eBookers has listed its shares on the London Stock Exchange.
Internet travel firm eBookers yesterday listed its shares on the London Stock Exchange. The UK-based company, which is worth $63 million compared to its peak valuation of $730 million, is already listed on the Nasdaq and on Germany’s Neuer Markt.
It looks like a sensible move. A London listing will allow various UK funds to buy its stock as well as making life easier for individual UK investors. The question, though, is whether these potential investors will actually bite.
The company expects to break even in Q4 this year or Q1 2002. And it is at an advantage over many of its rivals, for various reasons. One is its strong customer service reputation across 11 European markets. With a 45% resell rate, customers clearly perceive the firm to be good – and repeat customers are more profitable than new users.
eBookers also has a major retail presence in the UK market through former parent company Flightbookers, which it bought out last October. This ‘bricks and clicks’ strategy is also a major plus point, since it reassures people that there’s a ‘real’ company to deal with when things go wrong, as well as boosting its visibility.
A serious challenge facing the firm is the fierce competition in cheap flights. While eBookers is positioning itself as a full service travel agency, its core strength still lies in discounted flights. Its long term-success will depend on diversifying.
Another worrying development is that airlines are developing their own direct-distribution portals. They may use these sites to preserve their existing pricing models, whilst exclusively offering selective discounts to attract new customers – curtailing the supply of discounted inventory to intermediaries like eBookers. In addition, these sites will offer hotel, car-rental and holiday booking services, providing further competition.
eBookers stands a good chance of being a dotcom survivor, particularly if it can maintain its customer service reputation. But the challenges facing it mean that many investors will be reluctant to commit heavily for now – LSE listing or not.
