Trainline.com to float on the stock exchange

[Greenback]

There's no law against selling items at a higher price and doing loads of advertising with carefully worded phrases to make people think it's cheaper.

If it were, there would be hardly any adverts, or companies, left!

I have a colleague who always checks both trainline and the TOC site. Every time, the TOC is cheaper because there are no booking fees, but my colleague continues to check trainline because he is convinced they have access to some extra-cheap tickets. He refuses to believe they are the exact same tickets from the same database, even though he's never found cheaper tickets on trainline...

This is a widespread belief. either people mistakenly believe that TTL has a special agreement with rail companies to sell their tickets more cheaply, or they mistakenly believe that TTL buys up the cheapest tickets and the sells them on.

To be fair, many people believe the same about other travel websites, hence the multitude of ads you see about cheap flights and cheap holidays. As with the TTL, they never seem to claim that they are the cheapest, as there would be no question about that being false advertising.

 

[Clip]

Why is trainline allowed to exist when most people know it does not offer the best priced deals and tickets can be obtained more cheaply elsewhere ?

What is the regulator doing to protect passengers and the public from voracious capitalist vultures such as trainline.com ??

Are you being purposely stupid or just trolling?

That's like asking why there are travel agents when you can book flights and hotels directly.

I despair sometimes on here I really do.

 

[TheEdge]

I'm not saying people are stupid but its because people are stupid. I've said to so many people they are cheaper via TOCs and yet I keep seeing again and again Trainline tickets.

 

[sprinterguy]

It is very easy to use compared with sites like East Coast.

I find the boxes to choose ticket prices at the top of the East Coast website very confusing.

I always tell my students to look up things on Trainline, then when they know how much the ticket should cost, to go on EC to actually book it.

That’s exactly what I do – I find it far easier to plan a journey through the Trainline and work out the best tickets than trying to make head or tail of the East Coast user interface. Once I’ve worked out which tickets are best, I can then track them down and book them through the East Coast site.
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I'm not saying people are stupid but its because people are stupid. I've said to so many people they are cheaper via TOCs and yet I keep seeing again and again Trainline tickets.

“Stupid”? That seems a tad harsh. What about being comfortable with the familiar, or not fully informed?

It was only after at least a couple of years of using the Trainline that I became aware that the TOC websites didn’t charge a fee for booking tickets: I presumed that they all did. I also didn’t realise that they would sell tickets for other TOCs’ services than their own. Due to the lack of advertising on the part of the TOCs, these things aren't clear. It was longer still until I actually began to book tickets through TOC websites with their unfamiliar user interfaces.

Purchasing train tickets can be a massively complex palaver that the majority of people want to spend as little time thinking about as possible.

 

[Baxenden Bank]

£500m value on a business with an annual turnover of £980m. Don't think so mate.
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Why is trainline allowed to exist when most people know it does not offer the best priced deals and tickets can be obtained more cheaply elsewhere ?

What is the regulator doing to protect passengers and the public from voracious capitalist vultures such as trainline.com ??

Why is bread cheaper in One Stop Shop than Tesco?

Why should a regulator intervene. The fees are clear and upfront. You can pay them if you wish or you can buy elsewhere fee free. It's called the free market. The real question is, why are the punters so stupid and why do they always want someone else to wipe their backside for them?

PS One Stop is 100% owned by Tesco and usually more expensive, it's their higher priced convenience store brand they like to keep quiet about.
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I have a colleague who always checks both trainline and the TOC site. Every time, the TOC is cheaper because there are no booking fees, but my colleague continues to check trainline because he is convinced they have access to some extra-cheap tickets. He refuses to believe they are the exact same tickets from the same database, even though he's never found cheaper tickets on trainline...

However many times I tell people, I just cannot get them to accept that all the fares and reservations information comes, ultimately, from the same bubbling cauldron of raw data. Only TOC's offering a discount on their own advance fare e.g. EMT are genuinely 'cheaper than all the rest', although cashback / rewards, if taken into the picture, can distort things.

 

[Strat-tastic]

Anyone here seriously considering investment?

 

[northwichcat]

Anyone here seriously considering investment?

