HRG predicts business travel revenue to remain under pressure

HRG predicts business travel revenue to remain under pressure

Business travel revenue will remain under pressure due to “aggressive” competitor pricing and a continued move by clients to online booking, Hogg Robinson Group predicted today.

However, the travel management company’s annual performance to March 31 was helped by a strong performance by its Fraedom technology business, which saw revenues rise by 13% and operating profit ahead by 75%.

HRG’s full year pre-tax profit rose by 15% to £26.7 million despite a 4% drop in revenue to £328.3 million year-on-year , with most of the decline driven by Europe and the Asia Pacific regions.

The increased profit was down to Fraedom revenue growth and £4 million in cost savings through restructuring, according to the company.

Looking forward, the company said it saw similar conditions in the UK and North American travel markets during the next 12 months, with variable conditions in Europe and continued softness in Asia Pacific.

HRG said it anticipated revenue in its travel management division “will remain under pressure as aggressive competitor pricing continues alongside the ongoing move by our clients to online booking”.

Growth in Fraedom revenue and earnings is expected to continue.

Group chief executive David Radcliffe said: "Hogg Robinson Group made good progress during the year.

“Our travel management business, HRG, which helps clients optimise their travel spend, continues to leverage its technology and service delivery platform to offer clients a better travel experience whilst also maintaining our profitability.

“At the same time, Fraedom, our exciting technology business, is growing strongly, capturing the demand for disruptive technology in the SaaS [software as a service] areas of payments, expense and travel management.

"Looking forward, the board has confidence for the year ahead with the company focused on making further earnings progress.

“With net debt to Ebitda below our target range, we now have the opportunity to refresh our view on appropriate capital structure, taking into account the potential benefits of increased investment in the business and whether there is scope to enhance returns to shareholders."


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