2023-11-03 21:25:14
In the first quarter reported by the company’s new management, CVC said it increased its B2C sales and its ‘take rate’ — in what CEO Fabio Godinho said was a “direct reflection” of the measures adopted in the last five months.
According to the company, confirmed B2C reservations rose 10% in the quarter to R$1.3 billion, while the take rate in this vertical rose from 11.1% to 14.7%.
In B2B, there was a drop in sales volume, with confirmed reservations falling 7%, but the take rate also increased, from 5.8% to 6.1%.
In the company’s consolidated figures, confirmed reserves fell 4.3% in the annual comparison, also affected by a drop in reserves in Argentina, but the take rate went from 8% to 9.6%.
Godinho told Brazil Journal that the increase in B2C had to do with an improvement in ‘same-store sales’ in physical stores, driven by a change in mix — with the sale of more competitive products with higher margins.
The retraction in B2B was an effect of the discontinuation of ticket sales for mileage companies (such as Maxmilhas and Hot Milhas), as well as the cancellation of some contracts that had a take rate very low.
“At Rexturadvance we had several clients operating with take rates below 3%, 2%,” said the CEO. “We sat down with these clients to renegotiate the conditions. If you didn’t agree, we cancelled.”
According to him, this effect — of falling volume and improving B2B take rate — should continue in the coming quarters.
The improvement in the company’s take rate led to an increase in EBITDA and an improvement in the bottom line.
Adjusted EBITDA — which excludes the impairment of a premium from the acquisition of Submarino — was R$96.7 million, an increase of 36%. That impairment generated non-recurring and non-cash expenses of R$77 million in the quarter.
The adjusted net profit — which in addition to the impairment of the goodwill excludes the mark-to-market of the subscription bonuses that the company issued in the follow-on, and the write-off of a deferred tax — it was R$36.3 million. Without these adjustments, CVC would have recorded a net loss of R$87 million, 16% higher than the same period of the previous year.
Godinho said that the result reflects the measures that the new management has taken since taking charge five months ago. The CEO was appointed to the position by Guilherme Paulus, the founder of CVC who returned to cap table of the company in the June follow-on, when the tour operator raised R$550 million, of which R$100 million came from Paulus.
The executive — a CVC veteran who was previously director of new business and vp of products, marketing and operations — said he has focused on four ‘adjustment layers’ in recent months.
The first is governance. At the August EGM, Paulus placed board his son Gustavo and Felipe Gomes, the CFO of Mar, his family office. Opportunity kept its two representatives, and Pátria, one. There are also two independent members.
CVC also changed its strategy, returning to focus on exclusive products such as charter flights, exclusive negotiations with hotels, closed circuits, cruises and itineraries in Europe — products on which the company invested heavily in the past, but which ceased to be the focus as of 2020.
For Godinho, this mix of products guarantees a higher margin and has a competitive advantage, as the consumer will only find these conditions and packages at CVC.
The company is also investing in a phygital strategy, with online and offline marketing; new forms of financing for consumers (in addition to credit cards); and the growth of physical stores.
Since 2019, CVC has closed more than 350 stores, largely due to the pandemic. Godinho’s goal is to open the same number of stores in the coming years, focusing on cities in the interior.
“In the capitals we already have a large penetration, and it is outside the capitals where GDP grows,” said the CEO. “We want to look for a customer that our supplier cannot reach through direct sales. We will look for this customer in Sorriso, Mato Grosso, Niquelândia, Goiás, cities where we are opening stores now.”
To boost this growth, CVC cut the minimum investment for a franchisee to open a store in half, from R$150,000 to R$75,000. According to Godinho, this was done simply by changing suppliers, to more regional companies, and the materials used in the stores, without changing the layout and size.
The third ‘adjustment layer’ is the team. In addition to the changes at C-Level, with the entry of Godinho and CFO Carlos Wollenweber, CVC changed all ten directors, bringing back many names that had already worked with Paulus in the past.
Another change on this front was returning to the in-person regime. Since the pandemic, 100% of CVC employees were in home office. The company kept a third of the team under this regime, but forced the remaining two-thirds to return to the office.
“CVC has always been an execution machine, a vacation and travel factory. And a factory cannot operate 100% from home,” he said.
Godinho also separated the management of the three B2B units — Visual, Rexturadvance and Trend — that had been unified under the previous administration. Visual is focused on selling luxury packages; Rexturadvance, selling airline tickets to SME agencies in the corporate segment; and Trend does the same thing as Rextur, but in the hosting segment.
“What these three businesses sell is very different, so you can’t have one front single. O back office Yes, you can unify, but not the front!” said Godinho.
For him, this was the reason why CVC lost so much market share in these segments in recent years. “Tourism is made up of experts. This is what guarantees quality of service. Imagine if a travel agent is having difficulty with a ticket and calls a general agent… he won’t be able to solve the problem.”
Finally, the fourth front of adjustments was in costs. The CEO said that he already reduced the company’s SG&A by 22% in the first month and that this had no “impact on operations.”
According to him, there are still more cost optimization opportunities that can be captured next year. “There were so many tall grasses that this first cut was easy to do, but there are other things that require a change in systems and processes.”
After a pandemic that devastated global tourism, the previous management, under CEO Leonel Andrade, was more focused on the company’s survival, directing its efforts towards restructuring the debt, which was large and had upcoming maturities. Today, gross debt is around R$750 million and the company has more than R$200 million in cash.
Godinho also made it clear that the company has no plans to invest further in the OTA (online travel agency) model, which it entered with the purchase of Submarino in 2015.
Submarino will not cease to exist, but the platform will be redirected to sell CVC’s exclusive products, and no longer to sell hotels and individual tickets, competing with its suppliers.
“The airline and hotels see a lot overlap between consumers who buy from these OTAs and those who buy directly from them. I don’t want to compete with my partner. I want to create a new customer for them,” said Godinho.
CVC’s strategic shift comes following the company improved its capital structure with debt renegotiation and some follow-ons. Furthermore, the tourism market is going through a good moment, with two major competitors (123 Miles and Hurb) experiencing difficulties.
“There are many winds in our favor, macro and micro,” said the CEO.
Pedro Arbex
1699047455
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