I'd be willing to invest £1, if I can impose a £2.50 investing charge on them for my trouble.

 

[telstarbox]

Even if no-one bought tickets directly from TTL they still have contracts with other TOCs to provide booking engines.
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Sadly many people don't/can't manage their money well either. I am reminded of an incident at my local station on Monday morning. The person in front of me was moaning about the increase in fares. She then asked the clerk for five Anytime Returns to London, one for each day of the week. The clerk helpfully pointed out that a weekly season would be £20 cheaper and offer more flexibility.

You can't tell some people!

 

[LNW-GW Joint]

I think trust comes into it with the general public.
The unions go on about "fat cat" and "rip off" private train operators, and some of that has stuck.
Every news item saying ATMs and ticket offices don't offer the best fare just drives people to neutral sites like trainline - even if we all know they are in practice no cheaper.
By contrast trainline puts on a friendly face in its ads.
Booking fees are also endemic in the travel industry (try and book an airfare without them), so casual passengers don't always notice that they can be easily avoided for rail tickets.
Why is the railway "family" so hostile to an outfit which had done a great deal to promote rail travel with new technology?
I never use them, but that's no reason to want them out of business.

 

[bussnapperwm]

Anyone here seriously considering investment?

I might have a punt...

 

[185143]

I don't get it. How do these companies make any money?

Shirley it's cheaper to book directly with your TOC of choice? So I tend to book with Greater Anglia, unless i'm playing the split ticket game.

So how does any of these sites make there cash?

JW

They advertise on tv and radio. When was the last time you saw East Coast or Virgin advertise they sell train tickets with no booking fee? I can't remember but I do see quite a lot of train line adverts

I've seen a few East Coast adverts relatively recently. Saw the Virgin #arriveawesome advert once. I live on the West Coast as well it should be noted

 

[Baxenden Bank]

.... Booking fees are also endemic in the travel industry (try and book an airfare without them), so casual passengers don't always notice that they can be easily avoided for rail tickets.....

A slippery slope, tickets for concerts / shows are much the same nowadays.

Try getting a concert ticket free of booking / postage / administration / card fee. I think only if I turn up in person, pay cash and take the tickets away with me is there no fee at my local venue. So someone has to sit there, waiting for customers to walk through the door, rather than having a website or call-centre which can deal with many venues much more efficiently at lower 'per transaction' cost.

If The Trainline succeeds in building a successful added fee model, how long before TOC's start wanting a piece of the same action - by removing their own directly branded sites but having shadow sites for example - or do their franchise agreements / TSA prevent this? EMT now have (at least) two privately operated ticket offices replacing proper TOC operated ticket offices. For the time being they offer longer hours than previously and additional services (travel agency) with rail tickets at standard prices. If that model became widespread, how long before additional fees became the norm?

 

[arabianights]

Anyone here seriously considering investment?

I am quite seriously considering shorting them although I would not realistically do it at the IPO itself.

 

[bnm]

A lot of comment here as to where and how thetrainline.com makes it profit.

The flotation documents shed some light on this.

Market Share:
Consumer Online Sales 38%
B2B Online Sales 41%
TOC Branded Websites 43%

Breakdown of Net Group Ticket Sales:
Consumer 46%
B2B 23%
TOC Solutions 31%

Gross Profit:
Consumer 64%
B2B 15%
TOC Solutions 21%

And one of the key risks to the company's profit model? -

If the Group is unable to charge some or all of the booking and other fees that it charges to the customers of its Consumer business, or if such fees are subject to reduction or mandated caps, the Group may not be able to generate profit at current levels or at all, which could have a material adverse effect on its business, financial condition and results of operations.

 

[WestCoast]

They're a neutral brand (not associated with any particular operator) with slick advertising and a decent booking engine, it's easy to see why people would book with them. Not everyone knows that they have access to the same fares database as everyone else and no access to some TOC- specific offers...

This defies the rule in the rest of the travel industry, as I regularly find cheaper hotel rooms on sites like Hotels.com rather than booking direct (even when a so called best rate guarantee is offered!). Same is true from time to time on flight bookings, I've found tickets considerably cheaper on broker websites than offered directly.

