CaseStudy
DigitalOverhaul
How WebBeds' finance team used AI and blockchain to enhance cash flow, led by CFO Marco Torrente
Digital Overhaul
Project Casebook
Company data
Revenue
Profit
Staff
Finance
- Headcount - 200
- Key teams - Accounting, internal audit, tax and legal
- IT systems - SAP
Approach
WebBeds' parent company, WebJet, cut its operating costs and raised more than $500m from two rounds of capital raisings in April and June 2020 to see it through the stresses of the pandemic. It took the opportunity of the pandemic to set the foundations for future growth without affecting momentum.
Impact
The company reported in the second half of 2023 that bookings, revenue, and EBITDA were all ahead of where they were when the pandemic hit.
WebBeds not only averted disaster during the pandemic, but came out of it in a strong position through a financial transformation led by CFO Marco Torrente
Words Richard Crump Photography Richard Gleed
What does WebBeds do?
Launched in 2013, WebBeds is the world’s fastest growing B2B travel intermediary, or bedbank, providing accommodation and ground product distribution services to the travel industry.
When the pandemic struck it was a “shocking moment” for the travel industry which shuddered to halt as countries around the world introduced lockdown measures that restricted movement to contain the virus.
However, WebBeds and its Australian parent company, Webjet Limited, emerged from the pandemic better placed to deliver growth than before the outbreak - thanks to a finance transformation.
Turn crisis into opportunity
Marco Torrente took over as global chief financial officer (CFO) of the global travel intermediary during the height of the Covid-19 pandemic. But despite the instability the outbreak caused to the travel industry, the crisis provided an opportunity to retool the business, including the use of artificial intelligence (AI) and blockchain technologies.
The company sources content from travel suppliers, aggregates, and merchandises that content in the WebBeds platform, then distributes it to its global network of travel trade clients, who sell to the travelling public.
Even though travel has yet to fully return to what it was, the company reported in the second half of 2023 that bookings, revenue, and EBITDA were all ahead of where they were when the pandemic hit.
This, explains Torrente, reflects the transformation strategy the company undertook to retool its business, streamline its technology platform, and eliminate inefficiencies to make sure it would not only recapture demand when travel returned, but also accelerate its already rapid growth.
“It was very tough at the beginning, but also it was an opportunity to redefine the strategy for coming out of this period,” Torrente said. “We had a feeling that when the pandemic was over there would be pent up demand. And you need to be ready.”
THE SECTOR
B2B travel
THE CHALLENGE
Covid ground travel to a halt worldwide, leaving businesses, including WebBeds, with very limited cashflow.
THE OUTCOME
WebBeds took the opportunity transform and retool the business
We had a feeling that when the pandemic was over there would be pent up demand. And you need to be ready
How blockchain aided efficiency
The priority, according to Torrente, who had spent five years leading WebBeds European finance team before being promoted to global CFO in November 2021, was to Covid-proof the business.
First, WebJet cut its operating costs and raised more than $500m from two rounds of capital raisings in April and June 2020 to see it through the stresses of the pandemic.
“The first objective is to protect your balance sheet, protect your cash position to make sure you can survive a retrenchment period and make sure you have got all the foundations in play, in particular cash, to be able to survive that period of pandemic,” Torrente said.
The net proceeds from the offerings were used to pay down some of the company’s existing term debt whilst extending remaining term debt maturity into late 2022, as well as for potential acquisitions and ongoing capital management
The capital raising supported the businesses focus on maintaining a strong balance sheet as it navigated the challenging operating environment caused by COVID-19, while also diversifying Webjet’s funding sources and increased its financial and strategic flexibility.
WebBeds was also able to utilise a blockchain technology it developed to verify hotel reservations.
Rezchain - first workable blockchain in the travel industry - was built to address a significant industry problem given around 5% of all hotel bookings are disputed in some way due to data mismatches, according to Webjet.
The tool played a key role in reducing WebBeds operating costs and delivered significant value during Covid-19. It insured WebBeds against costly errors in the processing of mass cancellations saved both labour costs and hard financial losses.
“We were in a better position because our cost structure was very lean. With a very lean position it is more possible to manage the costs properly.” Torrente said.
