Ebookers chief eyes expansion into bricks and mortar

Business Profile: Dinesh Dhamija has led his internet travel company into profit. Now it's time for growth
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Dinesh Dhamija is tired and in a hurry. He's spent the whole day seeing shareholders after the third-quarter results of his ebookers online travel group and is due to catch a plane to Moscow later in the evening to check out possible deals.

Dinesh Dhamija is tired and in a hurry. He's spent the whole day seeing shareholders after the third-quarter results of his ebookers online travel group and is due to catch a plane to Moscow later in the evening to check out possible deals.

Tall and immaculately groomed, the 52-year-old who grew up in India but has a British passport, slumps down in the glass-walled meeting room in ebookers' London head office and sighs. "How long will this take?" he asks. Oh dear.

He's not on the best form and later apologises via a mobile phone call from Red Square. But his answers are always courteous, if brief, and he certainly ought to be in an upbeat mood.

Ebookers' third-quarter results earlier this month showed the group had made its first quarterly profit of £200,000 before interest, tax, depreciation and amortisation. In addition ebookers' shares are the second-best performer on the London stock market so far this year with a rise of 287 per cent. It is behind only Energy Technique, a maker of air filters, and one place ahead of arch-rival lastminute.com. Mr Dhamija, the chairman and chief executive, also sold £9m of shares, though he retains a 53 per cent stake.

"I'm surprised we are the second-best on the market," he says in a cut-glass English accent. "But we are still well below our peak during the boom."

He points to the differing performances of the major US and UK online travel businesses. In April 2002, the peak of the internet bubble, Expedia, the Big Daddy of the online travel sector, was valued at $1.5bn (£1bn). Now it is valued at $4.3bn. Travelocity has seen similar growth, from $300,000,000 at boom time to $1.4bn now. By contrast the valuations of ebookers and lastminute languish at half their peak levels. "If we produce the profits of the American companies I see no reason why we should not do well," Mr Dhamija says.

He insists the bursting of the dot.com bubble never bothered him and that he always knew his group would pull through. "We know how to make a profit because we'd done it for 17 years (with Flightbookers, his previous travel business which he founded in 1983). Ebookers is forecast to make its debut full- year pre-tax profit next year, at about the same time as lastminute.

By then, though, who knows what the travel industry landscape will look like. Mr Dhamija admits he is looking for deals. "I think there'll be different types of consolidation," he explains. "I'm not sure the five online companies (ebookers, lastminute, expedia, travelocity and opodo) will merge or buy each other, though of course, it could happen. We will certainly be buying bricks and mortar companies not online companies. We've shown we can move offline companies online. And they are cheaper too."

As airline tickets account for 68 per cent of ebookers' revenues (holidays account for 14 per cent and hotels 11 per cent) the deals are likely to be in other areas, such as hotels operators, car hire and insurance. Mr Dhamija would also like to extend ebookers' geographic reach into countries where it is relatively weak such as Italy, Germany and France.

He has made bids for parts of the ailing MyTravel holiday company, with Cresta Holidays, Panorama and Bridge being his main targets.

He dismisses the likelihood of bids for ebookers and lastminute from the traditional tour operators. "I don't think they have the firepower. None of us have ever made a profit and they probably think we never will."

However, he does not rule out a deal with lastminute with whom ebookers held merger talks a year ago. "There's always an opportunity at all times to do a deal. It depends on price and what their ideas are and our ideas are. I wouldn't rule out a coming together."

Sometimes he sounds like he would like to seek an exit after more than 20 years in the business. He certainly appears to have remarkably little emotional attachment to his creation. "In the end, we're shareholders and if it's good value then we'll sell. It's not a big deal," he says with a shrug.

At other times he suggests that his work is far from finished: "There is a lot of building up to do in this company. Profitability is only the first step. We need to beef it up with a couple of acquisitions. We want to build revenues to £1bn (from the current annual rate of £300m)."

Ebookers specialises in so-called "merchant fares", which it secures with most of the world's biggest airlines. These are not last-minute discounts but fares negotiated by ebookers up to a year in advance at rates up to 65 per cent below the published fares. Mr Dhamija says the airlines sell these seats through agents rather than directly in order to protect their brand values and assess the correct market prices for fares.

He shrugs off the potential impact of a conflict with Iraq saying the Gulf War now looks like "a blip" on ebookers' growth charts.

He also says the no-frills airlines help him. "They do short haul and are educating people about how to book online. When they come to us for long-haul, they'll know what to do."

As ebookers grows the business is also changing. A third of its 1,000 staff are now based in India, where ebookers opened a processing centre earlier this year.

The board has moved from being an all-Indian executive group to being a more mixed bunch with Nigel Addison Smith joining as finance director from First Choice and Philip Dale coming in from Priceline as IT director. Mr Dhamija's wife Tani remains on the board.

Born in Australia, the son of a diplomat, Mr Dhamija lived in India, Mauritius, Afghanistan, Czechoslovakia and Holland but calls Britain home after moving here in 1968. Like many who have adopted a homeland he is, in some ways, more English than the English. He speaks in a very traditional English accent and is a member of four golf clubs (Wentworth, Roehampton, the RAC and one in Delhi). He is a member of the Oxford & Cambridge club and is fond of the good food at Harry's Bar in central London. His two sons went to Harrow.

Indeed his two boys, aged 22 and 24, seem a bit of a sore point as neither has really knuckled down to full-time employment. "They don't have to work for us," he says. "But I think they should work. Hard." What are they up to, then? "The older one is looking around. He doesn't want to work here. The other one is going to India for a couple of months (Mr Dhamija still has family and a house in Delhi)."

This laid back approach to life seems at odds with Mr Dhamija's own sense of discipline. "I gave up smoking and drinking on the same day in 1978," he says, proudly.

On his own future Mr Dhamija maintains that he has no plans to separate his roles as chairman and chief executive and no plans to take his £9m and sail into the sunset. "I'm only 52. I don't want to retire just now."


Title: Chairman and chief executive of ebookers

Age: 52

Pay: £337,848 last year

Career history: MBA in law from Cambridge University followed by a stint at the computer giant IBM. Founded Dabin Travel in Earl's Court, London, in 1980. Established Flightbookers in 1983 but worked for airlines such as Royal Nepal and Air Tanzania during the 1980s too. Spun out ebookers from Flightbookers in 1999.

Interests: Golf, spa holidays and good food.