When you think about it this way, people are not stupid just uninformed....

 

[Donny Dave]

£500m value on a business with an annual turnover of £980m. Don't think so mate.

Anyone here seriously considering investment?

I might have a punt...

@ Class 172 Fan .... Wait until the share price drops after the IPO is my advice ....

@ Baxenden Bank .... It's not the valuation compared to to the turn over you should look at, it's the price/earnings ratio. Having looked at the financials, I'm not convinced that TTL.com is going to be a short term success, as the EBITDA (pre-tax profits to you and I) is only £23 million, give or take a few pounds. That's a profit margin shy of 2.5% which does illustrate how bad margins are in the rail industry. Also, £23m indicates a P/E ratio* of 22 which is steep, compared to the rest of the FTSE 250 (and 350) which is the index they will join, when the average P/E ratio is in the mid-teens. That's not the only thing that concerns me. The dividend payout (if any) will be very small.

 

[MarlowDonkey]

That's a profit margin shy of 2.5% which does illustrate how bad margins are in the rail industry.

Ask yourself how they (trainline) make any money. Turnover is the price of tickets sold, but it's not their revenue as that goes to the TOCs. They are left with the commissions they receive from TOCs for selling tickets and the fees they extract from businesses and consumers for their services. Both are going to be a relatively small percentage of ticket value.

I don't believe it has any bulk buy deals with TOCs where it takes the risk and profit of a block booking.

 

[jon0844]

If their own statement basically says they're buggered if they are ever made to stop charging booking fees or any other fees they can levy, it doesn't sound like a wise investment.

Given the way things have gone with ticketing for public events, with fees for everything (including having you print a ticket yourself) it's quite possible that one day the EU will clamp down on this by saying enough is enough. And that might then apply across the board.

 

[najaB]

Given the way things have gone with ticketing for public events, with fees for everything (including having you print a ticket yourself) it's quite possible that one day the EU will clamp down on this by saying enough is enough. And that might then apply across the board.

I doubt very much that the EU will outlaw booking fees as the whole third-party ticket reselling business model depends on them. It's not quite the same as the ruling on airline charges for "credit card processing", as in that case the fees didn't accurately reflect the costs involved.

Also, as was said earlier, booking sites have to show their fees clearly and customers have a choice if to use them or not.

 

[w1bbl3]

That's a profit margin shy of 2.5% which does illustrate how bad margins are in the rail industry.

Expedia group for example generate a profit margin 7.2%. Expedia can for ask airlines and hotels for larger ticket agent fee or refuse to sell their tickets, ATOC licensed ticketing agents can not negotiate larger agent fee or refuse to sell a given TOC's ticket they have to offer all TOC's.

The prospectus document is interesting in that whilst it refers to RSP and ATOC it does not explicitly state that profit is generated from ticket agent fees exclusive of any levied "booking fee", this element is regulated and could be amended outside of TL's control.

 

[tbtc]

Why is the railway "family" so hostile to an outfit which had done a great deal to promote rail travel with new technology

Good question.

The Trainline have attracted a number of people to the railway who wouldn't have used trains, which I thought was A Good Thing?

Obviously charging anything above the bare minimum is going to upset the kind of enthusiasts who are at the "financially prudent" / "spendthrift" end of the spectrum, but I think that The Trainline fill a void - for example, they are probably the only organisation advertising train travel at a national level.

Easy to complain that they are promoting their own service as "cheap", but surely it's not their fault if nobody else is taking on that market? If buying directly from the TOC is cheaper then why aren't the TOCs making more of that fact? If The Trainline is making so much money from your booking fees then why is nobody else stepping up to the plate and promoting train travel on the television on a regular basis?

It's a bit like seeing an advert for Tesco's "cheap" prices and complaining that it'd be cheaper in ALDI - and Tesco shouldn't be promoting their service.

I won't be buying shares, I haven't used The Trainline for years (and have no intention of doing so in the near future), but some people I know like their service (maybe because they appear "unbiased" or they don't change every few years like TOCs do... I don't know why - maybe people just find the website easier to use and are prepared to pay a premium?) - there's a role in the industry for them.

