Asmallworld AG (ASWN) Earnings Call Transcript & Summary

Good day, and welcome to the ASMALLWORLD 2021 Full Year Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jan Luescher. Please go ahead.

Thank you, John. I would like to welcome everyone to this earnings call for the 2021 Full Year results for ASMALLWORLD. My name is Jan Luescher. I'm the Chief Executive Officer, and I will lead you through today's call. As always, I will touch on the operational and financial highlights for the year, and I will provide additional information to put those results into context, so you can better understand the headline numbers. And in the end, we will also open up for a Q&A session, and then we'll answer any open questions you may have at that point. The presentation that I'm using to illustrate our 2021 performance is available for download on our corporate website. In case you haven't downloaded it yet, I recommend that you do so now. It will make it easier for you to follow my explanations. You can find the link to the presentation in this morning's press release or you can go straight to our corporate website. The URL for that one is www.asmallworldag.com. That's asmallworldag.com. Once you're on the site, you will have to navigate to the section called Investors and then to the submenu Investor Documents. And at the top of the list, you will find a document called 2021 Full Year Results Presentation, which is the document I am using for this call. So again, the document is called 2021 Full Year Results Presentation. Good. Then let's get started. As always, a brief recap of our mission on Page 2. We are the world's leading travel and lifestyle community and we inspire our members to travel better, experience more and make new connections. And a brief overview, just to refresh everyone's memory for our travel and lifestyle ecosystem on Page #3. Our group of business consists of 7 different businesses. At the center is ASMALLWORLD, our social network, which attracts an affluent customer segment with a high willingness to spend on travel and experiences. And this audience then creates demand for other businesses ranging from ASMALLWORLD events to the world's finest clubs for bespoke travel arrangements and hotel bookings with ASMALLWORLD Private and the ASMALLWORLD Collection. So in short, the ASMALLWORLD social network, with that one we attract our customers, and we then aim to increase our share or wallet with those customers with our other businesses. And so much for a very brief introduction. We have quite a bit of content to get through today. So I will now move to the 2021 results on Page #5. So in short, 2021 was the best year in ASMALLWORLD's history. Not only did we grow our sales by 30%, but we also increased our EBITDA by 61%. Net income was also up by 140%, which corresponds with earnings per share of CHF 0.14 per share. The operating cash flow increased by 584% to CHF 4.2 million, demonstrating the ability of the company to generate funds from the business. Related to this, the cash position was at CHF 5.2 million by the end of the year. Like I said, it was a record year for us, and I believe we can be very proud of these results. They came in higher than our guidance, which we already had increased twice during the course of the year. And I also want to mention that the market environment was still challenging for us. So I'd say -- I think it's fair to say that we achieved these results despite the market environment and not because of it. As we will see later, demand for some of our products is still lower than what it was before the dynamic. So I'm even more proud that we were able to present such a positive result overall. Now let's move on to Page 6 and have a quick look at the operational highlights, which led to these results. In short, we continue to drive sales with pandemic-resilient products, while we maintained our focus on costs. The products that were responsible for the increase in sales were primarily ASMALLWORLD Prestige Membership on the subscription side, and First Class and more flight packages and upgrade options in services. Both of those products were driven by continued demand for business and first class travel during the pandemic, as these products allowed our customers to purchase business and first class flights at a lower cost. We also continued to focus on costs. The one example I want to mention here is the restructuring of our travel setup, which was previously based in the U.K. At the end of 2020, we closed our London office and redistributed the tasks that were previously sitting with that team within the company. The move permanently lowered our fixed cost base, which has manifested itself in the form of higher margins in the service segment, as we shall see in a moment. At the same time, we continue to invest in the long-term revenue potential. So we didn't just save costs, but we also continued to invest where it made sense. We here expanded the functionality of our social network, and we further upgraded the ASMALLWORLD Collection. So these are the 2 things I want to highlight. This is, for me, an important point as I want to be very clear that we continue to build the long-term earnings potential for the company. So we didn't stop investing even during