Wotif shares down 5% after profit announcement, but industry says rate cut a boost for domestic tourism

Wotif shares are still down 5% from the beginning of the week after the company announced its first half profit would be lower than expected, although chief executive Robbie Cooke says the domestic tourism market is improving.

Other tourism industry leaders have also welcomed yesterday’s Reserve Bank 50 basis point interest rate cut, saying it will give a boost to mortgage holders who may have put off going on a holiday.

“I think the rate cut is going to be a really positive move,” says Peter O’Reilly, chief executive of Tourism Whitsundays. The area has been tarnished by natural disasters over the past few years, but O’Reilly says yesterday’s move will help bring tourists up north.

“We’re seeing good numbers, and I think the rate cut can only be a good thing.”

Robbie Cooke announced Wotif expects first half profit to increase by between 9-13% for the first half of the year, saying tough trading conditions are battering the market. The announcement was just below analysts’ expectations.

Cooke was contacted this morning by SmartCompany, but a reply was not available prior to publication.

However, he told Fairfax he still felt the business was producing a good result in tough trading conditions.

”The consumer is doing it tough at the moment and people are looking for value. In the last 12 to 18 months what has muddied the waters is the strength of the dollar,” he said.

That dollar has sent more people overseas in record numbers, especially to the United States, where competition among airlines for routes to the west coast have reduced airfares.

However, Cooke shared O’Reilly’s sentiments that conditions are improving, especially in the domestic market.

”We have seen an amazing outflow of consumers to overseas markets over the last year because of the dollar but the sense of urgency to take your holidays overseas is waning,” Cooke said.

O’Reilly says that while conditions are still soft, things are getting better with good signs that patronage will increase towards the end of the year.

“We don’t expect to do anything particularly flashy until the end of June, so we’ll be surviving until then.”

“But from July onwards, certainly we’re expecting to see some improvements. The forward bookings for September are already quite good…and the interest rate cut is really going to help.”