Online hotel site set for sale of stock

SYDNEY - Wotif.com, an Australian accommodation website, plans an initial public offering in the first half of next year to return funds to its owners and raise capital for potential acquisitions.

Wotif.com might sell 50 per cent of the company to employees and investors in Australia, chief executive Graeme Wood said.

The website operator said it was seeking advice on how much it might raise and would not confirm a report in the Australian newspaper that valued the company at A$500 million ($543.5 million).

The company helps travellers find vacant rooms for the next 14 days at discounted rates, taking a percentage of the rate in exchange for helping hotels use spare capacity.

Wood said he expected the company to increase sales by at least 30 per cent a year, potentially through acquisitions, as travellers booking their vacations online increased.

"Profit and revenue have grown consistently each year," he said. "It's a good story, and I think the shares will be in demand.

"There's still huge potential to expand. It's the most cost-effective way for hoteliers to get bookings, and there's drive from consumers who appreciate the convenience and good value they get by booking online."

Brisbane-based Wotif.com, founded in 2000, had earnings before interest and tax of A$16.9 million in the year ended June 30, on sales of A$250 million, he said.

Wotif.com has offices in Brisbane, Canada, New Zealand, Singapore and Britain. It offers rooms in more than 6000 hotels, resorts and guesthouses in 36 countries, says its website.

Wood said the company accounted for about half of all online room reservations in Australia, with 2 million website users generating about 100,000 bookings a month.

Selling shares to investors would give it funds to accelerate expansion.

"It does give us capital for acquisitions, so we could grow the business quicker than it has been growing if we chose that path," Wood said. "In some of the markets that we're involved in, there are some operators who could become potential acquisition targets if we can't grow the business fast enough organically."

The company is owned by its four-member board, which includes Wood, who doesn't plan to reduce his 35 per cent stake.

The other owners, chairman Kevin Fitzpatrick and directors Andrew Brice and Lyn Brazil, may cut their stakes.

The company will publish a share sale prospectus at the end of the year or in January.

- BLOOMBERG