Tuesday, August 25, 2009

Has Roamfree run out of GAS?

Australian online tourism services business, Roamfree once claimed to have developed one of the world's most extensive global accommodation search engine. They widely repeated their lofty ambition to become the "Google of the travel industry."

It seems that instead Roamfree have become the latest casualty of hard economic times in the travel industry.

Kiwi Moteliers may remember the agreement that Roamfree made with AA Tourism in New Zealand in 2007 to distribute online accommodation inventory.

This was followed by Roamfree commission reps hitting the road and trying to sign up accommodation providers in a confused uncoordinated campaign.

Those Kiwi accommodation providers that supplied inventory on Roamfree's GAS - Global Accommodation Search via the AA or direct with Roamfree soon found that the benefits of the distribution model were somewhat overstated.

Hints of trouble started in Australia by the widely reported financial problems of major shareholder and former face of Roamfree, Tony Smith who was facing multimillion-dollar losses from the MFS share collapse and sour property deals.

There was also a much publicised spat from up to 50 sacked employees that were sacked after a company reshuffle in April last year.
Mainstream media reported of Roomfree's ex-employees that were using on-line feedback sites with claims that Roamfree.com were finding it tough to grow as fast as it had hoped in the internet travel industry and were missing sales targets.

I guess they were right.

By Shannon Willoughby

ONLINE travel booking company Roamfree is the latest local company to be stung by high debt levels and a downturn in consumer spending.

The Surfers Paradise company moved into voluntary administration late yesterday after it failed to reach a debt-servicing agreement with its noteholders.

A decline in travel spending also fuelled the company's administration.

Ferrier Hodgson's Tim Michael and Will Colwell have been appointed to take control of the company.

The group's subsidiary trading companies, BookEasy Pty Ltd, Roamfree Pacific and majority-owned Tourism Technology, are not affected.

Roamfree was the brainchild of tourism entrepreneur Tony Smith who sold out after losing more than $50thmillion following the collapse of MFS.

Mark Frawley, the former general manager of Mr Smith's BreakFree company, was appointed the new boss.
Other directors include Terry O'Dwyer and Lee Warren.

The company said despite the appointment of the corporate doctors, its 25 employees' jobs remained safe.

"From my initial review of the company's affairs, it appears that funding provided by noteholders and investors has been exhausted by business investments and acquisitions and the costs of developing its online offering," said Mr Michael.

"The current economic climate, resulting in reduced travel and accommodation bookings, has also negatively affected the performance of the group.

"My initial focus will be to maximise the recoverable value of the company's investments in and loans to the group's subsidiary companies."

It is unknown what the company's debt is.

A creditors' meeting will be held Thursday September 3.

Source: Click HERE

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