this period where we had a strong focus on cost, but we continued to make sure that we have a business that will generate cash in the years to come. And last but not least, I want to mention the strategic partnership with Global Hotel Alliance, the deal that we announced just before Christmas. This deal didn't have an impact on the financial results for 2021, but it opens up significant revenue potential for the future, and I will talk about that a bit later on. Moving to Page #7, where we can compare 2021's performance to the previous years. In terms of net sales, we managed to generate CHF 15.6 million in sales, which surpassed the previous record of 2019 of CHF 12.9 million, which obviously is something that we're very proud of. And we've also managed to recover from the dip that we saw in 2020. So this was obviously the dip that we have from the immediate impact of the pandemic. So we recovered from that and we even went beyond 2019. So the highest revenue in the company's history. The member base increased by 2%, which is actually not much, but this was mainly due to the fact that we saw lower demand for new sign-ups for ASMALLWORLD due to ongoing restrictions, social, business, and travel restrictions, and also I think the result of us not spending that much on marketing during last year, because we believe that we can get a higher ROI on our marketing spend once restrictions are lifted and the natural demand for ASMALLWORLD is just going to be higher again. So we're basically saving our ammunition for when it will deliver a higher return on our investment. But most importantly is the third chart. In terms of profit, we saw EBITDA increase to CHF 2.4 million, up from last year's record of CHF 1.5 million. And as previously mentioned, the higher sales and the cost savings both contributed to this great result. So a record in terms of sales, a record in terms of profit for the company. So after financial and operational highlights, we are now moving on to the reporting of our 2 business segments, Subscriptions and Services. And at this stage, I want to mention that for participants who have just joined the call, you can download the presentation that I'm going through from our Investor website. You will find the link in today's press release or you can go straight to our corporate website. The URL is www.asmallworldag.com. And once you're on the site, please navigate to Investors and then to Investor Documents from the menu and at the top of the list, you will find the relevant document, which is called 2021 Full Year Results Presentation. Good. Now we're moving on to look at the Subscriptions business in a bit more detail. Despite the headwinds from the pandemic, we managed to grow the segment by 28% to CHF 10.2 million. At the same time, we improved our EBITDA by 37% to CHF 1.6 million, and this corresponds with an EBITDA margin of 16%, which is an increase of 1.1 percentage points. The strong revenue growth was primarily driven by strong ASMALLWORLD Prestige Membership sales, which were in high demand due to continued interest in business and first class flights. First Class & More, our smart luxury travel business, also managed to increase subscribers for its Diamond or Diamant membership, as it's called in German, which is its most expensive membership level priced at just under EUR 1,000. And this improvement in mix of membership sales also contributed positively to the result. On the slightly negative side, we've seen that the member base overall for the company has only grown by 2% for the year. As I said, this was due to ongoing weakness in sign-ups, especially for ASMALLWORLD due to travel and social distancing restrictions, which reduced the attractiveness of our service or demand for our service and also slightly lower marketing spend in general on our side. As I said, we will ramp that up again as soon as we see that it drives the return that we want. The World's Finest Clubs, the world's leading nightlife concierge also experienced another slow year as night clubs and entertainment venues in many parts of the world remained shut, so that obviously there's no demand for a product like The World's Finest Clubs. So we hope that this will return this year, and we're actually just about to start sales efforts to get people back to used to service. But in 2021, it only played a very minor role for our results. Page 10 is a deep dive of the ASMALLWORLD Prestige Membership sales, which we saw was the clear sales driver for 2021. The ASMALLWORLD Prestige membership is 1 of our 2 premium memberships, which are essentially travel benefits packages. The most important value element of the membership are 250,000 miles and more award miles or customers can also choose the same amount from Etihad. So it's an either or. We are also currently in discussions with Emirates to offer Emirates as a third partner, but that might happen later this year and we will see. Anyways, these award miles and the dominant seller is Miles & More. These miles can be used to purchase flight awards or upgrades to business and first class, which continued to be very popular during the pandemic due to the increased demand for privacy in air travel. Also in conjunction with Miles & More, our partner, we ran 3 sales specials