, the top three metrics, a +21% gross travel value vs last year, which is, as we'll see later on, the record for us, entirely driven from the growth of holiday packages, +51% vs last year, which translates into even more profitable growth than growth at the top line level, with adjusted EBITDA growing at 22%, +22% vs last year. Going into detail on numbers, we are at page 11 now.
As Luca was anticipating, volumes or bookings have been stable vs H1 2022. This is actually the result of a strategic decision, and it's combination of, let me say, profitability strategy plus mix of higher holiday packages sales. Which affects, as we were saying before, gross travel value, which has led to EUR 2 billion in the first six months. This is a record for us. It was a record already expected, and is driving, if we go from the revenues generated from holiday packages, which, in terms of mix, have reached almost 60% of the overall OTA revenue pie vs the 39% of 2019.
It's 20 percentage points higher mix generated by the holiday packages, which is correspondingly corresponding to the -21% of incidence of the flight revenues, which again, is a part of a strategic decision. Part is the commoditization of the flight business, and part is the, again, decision of focusing on the, on the most profitable pie of the travel market. This is in terms of comparison vs pre-COVID levels. In a market which still has not recovered, we are +9% in terms of top line. If we go back and compare vs 2022, which is page 13, we see that we have registered EUR 184 million revenues vs EUR 160, first half of 2022.
Again, this is a +15%, with an even higher growth of gross profit. Again, this is to witness that we are growing in terms of profitability more than what we are growing in terms of top line, +22%, EUR 74 million vs EUR 61 million, and this is essentially derived from a more efficient marketing spend, contrarily to what was happening in second half of 2022, as we commented also in our previous investor call. Also from the development of the B2B2C business that Luca was anticipating before, where we basically offer our content travel to third parties, which are interested in using our content travel for their customer base.
This is business which is growing, which is ensuring a higher profitability, and so it's also a mixed effect of these strategic piece of business that more and more we are going to develop in the future on top of the development of our B2C strategy on our customer base. Going to the page, following page, this is related to the usual representation of our cost base. On the left side, you see what we define HR fixed cost, which is essentially our HR cost, net of the capital expenditures, which are related to the development time and cost that, of course, tech people do. They have increased as planned, as planned, +20% vs last year.
This is the result of what you may remember, is this huge investment in hiring more than 130 people in our tech department, in order to reinforce the capability to make, with the make strategy, the effort in order to improve more and more our website and the customer experience on our on our on our properties. This is fully reflected into first half of 2023, given the annualization of the cost of these people, which have been hired from Q4 2021 to Q4 2022. You see reflected this point into the headcount, into the average headcount number, which has passed from 945 people to 1,076 in first half 2023.
If you go on the right-hand side, this is representing the, what we define running cost, so it's actually the tech cost, plus the overhead cost, plus the S&D&A. We are here 6%, still 6% down vs where we were in 2019. Still the effect of the massive cost reduction program that we've done during COVID are there. We are growing as planned, +20, +20%, +23% vs half one 2022, given partially to the increase of the headcount, and partially to the increase of the traffic that has generated our top line growth, which affects, of course, part of the IT costs. Moving to page 15. Page 15 represents, in a more numerical format, comparing 2023, first half 2023 vs first half 2022.
The key performance indicators at P&L level, I would not enter in detail into that, but just comment the two last lines. The one before the last, again, shows what we define adjusted EBITDA in continuity with all our previous investor calls, which is the combination of the EBITDA generated by the two, by the three business units, so by the OTA, the meta, and the cruises business, which is almost EUR 30 million, 29.9 vs 24.5 of first half of 2022. So a significant 22% increase. We have added the last line, which takes into account, as it's written on the left, the combined effect of cancellations, that we will comment in a while, and of the voucher misredemption.
That, managerially speaking, are part of the same phenomenon, because of course, vouchers are one of the refunds, method in order to refund for, for a cancellation. If we combine the two, actually we are a +1% vs last year, and this is, and this is entirely, almost entirely driven from the lower misredemption experienced in first half 23 vs first half 22, that I will comment in the following page. If you go to page 16, this tries to explain well this sort of phenomenon. If, if you start from the left, you see that again, EBITDA adjusted has been +22%.
