CEO’s Staff Memo: Lonely Planet Digital Will Locate With BBCWW

[Detail of how Lonely Planet is moving its digital team out of Melbourne]

Hi everyone,

Today we are making some changes to our organisation that will affect everyone at Lonely Planet, directly or indirectly, in order to reposition us to return to profitability while staying true to what we do and the travellers we serve.

Why are we doing this?

As I outlined at our all staff meeting in Melbourne, Lonely Planet is facing a series of financial challenges from external forces beyond our control – a sluggish global economy, the troubled retail sector, a declining print market and, significantly, the effects of the strong Australian dollar.

Despite the fact that we’ve delivered on everything we set out to achieve this past year, the devastating impact of foreign currency exchange shaved over $13 million off our 2010/11 revenues. And at the moment, we have more than 80% of our revenues coming from outside of Australia & New Zealand with more than 70% of our costs located in Australia.

We are a good business with talented people deeply committed to Lonely Planet, but this imbalance is not sustainable in the current environment.

Last month I presented BBCW with a series of recommendations carefully considered by our executive team to achieve a financial turnaround while delivering on our strategy for growth.

What is changing?

We plan to lower our cost base by up to 18% and this includes reducing corporate overheads and discretionary spending. Unfortunately, as a result of today’s announcement, we also expect to have 60-70 fewer roles across our organisation globally. The impact on the ground may feel greater as some roles become redundant while others are relocated.

We will rebalance our geographic structure to better match our operating costs with the markets where our revenues and customers are located, creating a ‘natural hedge’ against currency fluctuations.

This will include relocating our online operations to London to become part of a larger digital ecosystem co-located with BBCW. Dominic Rowell will continue to lead this team and he will relocate to the UK over the coming months. While we believe this decision gives our online business the best opportunity for growth, we recognise this will have a significant impact on many people working in our online team in Melbourne.

We are also streamlining our executive team leading the business and asking each member of the team to take on more responsibility. We will provide more detail on the executive team and organisation structure in briefing sessions over the next few days.

We will take advantage of further integration with BBCW by exploiting its capabilities and scale in online advertising and having BBCW take on responsibility for Lonely Planet Television.

Across all these changes, we’ve taken care to minimise the impact to authors, consumers, product quality and revenue.

New operating model

We will introduce a new operating model that breaks down our print and digital channel silos while maintaining our digital growth. Instead, we will establish two new business lines that reflect the way we serve customers:

1. Publishing led by Stephen Palmer – Our strategy here is to continue to be the world’s leading travel guide publisher across all platforms. Our efforts will be underpinned by ‘LPOS’ to deliver paid content products across books, ebooks, mobile apps, foreign language and licensed products.

2. Digital Media & Brand Development led by Dominic Rowell – Our strategy is to grow our brand, audience, and media revenue streams. This includes our online business and extends our brand through licensing opportunities, including the magazine, merchandise and gaming.

What stays the same?

We are committed to maintaining our headquarters in Melbourne, which will remain a centre of excellence for publishing. We will continue to transform our publishing operations through technology investments that help us establish a global publishing capability across books, ebooks, mobile apps, foreign language and licensed products.

The US continues to be a strategic growth market and we have grown print market share there from 14.1% to 15.5% in the last year. The US will become our centre of excellence for mobile having already bolstered our mobile capabilities in Oakland recently.

Our EMEA region continues to provide the largest share of our total revenue and supports a strong set of foreign partners whose relationship we value. And with the strong Australian currency, our ANZ regional activities have never been more critical to our business.

We will continue to focus on growth opportunities in emerging markets, including Asia – establishing publishing operations in India to serve Indian travellers and expanding our presence in China – and with foreign partners in Brazil and Russia.

There is no question about the quality of our products or capability of our employees. Over the past year, Lonely Planet has grown market share in all of its key regions and remains the leading guide book publisher with global market share close to 21%.

Revenue generated from purely digital sources has increased from 9% to 21% over the past four years, which indicates our digital business has momentum. Internet traffic rose over 20% over the past year to an all time high with over 100 million visits in the past 12 months. Over 9 million iPhone apps have been downloaded.

Impact to our community

Many of the decisions we’ve made have been difficult and we have not taken them lightly. We don’t under estimate the impact we are having on our employee community.

The next few days will be challenging, but let’s remember why we’re doing this.

Lonely Planet is a company we all love – we remain committed to our purpose of serving travellers with amazing guides, and the steps we are taking will put Lonely Planet in a better place.

Please join me over the coming days at one of our briefing sessions to learn more details about our plans and ask me any questions.


This article originally appeared in Lonely Planet.