last year, up from 2 sales specials in 2020, which resulted in additional sales for the products, which I'm very pleased with, and then that also contributed to the positive results in Subscriptions. So a record year driven by Prestige Membership sales and we hope we can keep that pace into 2022. Page 11 illustrates my point earlier that we are continuing to invest in our business. For the ASMALLWORLD social network, we released a major update called member posts in June. The photos on the slide here illustrate what that actually is. It's the ability for members to upload photos and share them via the news feeds within the app with the community. This is pretty much the core functionality of Instagram, if you're familiar with that. So obviously, one of our competitors in the social media space. And it is very important that we get that up and running. It's something that we had planned for a long time and finally released it in June last year. The feature has been well received and it continues to generate new user-generated content, which in turn gives users new ways to interact with ASMALLWORLD and with other members. And from a business point of view, this feature will drive user engagement, meaning more frequent visits to the app and a longer time spent on the app, which should then lead to higher retention rates and ultimately, a growing member base and growing sales. We have also updated the newsfeed logic, which determines what users see in the news feed when they open the app, and we will continue to tweak it to make sure that users have fresh content every time they open it and relevant content for them. We've also upgraded since then -- since June, we've already upgraded the image processing service and we now offer best-in-class image qualities of higher pixel count in the news feed. So this means you have a crispier image. So it looks much better now than what it did when we launched it in June. And we definitely have the highest quality in the industry, better than Facebook and Instagram. And going forward, we will obviously continue to refine this functionality, and we are also planning to introduce video functionality, hopefully at some point during 2022. Like I said, personally, I'm extremely happy about this new feature, but it is something that I always wanted to have, and I think it just adds another layer of interest to the ASMALLWORLD community and the way people interact with each other and with the community. So this is a fantastic update I'm very happy about. As I said, I'm moving quite fast today as there is a lot to go through. We're now moving on to the Services segment on Page 13. The Services segment grew even faster than Subscriptions, by 35% last year in terms of sales. EBITDA increased by 160% and the EBITDA margin improved by 6.8 percentage points to 14.2%. This strong profitability increase was primarily driven by sales, but it was also driven by the restructuring of our travel setup, which we initiated at the end of 2020, which permanently reduced the cost of our travel team. This was the closure of the London office I mentioned earlier. And we saw the full effect of these cost savings in the comparison now between 2021 and 2020. And these sort of cost savings are sticky, so they won't be ramped up again. So this is a permanent improvement in margins. In terms of sales, the primary driver here were first class and more strong sales of business and first class fly packages and upgrade options. This is very similar to what we've seen with the Prestige Membership on the Subscriptions side because it's a way for customers to get business and first class flights at a lower cost than buying them outright with cash. So this was the primary driver here. It's also worth noting that the ASMALLWORLD Collection, our hotel booking engine has started to contribute to the results last year, and we hope that we can maintain this positive momentum so that this will become more and more important in the future. ASMALLWORLD Private, our traditional travel agency business also saw a moderate growth for the year. And it is worth mentioning that the ASMALLWORLD Events revenue is still relatively low compared to 2019. Again, the reason here are social distancing restrictions, which led to a lot of cancellation of events compared to prepandemic times, and we hope that this will change again this year and definitely like next year. I also want to mention ASMALLWORLD Hospitality, our hospitality consulting business. This unit also contributed to the great result that we had, primarily with their engagement for the Keturah Resort in Dubai, which also brings the first Ritz-Carlton Residences to the United Arab Emirates. I will talk about that in a moment. And then also the MEDhills project, where we work with the owners of a large plot of land on Brac in Croatia to develop that piece of land and create hotels and apartments. Looking at some deep dives on Page 14, I would quickly like to talk about the most important development for our premium hotel booking engine, the ASMALLWORLD Collection. Here, we give users the chance to book the world's best hotels with extraordinary benefits and they can do that either via the web or via our app. I also want to mention that the service is also open