The cancellation impact, which as you know, are a structural component of the tour operator business, are actually growing EUR 1 million vs what it was last year. EUR 9.7 million vs EUR 8.7 million, are growing 11% vs a growth of the GTV of 21%. As you know, cancellation is a factor of two drivers. One is the cancellation rate. Cancellation rate is lower vs last year, so is in the region of 5% vs 6%, which was last year. The second driver is the average booking value, which of course, is a function of the mix. The more we sell holiday packages, the more the average booking value increases. The combination of these two factors affect the cancellation cost.
Cancellations are growing less than gross travel value. This is a very good news. Of course, we are working more and more, as we will say also later on, in order to reduce the level of 5% for what at least is related to the cancellation of voluntarily made from our clients. Part of the cancellations, approximately half of that, is related to the average behavior of the industry, of the airlines, generated by strikes, generated by capacity issues, generated by cap in the capacity of the airports, which still is there and still is more than double than what it was in 2019. Please, please, Luca.
Allow me to elaborate a little bit on the cancellations-
Please.
Please. First of all, cancellation rate at 5% is pretty in line with the industry. Percent of that is supply side. It's basically airlines. It's extremely rare that hotels cancel on their end. There is nothing we can do clearly with the 2% airline, except identifying some airlines that are much worse than the others and try not to sell them in Dynamic Packages. Airlines are still our market, 12% below 2019 in terms of number of flights. They are higher in terms of revenues, but that's because of pricing inflation. There is not much that we can do on the 2%.
On the 3%, which is client side, many of, of those, not fulfilling their payment obligations before travel date, so we do cancel because we don't allow people to travel with our money. Usually we get the money back from the hotel, again, we are stuck with the, the, the flight component, clearly. The number of interventions in order to better assess the credit worthiness of the clients before we allow them to choose installment or deposit and balance payments. We are expecting a significant change in the second half of the year. Those changes have happened, it's just that the effect is clearly at travel date, so anything that is booked 70, 90 days before travel date will not appear until three months later.
It's very important, the 2%, which is supply side, not much you, you can do. The 3%, which is client side, that you can really work on, and we have been doing it. Go on, please, Sergio.
Thanks, Luca, for the clarification. Now, the second phenomenon is vouchers. Voucher is a refund method, as you know. For those of you who follow us since COVID times, during COVID, we issued more than EUR 250 million vouchers in order to refund the EUR 500 million cancellation that we managed at the point in time. Of course, the voucher issue at that point in time had an expiry date, and of course, now, the amount of outstanding vouchers which are out there in the market are mostly related to the more recent cancellations. The COVID tail has ended, and that is affecting entirely the number that you see here.
The voucher misredemption, which again, let's define it, is the economic benefit in terms of CS liability, that voucher generate when they expire without being utilized from the customer. This corresponds on average, to 30% of the overall outstanding voucher. It was corresponding to 30% last year as well. It was corresponding to 30% even in the previous years. The point is, is that the stock is much less. The stock is much less because most of the COVID vouchers have expired, and therefore, this is generated, this is generating the 41% that you see at the bottom as a delta, which you need to read in combination of the cancellation cost.
Last year, if you look at the bottom, the two phenomenon were exactly compensating each other, the next effect of cancellation and voucher misredemption was neutral. This year, we have an effect of approximately EUR 5 million, which is mostly derived from the voucher long tail end due to COVID, than to the cancellation phenomenon. The EBITDA net of cancellation and vouchers, which we represent on the right side of the slide, is EUR 25 million, not far from what it was last year. If we go to the next page, we see the bridge down to IFRS EBITDA, which is impacted by a non-cash cost, which is what is represented into the incentive plans.
As you know, accounting principle require to revalue at every closing the liabilities that we have towards employees based on what is the stock price of that moment. lastminute.com has increased from approximately CHF 20, which was the price at the beginning of the year, to approximately CHF 28. These CHF 8 increase has correspondingly generated an increase in the liabilities towards employees for the long-term incentive plans existing and outstanding. This is generating the CHF 3.6 million. If you compare vs last year, which again is represented in the bottom, this was a positive relief to our P&L, because the stock price devalued in the first half of 2022, vs the price existing at January 1, 2022.
