Despite the failure of Monarch, its intervention following the collapse of A1 Travel and a series of seismic regulatory shifts, Broadway Travel has nonetheless managed to report a 33% rise in year-on-year net profit this year.
Around 1,500 Broadway Travel clients were caught up in the Monarch failure last October at a cost of around £150,000 to the business in revenue. Weeks later, Broadway was drafted in by the CAA to pick up the pieces following the collapse of A1 Travel.
According to the Air Travel Trust’s 2018 annual report, the cost to the fund of A1’s failure ran to around £4.5 million. However, it further states that Broadway’s intervention significantly benefited the trust and consumers.
Addressing delegates at the 2018 Broadway Travel conference in Dubrovnik on Monday (October 15), chief operating officer Jill Mitchell said the company’s spike in net profit was all the more remarkable considering the fallout from Monarch and A1, which came before a “challenging” year of regulatory change, a record equalling summer heatwave and the rare spectacle of England making a World Cup semi final - the first time in nearly 30 years.
“It’s been an erratic year,” said Mitchell. “We had our best January ever followed by our worst February ever. These ups and downs - there has been no real pattern. It makes it really hard to find out what we did well - or not.”
The result, Mitchell revealed, was a 33% increase in net profit, fuelled primarily by an increase in profit margin. Total transaction value in 2018 amounted to £174 million, down from £181 million in 2017. Gross profit, meanwhile, declined a shade from £14.8 million to £14.3 million.
“Our plan was to increase margins this year,” said Mitchell. “Gross margins have continued to go up. Net profit is up 33% on last year. We are absolutely thrilled.”
A significant success, said Mitchell, was the growth in Broadway’s repeat business, now at 44%, up from 28% just three years ago. “This is probably the one we are most proud of,” said Mitchell. “We’ve made a huge stride.”
Reflecting on the collapse of A1, Mitchell said with around 6,000 passengers affected by the failure, it was a “big compliment” to Broadway when the CAA asked the business to step in and take on affected A1 bookings.
Other challenges faced by Broadway over the past year, said Mitchell, included around a £1 million hit from the ban on credit and debit card surcharging in January under the EU’s new Payment Services Directive and a more than 40% drop off in online and call traffic resulting from GDPR in late-May, albeit offset by a 25% spike in conversions.
The “good old English summer” and England’s World Cup success took their toll on bookings in June and July - “everyone stayed at home,” said Mitchell - and the implementation of the new Package Travel Regulations in July “increased costs” for the business. “We are struggling to find the positives,” said Mitchell.
Broadway rolled out its new website shortly after its 2017 conference, which Mitchell said was a huge step forward but not one without its own challenges. “It’s not quite where we want it to be. It’s work in progress,” she said.
“We are 70 this year,” said Mitchell. “It’s a massive achievement. We have a right to celebrate. It wasn’t such a bad year after all. We did have some successes.”
Looking ahead, Mitchell said Broadway’s growth ambitions included a renewed focus on its consortium members, including recruiting new ones, and capitalising on repeat business.