to nonmembers, and that should also help to drive growth beyond the ASMALLWORLD community. Page 15 quickly illustrates the 2 rates that we offer for our hotels here in one specific room type for The St. Regis in Mallorca. We always offer lowest rate. But then next to that, we offer our very own ASMALLWORLD preferred rate, which is 99% of our bookings, as this is really what makes the service unique. It's basically the same price as a cancellable rate on other sites, just with a lot more benefits like room upgrade, hotel credit, complimentary breakfast, early check-in, late checkout. So this is really the good selection of hotels and this rate with benefits is really the value proposition and why people book with us. So what's the update here, Page 16. So we started the year with 3 partnerships that we have established for the Collection. We are a Virtuoso travel agency, which is the network of independent luxury travel agencies by invitation only. And we are also a preferred travel agency for the Hyatt Group and for Hilton. Hilton, obviously, not the Hilton Hotels itself, but hotels like the Waldorf Astoria and then Conrad. And we have the right to feature properties from these partners. And during the course of last year, we entered into 3 more partnerships to expand this pool of potential hotels that we can add in further. The biggest one is definitely Marriott, which we did in January. Here, we have access now to great hotels like Ritz-Carlton, St. Regis, or Ws. We added Shangri-La as well and then The Doyle Collection. And all these partners now allow us to further build our inventory for ASMALLWORLD Collection. And you can see the result of that on Page 17. So we started the Collection in June 2020 with 583 hotels. As of yesterday, we have had 1,491 hotels, just short of 1,500. That's more than 150% more than at the start, and we now cover 345 destinations compared to 156 destinations at the start. And this more comprehensive inventory offers customers more choices of high-quality hotel in more destinations, thus making the collection more relevant and giving us more inventory to sell. We have also seen that bookings are constantly going up. They're slowly increasing, and many of our customers are already repeat customers confirming that we are offering a great value proposition and a good booking experience. And we obviously plan to grow the revenue from this service further over the coming months as we start to ramp up our marketing efforts for this service. Moving on to Page 18. I would like to talk about the most important development concerning ASMALLWORLD Hospitality, our hospitality consulting service. Last year, one of our clients, MAG of Life signed a deal with Marriott International to bring the first Ritz-Carlton Residences to the United Arab Emirates as part of their Keturah Resort. However, due to confidentiality agreements, this was only communicated this February, and I think people have seen the press release for it. The Keturah Resort, going to that, is a large-scale development project on the Dubai Creek. It will consist of a hotel, about 20 Villas, and more than 200 apartments. And on top of that, a wellness and a retail space. So it's a fairly big development project. And ASMALLWORLD has been advising MAG of Life for over a year now on this project and has played a very important role to secure the Ritz-Carlton brand for this project. And now the initial sales period had started in February and the first villas and 2 to 3 bedroom residences are now on sales. ASMALLWORLD's role has transitioned now to the role of sales coordinator for the Ritz-Carlton Residences. And we are basically overseeing all the sale of the residential units, which currently for the estate has a market value of about USD 500 million. So this is fairly big. And in case you want to have a closer look at the project, you can do so under the link that I have put here on the page. It's theresidencesdubaicreek.com. In case you're interested in buying a villa or an apartment, please also reach out to us directly. And now after sort of the highlights from our 2 business units, I want to move on to Page 20 to go into the consolidated financials for the group. So let's start with the income statement on Page 20. We've already seen the higher sales and the strong EBITDA, but let's go through the most important commentary for those numbers. Sales increased 30%, as I said. Other operating income was negative by CHF 199,000. This is a net effect of 2 things. We actually had to do an impairment on 1 of our short-term receivables and to the extent of CHF 500,000. This is coming from the deal we did with PNG 2 years ago where we wanted to launch ASMALLWORLD magazine jointly with that partner, something that didn't come to fruition during the pandemic and was actually put on hold. We still want to go ahead and do something with them, but it will be on smaller scale. So we basically had to write off that short-term receivable, which would have been the payment for the rights to the ASMALLWORLD brand for the print magazine. And on the positive side, we had CHF 300,000 payment from the Swiss government to support the ASMALLWORLD Events business, which was not doing so well last year. So that's the net effect of those 2 