This is a swing of approximately EUR 6 million, year-on-year, comparing the two first half, that is impacting IFRS EBITDA. It's purely accounting stuff, is a non-cash cost, but of course, we need to comply with accounting principles, so we need to fully consider this effect. That's why IFRS EBITDA is EUR 20 million vs the EUR 27.7 million of last year. In page 18, you find the, again, the numerical explanation, line by line, of the various KPI of the profit and loss from the adjusted EBITDA to the net result. Net result, of course, we are back to net income, which is very good news. If you remember last year, the result was affected by the provision of EUR 35 million for the investigation and the repayment of the government subsidies.
We are back to profitability vs first half, 2022, net income is approximately EUR 7 million lower, and this is almost entirely due to the non-cash cost that I commented before, related to the long-term incentive plans, starting from a similar level of adjusted EBITDA, net of cancellation and voucher misredemption. Last slide on my side represents, as always, what is the trend of gross and net cash. The red curve is the gross cash, which at the end of June was EUR 167 million, net of the repayment of the EUR 29 million, CHF 29 million, to Switzerland, for the sake of the government subsidies. Not far, if you gross up the amount of the government subsidies repaid, to what was the level in June 2022.
In terms of net financial position, it has more than doubled to 2.5x what it was at the end of 2022. At the end of 2022 was EUR 42 million. It is more than EUR 100 million, EUR 102 million at the end of June. This is actually factoring the approximately EUR 60 million-EUR 65 million of financings that we have, and is factoring also the reversal of the timing difference accounted for at the end of 2022, related to the accounting treatment of the purchase of minority in, of membership interest into retailers, that we commented as a one-off effect on net financial position effect, which has entirely been reversed in Q1 2023.
Very solid position again, even after having repaid entirely the government subsidies to the Swiss State. Maybe, Luca, you can take up again from here.
Thank you, Sergio. Clearly, as Sergio noted, since the new board came in, the shares have grown 30, more than over 30% in six months, and the only negative impact being our incentive plan that flows all the way through in the P&L. Hopefully, we're gonna have additional costs in the future, too, if we keep on growing the share value significantly as we plan to do. I'm going straight to what is obviously for lastminute.com. It's give you some guidance about 2023. Basically, we expect to finish the year 10%-15% higher in revenues, and 15%-20% higher in adjusted EBIT, the cancellations, which we mentioned before. Even including cancellations, we expect to be 10%-15% higher than last year.
This is particularly important because we are basically managing this, this growth. We could, I wouldn't say easily, but we aim for faster growth in terms of revenues and lower growth in terms of adjusted EBITDA. We think that you, as our shareholders, really appreciated the company grows better than, than, than market, but keeps the focus on, on, on profits. This, I believe, and as Sergio has shown it in our NFP, makes the company stronger, which is a key element for the future. The key takeaways, and then we will quickly go into the Q&A session, is, like with all our initiatives, expect some additional positive impact in H2.
We've also done a big job to identify some factor to keep on cutting costs and right sizing our employees, and this will kick in in the year. The board has is much stronger, and the reorganization is starting to show its effect in terms of efficiency. We are above 2019 levels, which is always the benchmark in this industry, 2019. Profitability is in line, but we aim to grow it a bit more in the second part of the year. We have a lot of cash. Now, most of this cash is trapped, because, as you know, we have restricted accounts.
When we're talking about our customers' money they travel, there is quite a potpourri of regulations going around in our markets. Basically, we keep the customers' money, part of it, aside, before they complete the travel, and this explains the EUR 100 million difference between our cash cash position. Overall, if nothing like COVID happens, you can expect our full year to be higher in revenues in the 10%-15% range, and the same for net of cancellations, which is a key metric in our industry. Having said that, I hand it over to Silvia, who probably is the best person to lead the Q&A session.
Thanks, Luca. We are now starting the question and answer session. As said before, you can post your questions in the field that you see next to the slides, or should see. I can see that there are already some questions posted. Some of them are similar, let me just point out that we will bundle similar questions to be able to address as much as possible. Don't be surprised if your question might be phrased a bit differently when I read it out from the exact way you posted it, so we can cover the broader topic, and as I said, address as much as possible.
