No position but impressed with the quality of the letter. Hope you guys can run it to $60. Seriously considering jumping in this train now, knowing that Jeremy is active
I sent an email pressing the points that Jeremy made in his letter and got this reply below from IR. Seems like pressure is building for company to do something, one can dream at least.
Thank you for your message.
LM Group confirms having received letters from several investors. These letters have raised a number of issues and made a series of proposals. The Company has initiated internal investigations across a range of issues, including those highlighted by investors, and expects to be able to update the market and all investors on November 17, as far as will be legally possible within the framework of the current investigations.
Unfortunately, the fate of the company appears to be in the hands of Booking.com. In H1 2022 around half of dynamic package revenue was its white label
business and most of that was Booking. LMN hasn’t disclosed exactly how its relationship with Booking or white label partners works. But you could imagine this could be very high margin revenue given Booking likely bears all customer
acquisition costs with LMN earning a booking fee. 48% of DP revenue
(17% of consolidated revenue) could be a very large share of consolidated profits. Booking has said they want to develop their own DP technology. The possibility of Booking walking complicates negotiations with anyone.
The CEO told me that when I went to the annual meeting a few years ago.
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BKNG relationship w/LMN def. a risk and you kinda have to game theory that. What’s the optimal result for BKNG who A/B test the heck out of everything including BKNG + LMN customer attach rates.
In Europe, what drives the economics of DP is an opaque reserve price that a hotel will show LMN. These hotels provide BKNG a list price — maybe discounted a bit through what BKNG calls merchandising — that shows up in direct searches, meta searches etc. But many of these hotels are wary of providing BKNG both their list price and their reserve price, basically opening up their kimono to their largest supplier and extractor of economic rent. It’s a little bit of a love / hate relationship.
There may be a way for Glen Fogel to thread this needle, if anyone can do it, he can. Right now, BKNG is basically extract those economic rents through LMN as a proxy via their revenue share agmt. It’d be interesting to see what Glen does.
Thanks for the color!
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Strong earnings from BKNG yesterday and quite positive comments around European demand as well (at least so far), couldn’t hope for much more.
I guess the revenue part that affects LMN is “merchant revenue”? I struggle a bit to understand what dynamic packages are in relation to how BKNG show results. Anyone have any insight into this?
I saw that there was a ruling on the fine now, 29mEUR. Let’s see if that’s the end of it. You still think 50chf is an achievable target? Seems like business results won’t be improving that much going forward and obviously there is some major downside risks to European economy going forward.
yes just posted some thoughts on the latest developments. i actually am unsure what an achievable price is now, i think 5x EV/EBITDA (basically where it is now, i think) is still too cheap and the synergies are v large to BKNG, etc. but it does increasingly need to be sold. personally i would be happy with 40 EUR from here.
Very well written letter – And I am eager to hear their response! 🙂
thank you! hopefully they send me a reply…
Great letter Jeremy! Seems like a very tough management to be able to sway in a way but hopefully pressure is building!
fingers crossed…
No position but impressed with the quality of the letter. Hope you guys can run it to $60. Seriously considering jumping in this train now, knowing that Jeremy is active
thank you! join us! haha
bravo Jeremy
thank you
I sent an email pressing the points that Jeremy made in his letter and got this reply below from IR. Seems like pressure is building for company to do something, one can dream at least.
Thank you for your message.
LM Group confirms having received letters from several investors. These letters have raised a number of issues and made a series of proposals. The Company has initiated internal investigations across a range of issues, including those highlighted by investors, and expects to be able to update the market and all investors on November 17, as far as will be legally possible within the framework of the current investigations.
thanks Richard. That is good to hear. I have not heard back from the chairman yet, perhaps I was too harsh…
Unfortunately, the fate of the company appears to be in the hands of Booking.com. In H1 2022 around half of dynamic package revenue was its white label
business and most of that was Booking. LMN hasn’t disclosed exactly how its relationship with Booking or white label partners works. But you could imagine this could be very high margin revenue given Booking likely bears all customer
acquisition costs with LMN earning a booking fee. 48% of DP revenue
(17% of consolidated revenue) could be a very large share of consolidated profits. Booking has said they want to develop their own DP technology. The possibility of Booking walking complicates negotiations with anyone.
excellent points. there is a lot riding on the BKNG relationship…
Hey Daniel, appreciate the color. You said “Booking has said they want to develop their own DP technology.” Where did you see that?
The CEO told me that when I went to the annual meeting a few years ago.
BKNG relationship w/LMN def. a risk and you kinda have to game theory that. What’s the optimal result for BKNG who A/B test the heck out of everything including BKNG + LMN customer attach rates.
In Europe, what drives the economics of DP is an opaque reserve price that a hotel will show LMN. These hotels provide BKNG a list price — maybe discounted a bit through what BKNG calls merchandising — that shows up in direct searches, meta searches etc. But many of these hotels are wary of providing BKNG both their list price and their reserve price, basically opening up their kimono to their largest supplier and extractor of economic rent. It’s a little bit of a love / hate relationship.
There may be a way for Glen Fogel to thread this needle, if anyone can do it, he can. Right now, BKNG is basically extract those economic rents through LMN as a proxy via their revenue share agmt. It’d be interesting to see what Glen does.
Thanks for the color!
Strong earnings from BKNG yesterday and quite positive comments around European demand as well (at least so far), couldn’t hope for much more.
I guess the revenue part that affects LMN is “merchant revenue”? I struggle a bit to understand what dynamic packages are in relation to how BKNG show results. Anyone have any insight into this?
I take it there is still no word from them? They better address it on the media cc
still nothing. i guess they are stonewalling me as they didnt like the tone of my missive…not a huge surprise but not a great sign either…
https://www.bloomberg.com/news/articles/2022-11-14/lastminute-com-faces-investor-pressure-after-ceo-detention
Also mentioning this letter
I saw that there was a ruling on the fine now, 29mEUR. Let’s see if that’s the end of it. You still think 50chf is an achievable target? Seems like business results won’t be improving that much going forward and obviously there is some major downside risks to European economy going forward.
yes just posted some thoughts on the latest developments. i actually am unsure what an achievable price is now, i think 5x EV/EBITDA (basically where it is now, i think) is still too cheap and the synergies are v large to BKNG, etc. but it does increasingly need to be sold. personally i would be happy with 40 EUR from here.