effects. Obviously, direct expenses increased in line with the revenue growth. So no surprise there. And personnel expenses went down significantly. There are 2 effects. It's the mentioned closure of the U.K. entity and lower labor costs as well as some remaining support from the Swiss government for furlough payments that brought those costs down there. So EBITDA improved by 61% and the net result then in the end improved by 140%, as previously mentioned. Moving on to Page 21, to the first part of the balance sheet. The cash position increased by CHF 2.3 million due primarily to the profit from our operations and stood at CHF 5.2 million. Other short-term receivables decreased due to the impairment that I previously mentioned, the CHF 500,000 for the print magazine. Intangible assets decreased just due to general amortization on our IP, which goes down by 20% each year. So we do an amortization of the IP over 5 years. The second half of the balance sheet you'll find on Page 22. Here what I believe is worth mentioning are the payables from Goods and services that went up. This is primarily due to an open invoice that we have for Miles & More for Prestige sales in December, which have now been already settled. The short-term provisions reflect the last payment of CHF 3.6 million, CHF 3.7 million, which is due for the earn-out for the First Class & More acquisition. So this will be paid in the next few weeks. And you will see that the payments or the CHF 2 million that we have in 2020, that was already paid out last year. At the same time, long-term provisions, you will see the same number there, CHF 3.7 million in 2020. This is the one that moved to short-term provisions and the long-term provisions are now at 0, basically reflecting that this CHF 3.6 million payment to First Class & More is the last payment for First Class & More. After that there will be no more payments from the acquisition, and we basically paid the asset in full. So there's no more payments going out here in the form of an earn-out in 2023. Good. Long-term financial liabilities increased by CHF 700,000 due to additional financing that we received from Pellegrino Capital, our main investor. And moving to the equity, you will know that our equity is negative due to the fact that we don't capitalize goodwill from acquisitions. But this negative equity has been reduced by CHF 1.9 million to CHF 4.7 million. And just to give you the comparable number, in case if we went with capitalization of the goodwill from acquisition, in that case, we would have stood at CHF 2.5 million at the end of the year. Moving on to the cash flow statement. Part #1 here on Page 23. Operating cash flow increased quite dramatically to CHF 4.1 million -- sorry, CHF 4.2 million. This is due to a combination of factors. Obviously, the higher costs from operations, the impairment on short-term receivables that we have mentioned about before, the increase in payables for Miles & More, and the deferred income increase that we had. So in short, it's a combination of higher profit and then working capital changes, probably a bit overstated on a normalized basis, but stood at CHF 4.2 million for last year. Acquisitions from subsidiaries a bit further down reflects the CHF 2.2 million payout to First Class & More that I mentioned earlier that basically stood in the short-term provisions in 2020, which have now been paid out. And the second part of the cash flow statement on Page 24, we see the inflow from financing of CHF 700,000, which is the loan I mentioned that we received from Pellegrino last year to cover our cost. And you will see that the net cash increased by CHF 2.3 million, which we've already seen for in the cash position. That's the overall result of all cash flow changes. And again, I want to mention at this point we had financing from Pellegrino Capital and I mentioned First Class & More. Over the last 3 years, we had quite a few -- despite generating profit, the cash flow was negative because we had to pay the earn-out of First Class & More. This is now completed. So the last payment will be made now with that money that we have. I mean you've seen the cash position that we have. We have a cash position of CHF 5.2 million, which comfortably lets us pay the CHF 3.6 million that we need to pay out. And after that, there is no more outflow of funds, which means now for the first time since we listed the company, we are now a self-sufficient business and the business can finance itself, which is a huge milestone and very important for me as well, as a CEO of the company. Good. Now let's move on to a special topic, which is the deal with Global Hotel Alliance, which is outlined on Page 26. In December, just before Christmas, we announced ASMALLWORLD would acquire a 10% stake in GHA, Global Hotel Alliance. We will pay for this deal in cash and in shares so that GHA will also become a shareholder in ASMALLWORLD, but a sort of a 3% stake in our company. And we will have 10% in GHA, and the combination of that should really underline the strategic collaboration that is intended to take place between the 2 companies. The closing of the transaction is scheduled for Q2. So I hope we can close it in the next few weeks. And the start of the operational collaboration is