EDINBURGH travel search business Skyscanner has continued to flourish since being taken over by Chinese company Ctrip in 2016, posting strong growth in turnover and profitability for the 2017 financial year.
In the first full year since Ctrip acquired the firm in a £1.4 billion deal, Skyscanner generated revenues of £214.2 million and pre-tax profits of £24m.
The former figure represented a rise of 35 per cent on the previous year while the latter was 41% up, with growth in the firm’s international business proving particularly strong.
While sales in Europe were up by 29% and in the UK and Ireland by 23%, growth in the rest of the world increased by 55%, with Skyscanner benefitting from being able to access the high-growth Chinese market thanks to the Ctrip deal.
The firm, which acts as a search engine that directs customers through to travel agents or airlines to make bookings, is also now able to provide direct booking for flights provided by Ctrip, one of China’s largest online travel agencies.
Skyscanner founder and chairman Gareth Williams, who handed over the chief executive’s role to chief technology officer Bryan Dove earlier this year, said that widening the firm’s focus away from only flight bookings was also paying off.
“Flight metasearch continues to be the company’s largest revenue channel,” Mr Williams wrote in the firm’s annual accounts.
“However, in 2017, revenue from the company’s hotel, car hire and advertising products has contributed 20% (2016: 17%) of overall revenue in the financial year.”
Skyscanner generates revenues by earning a commission every time a flight, hotel or car is booked on its site as well as when visitors click through to partner sites. It also offers a white-label service to other travel businesses, which pay to use its technology to power their own-branded websites.
Commissions from flight bookings, which grew by 43% year on year, make up the largest share of total revenues, coming in at £168.6m in 2017.
At 54%, hotel and car hire commissions grew at a faster rate although at £19.9m accounted for a far smaller proportion of the firm’s overall sales.
This is the second set of Skyscanner results that have shown benefits from the Ctrip acquisition, with the firm’s 2016 figures including an £18m tax credit that came about as a consequence of the deal.
Millions of pounds’ worth of share options that had been granted to Skyscanner staff in preceding years vested when the deal went live in late 2016, with the credit coming as a result of the tax incentives associated with company share incentive schemes.
Mr Williams stressed at the time that the credit would be a one off and that Skyscanner holds itself “to a high standard in relation to paying a fair rate of tax in all of the jurisdictions in which we operate”.
The firm’s tax bill for the 2017 year came in at £5.4m, giving an average tax rate of 22%.
The acquisition has also proved of benefit to Ctrip, whose chief executive Jane Sun and chairman James Liang told investors earlier this year that Skyscanner is “another important pillar of our international expansion plan”.
In a May letter to shareholders, the duo said that Skyscanner had “continued to show strong growth in our first full year post investment in late 2016”.
Since making the Skyscanner acquisition Ctrip has further invested in Scotland with the launch of an Edinburgh-based call centre that handles customer-services enquiries from the firm’s growing international client base.
That part of the business, which received financial support from government-backed agency Scottish Development International and is expected to create up to 200 jobs, operates as a separate entity to Skyscanner, which despite being owned by Ctrip continues to operate as an independent business.
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