In case we won't have time to answer your questions during the call, as I said before, please feel free to reach out to the investor relations team, and we can schedule a follow-up so we can address any questions left offline. Please remember, the session also is being recorded, and we will provide the replay on the website, so you can re-listen. Let's start with the first question. This one, excuse me, is for, is for Luca, and it refers to the, to the employees. lastminute.com has now over 1,500 employees. About 300 are working in IT. How many are working in sales, marketing, customer support, and administration? A bit, if you could just give a bit more color on the split of the staff in terms of departments.
Yes, I mean, there are tons of details, but overall, we are actually over employees. Definitely, a good growth. Those working in IT are over 400, plus external contractors, so it's quite a relevant part of our business, our customer care, which is 660 employees. Between tech and customer care, we add up to, to 1,000. The rest is around 300, 350, depending what you count with the meta business, are in business side. There is finance and payments, which is over 100, and then, myself, my staff, all the corporate functions, legal, you, you name it, all the various HR, all the various functions that are, are the remaining another, another 100.
What I'm very proud to say is that as a company, we are almost perfectly 50/50, divided by gender, men and women, which is something important, given our ESG commitment. That the majority of our employees is less than 45 years old. The, the most common group is 25- 35, with almost half of our staff in that bracket. It's young, and it's quite balanced in terms of, of gender. I hope I replied. If you want some additional details, please feel free to ask.
Thanks, Luca. The next question refers to the net cash and the possibility of a repurchase program, share buyback program. The question says: Net cash is now over EUR 100 million. Is it, is it too early to think on applying such a repurchase program?
Is it me or Sergio?
It's you, Luca.
Yes, the AGM on the 30th of June has again approved a repurchase program, but the share buyback is focused on financing our long-term incentive plans. If and when we will restart, just depends on the need of our incentive plans. We will stay focused, and of course, we will adhere to all the regulations and inform the market, but for the time being, there is no additional big buyback program approved by the shareholders.
Okay, thanks. Next question would be for Sergio, and it refers to the finance income. Your finance income only shows EUR 335,000.
Yeah.
Should we await a large increase in this position, considering that over EUR 100 million cash in combination with a credit interest of over 350%? As you know, the Euro key interest rate is now 4.25%.
Thank you, Silvia, and thank you for the question. I mean, this is a good point, no? What do we do with all this cash? It's related to the, let me say, liquidity investment strategy that the company may have. You should consider two, three factors, no? One factor is that we've been quite cautious over time in terms of investing our cash in excess, because still there are some uncertainties in the market. I mean, Luca has presented the guidance before, but we should remember that there is a war 1 hour and a half flight from here, that there are some macroeconomic uncertainties that we read every day on the newspapers.
We were having 29 million CHF to repay to the Swiss state up to May. There were a number of reasons for which... last but not least, part of this cash is quote-unquote, "not available in order to be utilized for future payments, for future departures related for the regulated business." Everything combined, our approach on the possibility of reinvesting part of the excess cash has been so far, quite cautious. It is something that we are going to reevaluate in the future. Of course, there is an opportunity which is derived from the high interest rate. We will evaluate based on the opportunity that we will have. I think that's it. Thank you.
Okay. next question is again for Sergio, and it's about the profitability.
Yeah.
What were the triggers for the improvements in adjusted EBITDA in absolute terms and in margins Q2 vs Q1?
The triggers are entirely at gross profit level, as we said. If you compare... We're talking about comparison of Q2 vs Q1, if I understand correctly the question.
Mm-hmm.
It's quarter-on-quarter increase. We have registered a higher gross profit vs Q1, with revenues which were more or less in line vs Q1. This is entirely driven from the combination of the two factors that were mentioned before. One is a more efficient marketing performance spend, mostly on the holiday packages business, through a more wise approach in order to ensure that the return on investments of our marketing spend is proper. Two is the acceleration of the mix of sales to a B2B2C channel, mostly related to holiday packages, which is again, part of the strategy of the company. We are not talking about Booking.com only. We are talking about agreements with third parties, non-travel players, in order to offer content travel to their customer base.
Particularly, I'm talking about the employment benefit business, which is a business which is growing a lot, and which strategically is very relevant for us.
