Driving ancillary revenues and a strong focus on customer service have been a priority since Dana Dunne took the reins and it seems to be working. Sally White reports

Unlike their peers in flight, top European OTA managers have little media following. Yet one whose performance would seem to justify coverage is Dana Dunne. In just over a year as CEO at eDreams ODIGEO, the Spanish-based international OTA which is Europe’s No. 1, he has delivered a strong turn-around. His strategies have helped drive bookings up 10%, revenue margins up 7% and net income up 50%.  

He comes with a formidable background. A native New Yorker, but now also Spanish and French speaking, he topped up US business school education with several years running chunks of banks in Wall Street, various roles with McKinsey and heading two telecoms groups. Then came AOL and EasyJet, where he was chief commercial officer. He joined eDreams in January last year to sort out its disastrous post IPO performance, which wiped over a billion Euros off its stock market capitalisation. (*Correction: Dana Dunne joined firm in 2012 as chief operating officer but was appointed CEO in January 2015)

Undoubtedly, the hope of the major funds, which own the bulk of eDreams’ shares, is that he’ll repeat his AOL performance. Back in 2008 the Daily Telegraph ran a headline ‘The AOL miracle man makes you believe’ on a story that he took just 18 months (as head of company transformation) to galvanise staff to lift AOL from 13th to third most popular UK web publisher. 

Following Dunne’s eDreams performance in the 2015-16 financial year, he is certainly going for more in the current one (to March 2017). Yet this is not, perhaps, at the best time for European travel companies.

The work is not over yet

However, a few months into his ‘Action Plan’, as eDreams’ statement to shareholders illustrates, there is a lot that can be still done: “Customer satisfaction results have increased significantly, with a 20% reduction in customers needing assistance, the introduction of the revised Help Centre, the implementation of a new ‘my trips’ user area and the roll-out of the new contact centre platform.”

A new product was introduced last month (June) for customers across three of the group’s brands - eDreams, Go Voyages and Opodo. eDreams has linked up with mobile and data solutions providerMTT to produce a new free messaging tool for both iOS and Android devices. This givesintelligent push notifications from airlines and travel companies, allowing them to send personalised alerts and offers in multiple languages. For example, travellers can be notified of any flight delays, cancellations and diversions, as well as gate announcements and baggage claim areas.

More value-added products and services are coming in to increase the customers’ basket at the same time as enhancing their experience

Dunne tackled eDreams first by going through loads of analysis of the data across the 44 countries in which it operates and only then setting out his plan for the group. The aim was sharpening up the customer proposition, marketing and yield and increasing focus on the mobile web. More value-added products and services are coming in to increase the customers’ basket at the same time as enhancing their experience. And he recruited to bring in new energy and ideas.

While eDreams does not split out its non-flight business in detail, it does say that advertising and metasearch revenues grew by 37% last year and ancillaries' revenues by 18%. eDreams brands cover a wide range. eDreams, GO Voyages, Opodo, Travellink, and the metasearch engine Liligo offer regular and charter flights, low-cost airlines, hotels, cruises, car rental, dynamic packages, holiday packages and travel insurance. EyeforTravel hears that going forward, we can expect to see a much stronger focus on hotels.

There has been progress all round. As he told shareholders: “In regard to traffic source and channel mix, we successfully shifted the mix to less expensive traffic sources. We have been focusing on lower cost channels and customer retention. In addition, improvements made to our products have helped. This is reflected in the 10% bookings growth while reducing our variable cost per booking by 6%. Mobile channel bookings continued to improve, up 51% in 2016 fiscal year, representing 24% of our total flight bookings on average in the fiscal year 2016.”

The flight business revenue margin grew 5% year-on-year, reaching €367.3 million for the full year 2016. This revenue growth was driven by a solid growth in bookings, which were up 11% year-on-year.

The non-flight business revenue margin increased by €8.4 million (up 10% year-on-year) to € 96.0 million, from €87.6 million the previous year, “principally due to a 13% increase in our revenue margin per booking of non-flight products”.

There is plenty of market to go for, if the conditions are right. eDreams has only a 27% share of the OTA’s flight market and last year succeeded in boosting its market share by 2ppt in Germany, Portugal and Spain and by 1ppt in France, the UK and Italy. In the US, it says ‘our bookings are growing at double digit’ rates.  The OTA industry in Europe remains highly fragmented, but opportunities for business are growing across the board in travel and leisure, for accommodation and the expanding railway networks.

While he sets out last year’s victories - advertising, metasearch, dynamic packages, cars and ancillaries - Dunne is equally open on what is not working well. These are the areas of holiday packages and hotels. 

There was a 30% decline in holiday package margins in a poor markets as “we faced technical and content challenges”, coupled with terrorist related market declines in France and North Africa. Hotel performance was “flat”, but “we are testing new levers to boost performance, showing early, encouraging results”.

He was a little elliptical about how he would tackle improving profitability in 2016:  “Reduce areas in which we are not as profitable and are not strategic to long term success. In addition, we will invest to build long term sustainable business,” was the outline. No detail on what would go.

Nor was there any colour given on which numbers would rise - except, of course the profits. He aims to increase those by 10%.