Nothing wrong with a business that charges more than just the bare minimum for a service/product either - some firms exist outside the "lowest common denominator" market.

Maybe the other reason for their success if that a booking fee is fairly small if you are the kind of "normal" person buying relatively expensive tickets (but this becomes a proportionately high cost if you are an enthusiast buying bargain basement fares because you are splitting your tickets at three intermediate stations)?

 

[maniacmartin]

Imagine if Tesco ran an advert along the lines that Trainline uses:

Our apples are cheaper than Sainsburys'*

* compared to Sainsburys oranges

This is why I don't like the Trainline. The fees aren't really the problem as much as the deceptive advertising

 

[telstarbox]

Good points well made tbtc. Some TOCs are now advertising "buy tickets for any UK journey".

 

[jon0844]

I have responded to some of thetrainline's social media posts by pointing out they're more expensive 100% of the time on account of the fees, and they told me they're quite open and honest about them with nothing to hide.

I suppose that's true, and they're effectively saying that they don't care what people like us say because people are paying the fees. And they have a point.

 

[LNW-GW Joint]

Ask yourself how they (trainline) make any money. Turnover is the price of tickets sold, but it's not their revenue as that goes to the TOCs. They are left with the commissions they receive from TOCs for selling tickets and the fees they extract from businesses and consumers for their services. Both are going to be a relatively small percentage of ticket value.
I don't believe it has any bulk buy deals with TOCs where it takes the risk and profit of a block booking.

They will get licence fees for providing TOC booking engines based on the trainline platform.
So that's Virgin, Stagecoach, Arriva, Abellio and others.

 

[TUC]

Why is trainline allowed to exist when most people know it does not offer the best priced deals and tickets can be obtained more cheaply elsewhere ?

What is the regulator doing to protect passengers and the public from voracious capitalist vultures such as trainline.com ??

What do you mean 'allowed to exist'? I'm no fan of the Trainline.com but there is something about customers' own responsibility to seek out the cheapest deals too.

Do you think a supermarket chain should be closed because it sells products at a more expensive price than some of its rivals?

 

[jon0844]

Do you think a supermarket chain should be closed because it sells products at a more expensive price than some of its rivals?

Some of the comments about the current problems at Tesco would suggest a fair few people do think that.

I would personally not wish to see trainline.com go, especially as it provides its services to TOCs that don't charge fees, but rather be forced to be even more 'open' than it claims to be. In other words, to be made to adjust its advertising to stop implying it is cheaper than elsewhere when it isn't.

The company might say it's up front about its fees, but I suspect most people aren't aware. I don't recall seeing anything about booking fees in the adverts, for example.

However, you can only help people so much. Loads of people are still using the site even when being told they can buy cheaper elsewhere.

 

[najaB]

In other words, to be made to adjust its advertising to stop implying it is cheaper than elsewhere when it isn't.

The thing is, none of their ads say that they are always cheaper, just that they can be cheaper than buying on the day.

The company might say it's up front about its fees, but I suspect most people aren't aware. I don't recall seeing anything about booking fees in the adverts, for example.

They do, however, show the booking fee when you are using the site - at every stage of the booking process the fee is listed separately - the screenshot attached is from the first stage.

 

[Baxenden Bank]

Is the agents fee still around 13% of the ticket price? Is a surcharge really necessary?

 

[jon0844]

The thing is, none of their ads say that they are always cheaper, just that they can be cheaper than buying on the day.

But they can't even then. With the fee, they're still more expensive EVERY time.

Oh wait, you mean if you waited until the day of travel and then the advance tickets weren't available at all (or were sold out even earlier than that) - THEN it would have been cheaper to buy from thetrainline even earlier. Well, yes, but that's nothing to do with the trainline really, and it would still be cheaper to buy that advance from somewhere else anyway.

I said 'imply' simply because they're not lying at any point, but just letting people misunderstand what they read, a common trick for ALL advertising.

And the above is a perfect example of this.

What next? Buying from the trainline is cheaper than not buying a ticket and getting taken to court?