Perfect. Again, it's, I think it's maybe already, implied in the, in the, in the question before, but, the, again, the Q2 margin was 18.3, is above 20% margin in Q3 and Q4 thinkable?
I would say that we should expect a. For sure, we should expect an increased percentage margin, taking into account cancellation and voucher misdirection. From what Luca was saying before, this is going to be happening. There are a number of actions, a number of interventions, in order to reduce the any-- and this is already materializing in July, the generation of EBITDA after cancellation and voucher misdirection, thanks to the action in place that Luca was commenting before. I would say that, yes, we should expect, I would say, to maintain this percentage and eventually to increase it also after cancellations and voucher misdirection.
Mm-hmm. Next question is on because we mentioned in the presentation the case with Ryanair. The question is basically just a quick recap of what that case is about. Would be for Luca in this case, maybe just-
Okay. Unfortunately, as I said before, Ryanair is in litigation with the industry. With us specifically, we had positive ruling in Spain, Italy, and Switzerland. In Italy, after obtaining a rule confirming the full lawfulness of our activities, we are now waiting for a decision in terms of abuse of dominant position of Ryanair in the Italian market. We have won costs and damages from Ryanair. Just to remind everybody, this has been going on for over 10 years in the various legislations. It is not something that will come to an end soon. We are, let's say, with other players in the industry, try to see if we can find some sort of agreement with Ryanair.
It really depends on their on their side and on their attitude towards distributors, who actually help a lot the customers. Because if you buy a Ryanair flight by yourself on Ryanair website, and you go and book a hotel, and then Ryanair cancels the flight, you are left with your cost of the hotel pending there, and there is nothing you can do, nothing Ryanair would do to help you. You may end up having paid the hotel for nothing. Now, if you do the same via lastminute.com, you buy the Ryanair flight, you buy the hotel, and then Ryanair cancels the flight, we, lastminute, we reimburse you not only the flight, but also the hotel. We are protecting the consumers, which is something that Ryanair doesn't seem to care about, how much the consumers are protected.
We have a very different view in terms of what's important as a service to the people who end up paying, for the holidays. We will keep on fighting Ryanair in all the, the, the courts. Hopefully one day they will come senses and be more accommodating to the protection of the consumer. Anything else, Silvia?
Thank you, Luca. Yeah, there are a couple more questions. For example, on the extension of our dynamic package business to other markets, which was just twice the questions: Which countries were, were added in the first half of 2023? What is to be expected in the, for the second half? If all countries were added, on a standalone basis and together with, white label partners?
Okay. The five countries that were added, unfortunately, were not very large ones. We're talking Malta, Luxembourg, Czechia, Slovakia, and Estonia. A number of other, of Eastern countries are in the pipeline for the second half of the year. Those we have added in our partner with Booking.com. At the same time, we have added other partners. Unfortunately, we did, did not get permission to release the information, the only one that I can mention is O2, the large mobile player in the U.K., U.K. market, who is now one of our partners. We added partners both in the travel industry and outside the travel industry.
Okay, excellent. The next question would be for Luca as well, and it's related to customer care. Is the customer care improving? What are first results? Have you done any surveys that show any changes in the customer care results?
Yes. First of all, yes, of course, we've done surveys. We actually constantly do surveys, post-call, post-chat, because we want to know how well we are doing. The two key metrics are, for us, that has improved significantly, the one-stop shop answer. When the customer contacts us, the percentage of time in which we the issue in just one single contact, be it on the phone or via chat, that has increased significantly. The second that we look at is our score in Trustpilot. The trend has been going up significantly again, on our website. Regardless of the brand, I remind everybody on the call that we have five major brands that we are using across Europe.
The total score in Trustpilot clearly is moving very slowly, because when you have tens of thousands of ratings, even if 1,000 new ratings come in at five-star, the overall average is slowly moving. We monitor the trend score, and the trend score, from a customer point of view, is going up. It's going down the cost for us, because with one contact, we solve the issues, and the satisfaction of the customers is going up. This is a very good result.
Very good. thanks. The next question is, is a bit about how the summer season has started. If you can provide some color on, on the summer season, development, and any indication on the second half of the year, if we are expecting an acceleration vs the first half.
