GRAEME Wood started hotel site Wotif.com just as the dotcom bubble burst, but that didn’t stop it becoming an internet success story.
One of the greatest pay-offs for the new-age online entrepreneurs is that as soon as they create a website eyes want to surf to on a regular basis, and the marketing campaign has some traction, it’s just a matter of making money while they sleep.
Graeme Wood, the founder of one of this country’s most successful online destinations, actually took “making money while you sleep” to a logical conclusion by creating a site that effectively sells beds at hotels to a world virtually addicted to travel.
And not only has Wotif.com been an online entrepreneurial success, it has delivered the ultimate prize of being in business – the creation of a respected, publicly listed company.
How successful? Well, try these bananas:
– Offices in Australia, Canada, Malaysia, New Zealand, Singapore and Britain;
– Hotel customers in 44 countries;
– 11,000 properties sold on the website;
– Visits per month: 3.2 million;
– Bookings per month: over 200,000;
– Employs more than 190 people.
This is not just a success story Graeme Wood can be proud of; it’s a national achievement that creates a powerful role model for other budding online entrepreneurs.
So, what’s his story and the secrets of his success?
Having a benchmark skill in the fast-growth area of the internet and understanding how markets worked was a starting point advantage for Mr Wood. His academic background was perfect with a Bachelor of Economics and a Master of Information Systems.
This all came together when working for a hospitality outfit.
“I always had a fascination for markets and I was doing some work for a hotel chain,” says Mr Wood.
“The problem was how does an individual hotel get the news to the market that they had something to sell?”
The answer was simple: a website that permitted those supplying rooms at less than the usual rate to tell those demanding rooms that the rooms were available.
“I went out and approached a big hotel chain and asked them what they thought about the idea and was met with, `It might work’,” Mr Wood says.
“However, smaller hotels saw it as a great idea figuring they had nothing to lose.
“In the end, as the smaller hotels took to it, the bigger ones came around, too. We had created a market and it was magic stuff. It certainly has proved a magic formula.”
Backed by co-founders Andrew Brice and Kevin Fitzpatrick – who stumped up the money for Mr Wood’s market-maker – the rest has become online business history.
But it was no simple walk in the technology park because Wotif.com started in March 2000 – the month the dotcom bust happened, sending the stock market plummeting.
Despite this challenge, Australians still wanted to travel and buying off the internet was a social tsunami no one was going to contain. But Mr Wood believes his company’s innovations also explain the success of the business.
“Our innovative way of displaying room rates – our hotel price matrix – added to our success,” he says.
“It gave travellers and the hotels an easy way to check all available prices, up-front.
“Customers could now see discounted pricing from a number of hotels on the one screen and then simply book the room they wanted.”
Word-of-mouth referrals from the new breed of internet-users helped the company achieve market momentum.
But the wagging tongues were helped along by the strategic use of public relations to get the media outlets on side and doing free marketing for the fledgling operation.
“We used an external PR firm for six months when we started but we do it in-house nowadays,” he says. “I have a great belief in the powers of the press.”
The take-off of the business was fast – very fast.
“In 2001, we opened our European office in the UK and by 2002 we were offering deals in the US and offering accommodation in 20 countries,” Mr Wood says.
“In September 2005, our board of directors announced the decision to seek a listing on the Australian Stock Exchange.”
It happened in June 2006 and by August last year the 2006-07 financial year results showed 60 per cent growth in net profit and a total of 2.06 million bookings for the 12-month period.
What was the vision that Mr Wood saw as giving him the competitive edge to create this blockbusting business?
The starting point was really understanding the market – great entrepreneurs have in-built marketing radars or else they are smart enough to pay for others to show them the way.
Mr Wood’s observations told him hotels with unsold rooms could get a short-term, responsive, cost-effective sales channel via the internet.
Meanwhile, hotel guests, who once lacked market information and paid too much, would be able to save both time and money.
His offering had an enormous productivity offering for smart business managers.
“Wotif.com made it possible for hotels to optimise their yield by updating availability and rates online, in real time, based on current demand and supply,” Mr Wood says.
“A room sold at 50 per cent of normal rates adds more to the bottom line than an unsold room.”
When you understand the challenges of both the producers and the customers in a market, and then you can create something that makes both parties’ lives better, you are on to an absolute winner.
On the appeal of creating an online business, Mr Wood looks to the attractive numbers.
“One of the nice things is you can run a small pilot – it didn’t cost us much to get a website out there,” he explains.
“But there was a constant reinvestment of profits into making it better.”
And that’s the entrepreneurial challenge to find the money to back the vision.
Mr Wood says he is not a big one for experts and has relied heavily on gut feelings, but he is a listener.
“It’s always nice to talk to someone when you hit a dead end,” he says.
“People like me are always looking at new ways to solve a problem and in talking to someone an idea can turn up.”
Mr Wood has retired as chief executive, acknowledging that public company life “means you have to behave yourself”.
He hankers for the entrepreneurial life and running a public company calls for a different skill set.
“I love delegating,” he says. “When I find people who do jobs better than me, I give those jobs to them.”
Wotif.com recently acquired Asia Web Direct and Travel.com.au, which Mr Wood thinks will give his company greater access to Asia and a broader range of services.
Online entrepreneurs of the future could well benefit by asking themselves: what if I modelled my business plan on Wotif.com? That would be a smart entrepreneurial decision to make.
Originally posted on News.com.au
Graeme Wood’s blueprint for online success:
– Create an online business plan that makes money while you sleep.
– Do your market research, identify market failure and come up with a solution to both buyers’ and sellers’ problems.
– Get financial backers on side to bankroll crucial start-up investments such as a great website.
– Use your innovative business approach to attract media exposure.
– Approach small players first to try your product and watch the big boys follow when it proves to be a goer.
– Continue to innovate to keep wowing your customers and to attract new ones through word-of-mouth advertising.
– Enter awards, win them and get media coverage for marketing payoffs.
– Replace yourself with people who are better than you.