We redefined strategy for the company and focused on how we can transform the technology
Integration drives growth
WebBeds did not waste the crisis. Prior to the pandemic, WebBeds had grown rapidly through acquisitions. But it had constraints around its processes and technology and there had not been an appropriate time to set the foundations for future growth without impacting momentum.
The pandemic provided that opportunity to accelerate the move to a seamless global distribution platform. When the world stopped, the company took full advantage of the time to transform the business.
“We redefined the strategy for the company and focused on how we can transform the technology to make sure that we were in a very strong position to be able to pursue all the demand that is going to come after the pandemic,” Torrente said.
One of the key points, Torrente explains, was to have one ERP system for the different businesses that WebBeds had acquired in the preceding years. In 2017, it acquired JacTravel, a London based global B2B, followed by a $173m deal for Dubai-based Destinations of the World in 2018.
In 2020, WebBeds took the step to unify its B2B trade brands, streamlining processes for supply and distribution partners.
“There were different businesses with different booking systems, different accounting systems,” Torente said. “So, we were really able to put the foundations in place, to put in one ERP system ready to start the implementation to make sure that we are connecting the right way, speaking the same language.”
Torrente said his “clear objective” was to make sure that WebBeds had “all the system in place to support the business, to make sure that we were able to manage the high growth that was coming.”
“When implementing a big strategy in terms of the group, if you don’t have a system in place it is going to be difficult to manage,” he said.
AI and machine learning were also crucial to WebBeds, which used the technology to improve customer experience through a chat box, real time answering and immediate reconciliation of accounts. The finance team was also able to harness machine learning to improve decision making, through automatic cashflow and revenue forecasts.
Humans that are not using AI will be replaced by humans who use AI
AI is central to the future
For 2023 and beyond, WebBeds’ goal is to build a scalable, efficient, and dynamic technology ecosystem to support the evolving demands of the global marketplace and to leverage its wealth of raw data that is ready to be mined.
Clients, online travel agencies, retail travel agents, corporate travel managers, tour operators, wholesalers, tourism boards, airlines, and more access the company’s inventory of more than 368,000 hotels through trade-only booking websites or via API connectivity.
Clients can also book over 15,667 transfer services in 1,190 destinations along with thousands of guided excursions and tickets for attractions.
The ERP unification programme will deliver scalability and drive efficiency across the business. Other initiatives include new robotics workstreams and streamlining the customer service work process.
Torrente said that by doing the digital transformation first, he was able to “put the foundation in place so then you can progress and focus more on artificial intelligence and machine learning.”
“It is important to have clear objectives. You need to make sure that you have a good checkpoints and very thorough signals to make sure you are going to the right direction and that you are investing the right resources,” he said.
Artificial intelligence, robotics and data-driven decision-making will become increasingly important the company seeks to improve customer service, competitiveness, and profitability, according to Torrente.
Torrente said there is “a lot of feeling in general that AI is going to replace the humans”, but for him it is a different perspective.
“Humans that are not using AI will be replaced by people who use AI. You need to be able to deal with it and for the finance perspective it is one of the key tools that you need to think about in the near future,” he said.
Managing a global finance team
WebBeds operates globally through four geographic regions Europe, Asia Pacific, Middle East and Africa and Americas - with over 1,600 travel professionals working in 50 offices worldwide, and a global distribution network of over 44,000 travel companies.
Because the business is divided by region, Torrente said it is important to have a specific team dedicated to one region “because you are speaking to the customer directly with the same languages and the same culture”.
“Obviously it is going to be more and more efficient and talking about the accounts payable,” he said. “It can be beneficial to create a business partner within the company but also externally with the commercial suppliers.”
As a global business, Torrente must manage a global finance team of approximately 200 people across 15 locations as diverse as Singapore, Manilla, Dubai and the UK, which he said is “a great opportunity, but also it is very challenging in terms of management.”
The first thing in terms of managing the team is to have experience in different cultures, according to Torrente, who began his finance career inside the Milan, Italy, offices of SC Johnson, the household cleaning products giant, before working in London and Geneva.
This was followed by stints at Tui Travel in Spain and the UK, and then Sabre.
“You need to make sure you understand the differences, because in Europe already there is a lot of difference between northern Europe and southern Europe.
“You need to be humble. You cannot go in and dictate what you are going to do, you need to understand their need, their requirements,” Torrente said. “You need to make sure the strategy is clear, and the objective is clear for them to be able to move in the same direction.”