Yes, clearly, summer season has started. We are happy with the result. I have to say that this year, the seasonality has not been remarkable as in the past, simply people were booking their holidays before for later travel dates. Still, of course, the business is growing and without giving any specific guidance to quarter three, but we are definitely heading in the right direction. We are very happy for the way things are going. Let's not forget that we are letting go of many flights because they are not contributing enough in terms of margin. We are trying to Well, to look for flights to move into the DP, DP space.
In terms of holidays, we are investing more in DP marketing, in dynamic package marketing, vs what we are investing in Flight. Even if you come to our website looking for a flight, we have a number of touch points in the funnel while you are booking, to push you towards the DP. This has allowed the big change in product mix that Sergio was illustrating before, and, of course, together with that, a higher margin.
Okay, thanks. A bit on the, on the mix topic. How do you influence the mix, or can you influence the mix, the, that of Dynamic Packages vs Flights? How can you push one more than the other?
Silvia, I think that frankly, there is not much to add. Marketing spend more in DP and touch points in the funnel from Flights to move you over to, to DP.
Okay, thanks. Maybe a question, because there are several ones on the market growth, but maybe what's the current market growth, the number or the metric you look at and compare to our own growth? lastly, the market growth metric we take as a comparison.
Well, the, the, both-- I mean, we look at Eurostat flights as a, as a third party, very reliable information source, plus a number of searches and surveys, like from Skift, for, for people inside the industry. We limit those to the European markets. As Sergio was mentioning before, the, in the European markets, we still 12% below in number of flights, not in volume, in number of flights, compared to 2019. What we do is to outpace the market in DPs, in holidays, in general. We really don't care very much if we reduce our market share in flights only. Flights only is a cutthroat market.
With all the metas, like Skyscanner, compared, the amount of margin that you can make has been significantly reduced and basically left only on ancillaries. You really don't make money on flights by themselves. Without any ancillaries, are all money-losing. We have decided to use the flights to push the DP or just serve those customers that are contributing, generating via ancillaries on the flight side. Everything else, we really don't care.
Thanks, Luca. Next question, there were a couple of questions around cancellations, and one of them, and I think it's a good one to just.
To entirely reprotect the customer with a different flight. In case we are not able to do it, or he's not able to, or he's not accepting the protection, we need to refund him. We refund him either through cash or through vouchers. The voluntary cancellation, instead, is something which is entirely in the hands of the customer behavior, and is something which can be, you know, related to customer ability to leave, or as Luca was mentioning before, to unpaid. Of course, the more we sell holiday packages, the more for us is strategic to allow the possibility of paying through installments. An average booking value for a holiday package is in the region of EUR 2,000.
Any customer will have his credit card stuck if he pays in one shot. It's strategic for us, more and more, to allow them to pay through installments. 50% of the bookings of holiday packages that we sell today are sold through installment plans, which again, we will increase more and more going forward, because it's a fundamental factor in order to increase conversion and sales. Of course, if a customer doesn't pay one installment, and we are not able to recover that through the credit recovery process, we don't let him go, because he must complete the entire repayment prior to departure. If we don't let him go, we cancel the booking, and that is also another, let me say, piece of the reasoning. I think there was also a question about the classification-
Mm-hmm.
and how we treat and how we expose the data. Yes, I mean, more and more, in order to, you know, also allow analysts, allow the market, allow the key stakeholders, in order to have better transparency and about our performance, yes, more and more. In fact, we are going to show what is the level of EBITDA, net of cancellation and vouchers. Again, these two phenomenons have to be considered as a whole, because voucher, again, is a mean of refund of a certain cancellation. Yes, more and more, we are going to show these KPI as, you know, the main one in order to focus on. Yes, in the second half, we should absolutely expect an improvement vs first half.
Of the net effect of the two, of the two phenomenons, because we are working a lot in order to reduce the cancellation rate, in order to improve our processes, in order to better score the customer, to offer, to whom we offer consumer credit solutions, and to reduce this % going forward.
Yes, Sergio, just allow me that clearly, besides not offering to untrusty customers the deferred payment solution, we are also working on forcing, and I say forcing between quotes, clearly, the customers to purchase insurance.
