E-Bookers

By Blaine Greteman/London

The travel industry has endured a nightmare trifecta: the Sept. 11 attack, the war in Iraq and SARS. But as Dinesh Dhamija strides through London clutching a bouquet of balloons emblazoned with the e-bookers logo, it's as if the disasters never happened. "We knew we'd survive," says Dhamija, e-bookers' founder and CEO. "The question was whether we would become No. 1 or No. 2." Today e-bookers is Europe's largest Internet travel agency and the first (as of May) to turn a pretax profit. It was also the London Stock Exchange's second-brightest star last year, with share prices up 324%.

It's been a bumpy flight since the firm's 1999 launch. Its NASDAQ shares dove 95%, from $43 in 2000 to $2 in 2001. What helped e-bookers evade the fate of so many that failed? "We built a website around a business," answers Dhamija. "We didn't build a business around a website." E-bookers makes 30% of its sales through shops and call centers. Dhamija, who came to Britain from India in 1968, set up a discount-travel shop in London in 1980. His knowledge of the industry, not technowizardry, was the basis of e-bookers' success. To avoid competition with low-cost, puddle-jumping carriers like Easyjet, it focuses on the mid- and long-haul market. To get cheap merchant fares, e-bookers has personnel in 11 countries. It uses flights to sell lucrative hotel bookings. And last year e-bookers yanked its central office out of Britain and moved the 400 jobs to low-cost New Delhi. The business model may not be sexy, but it is working. Sales rose 52% last year. Nearly all of that growth was organic, rather than through its steady stream of acquisitions. Despite those deals and increased volume, costs fell from $77.9 million in 2001 to $74.6 million last year.

It must let a little air out of Dhamija's balloons, however, to realize how close his perch at the top of the industry is to the ground. After taxes and exceptional costs, e-bookers' maiden first-quarter "profit" of $175,000, turned into an $8.1 million loss. But e-bookers has shown that it knows how to reach the black ink, and as any old-economy travel agent will tell you, it's the destination that really counts. --By Blaine Greteman/London