Yeah
... against cancellation, so that, in case of cancellation, we can then, go, go to the insurance to limit our P&L impact. Pushing insurance is also a, a very important lever in order to reduce the cost of cancellations. We aim, like everybody in the industry, to have zero cancellation costs. Can that be achieved tomorrow morning? No. Can that be achieved, in the nearby future? Yes.
Thanks, Luca. We are almost out of time, so let's take maybe one last question because it's an important topic. It's for Sergio again. How can you optimize the marketing spend? What are the levers to do it, and if it has any relation to the reduction or the decrease of the meta business?
I would say that we are talking about marketing performance, first of all. What we find marketing performance is the biggest chunk of cost of the variable cost that we have. Remember, 70%, 70%-75% of our cost base is variable, so it's linked to how the business goes. That's one, one of the key strengths of our business model. The biggest part of that is related to marketing performance. How optimize it? First of all, being cautious in how we spend on the campaigns that we do on Google. Setting proper targets of return on investments. There are very, very sophisticated analytical tools in order to let me say, drive what is the daily marketing spend per campaign on a specific keyword in order to avoid to overspend.
This is something that is out there in the market. It's a matter of doing properly, implement it properly, manage it properly. Second is, of course, related to increasing the weight of the channel, where the spend of marketing performance is lower. The more we increase traffic on our own website, on our direct channel, on the app, the more we retain customers, and that is a strategic lever in order to generate mix from non-paid traffic channels, which, of course, is another of the, let me say, ways in order to reduce the marketing spend. This is happening because we are investing on the app, and the share of the app traffic, and bookings, and sales is progressively increasing.
Okay, let's just one last question, because it's, it's really important to answer, even if we're a bit off time. This is for you, Luca, and it refers to the, you know, the part of the announcement about our CFO. What are the requirements for the, for the new CFO?
First of all, let me start by saying that Sergio's performance has been extremely good all these years, and so I'm very grateful that he gave us ample notice of his leaving, and he's giving us enough time in order to find the perfect candidate. Thank you again, Sergio, for what you've been doing, and you will still be doing, because at least we'll see when exactly, but up to the approval of the 2023 accounts, you will stay on board. Thank you, really.
Thank you.
As far as the requirement for the new CFO, we have strong internal candidates. We will compare them with strong external candidates. Clear, we need somebody who has a background in digital, much more than specifically travel, because we are a digital technological company more than anything, than anything else. And that has a very good strategic view, because the, the CFO in the future is less and less administration and accounting, and more and more strategic contribution to the leadership team, looking forward to the dynamic of the industry and the key investments that have to be made. The board, having been informed by, by Sergio, has already decided to search for a new CFO.
We have, my Co-Executive, Maria Teresa Rangheri, whom I thank, too, who's taking this on board personally. Let's say that without any particular time pressure, given the gave us, we will announce to the market when we are ready, the introduction, the introduction of our new CFO.
Thanks, Luca, and thanks, Sergio. Let me... we're out of time. We need to close the Q&A session, unfortunately. Thanks to all of you for your questions. I can see that there are a few ones still in the system that we didn't have time to answer. Please reach out to us if you feel that something was left un- unanswered or if you would like a follow-up, just drop us an email at investor.relations@lastminute.com. Also note that, as I said before, we will of course provide the replay of this session as soon as we can, so you can always relisten.... Before we close the overall call, let me just mention the financial calendar, the next upcoming date. It is the nine, ninth of November for our first nine months update.
So please take note of that, next upcoming financial calendar date. With that, I would hand over to Luca for any last words. Goodbye from my side. Again, thanks for listening and for posting your questions.
As final last words, which is actually not foreboding well, let's say final words for the call. Let's say that as you have seen, we have done a lot of road in six months, and we have still a lot of ground to cover going forward, we have clearly focused with the key issues. I have clearly a very talented team of professionals that's continuously being improved by hiring very, very qualified employees from the market. We know where we have to go, we know how to get there, and I think we have all the means, both H.R. and financial, to get there. My outlook overall is extremely positive for this group. Thank you so much to everyone who has spent all this time with us this morning. I wish you all the best. Ciao.
Thank you very much, also on my side, and, talk soon.
Bye.
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