scheduled for this summer. Page 27 gives you a quick overview of who GHA is, in case you don't know their business that well. I mean, it's the world's largest alliance of independent hotel brands. It's 1 of the top players in hotel loyalty with over 800 hotels in 85 countries and 22 million customers. I mean these numbers count NH Hotels as well, which is a brand that will join the alliance in June this year. So this is the combined numbers of those 2 companies. Major shareholders include Kempinski, the hotel chain Minor Hotels, Corinthia Hotels, Pan Pacific, and Oracle, and now ASMALLWORLD as well with a 10% stake in the company. Page 28 shows the brands that are part of the GHA portfolio. The company has more than 35 brands, among them probably many that you will know. Kempinski is here, like I said, Corinthia, Capella, Anantara, Nikki Beach hotels is part of it, Pan Pacific, Park Royal. So it's 35 brands. And in June, NH hotels, the Spanish chain will also join the program. On Page 29 then I have outlined the 4 areas where the partnership will create value for ASMALLWORLD. So basically, what we will get out of this deal. So starting at the top, we will offer complementary memberships to GHA top members. So Discovery -- and I apologize I haven't mentioned it earlier, the loyalty program is called GHA Discovery. It's under -- that's the customer-facing name. Global Hotel Alliance is the company name. GHA Discovery is the loyalty program. So 22 million customers, about 500,000 of those customers are really their top-tier customers with 1 of the 2 highest status levels. And they, as part of their status benefits, will get complementary access to ASMALLWORLD. So this will grow the membership base in ASMALLWORLD, but GHA will also pay the service fee that we sort of accept these members. So it's basically a payment that we will service these customers as part of ASMALLWORLD. So we get a service fee for that and more customers, which leads to the second point. Because we will have these GHA customers as part of the ASMALLWORLD Universe, we will be able to generate additional sales with these GHA customers. Given that they spend a lot at GHA, hopefully, we can also make them spend money on the ASMALLWORLD Services. And in addition, beyond the customers that come over to ASMALLWORLD, we also agreed with GHA that we would market ASMALLWORLD Services to the other 22 million customers that they have and can address. The third point is a bit of a different business, which is something that we don't do today. So you've seen the hotel portfolio on the previous page with 35 hotel brands. We will add a new brand to that, the ASMALLWORLD Hotel and Resorts, which will be a soft brand. So this is not something that you will see on an actual hotel. But what we will do is we will go out and recruit independent hotels to become part of Global Hotel Alliance. So far, this was something that wasn't possible. Global Hotel Alliance only accepted chains, so a nation of multiple hotels, but not individual hotels. And we now agreed that ASMALLWORLD will be the vehicle to accept independent hotels into the GHA program, and there are a few hotels that already are lined up to join, and we are sure we can convince a few more other hotels to join, so that we believe that we can fairly quickly get to 10, 20, 30 hotels that we will bring into the alliance, and we will get a service fee based on all the room nights that are generated through GHA. And the last area of sort of value for ASMALLWORLD will come from the profit that GHA generates. As a shareholder, we're obviously entitled to receive a part of the profit that the company makes that will be paid out in dividends, and we expect that next year they will start paying dividends again after sort of an investment year into the program that they had last year and this year. So in short, we believe the deal actually has the potential to be a game changer for ASW in terms of opening up new possibilities to generate revenue over the coming years. Great. So to conclude, I would like to give you a brief outlook for the business for this year on Page 31. In short, our outlook remains cautious short-term. I mean we still see that countries are only slowly easing out of restrictions in certain areas. In some countries, we've seen that actually restrictions have been reintroduced where they had like short surges of COVID. So I think it will stay with us a little bit that topic. Also, obviously, with the events in Ukraine and Russia, this has an impact on the global economy. We are not directly impacted that much. I mean less than 1% of our customers or revenue comes from there, but it will have an impact on consumer sentiment. It will have an impact on fuel prices and travel. So we are cautious in the short-term that there are some negative factors that impact the market environment, but we will hope that over the course of the year, these things ease off a little bit, and we will see a positive change in the market environment. At the same time, as a result, we will continue to be prudent with our resources short-term. We'll also continue to focus on products which have proven resilient during the pandemic, as I mentioned earlier. And we will, at the same time, also continue to invest in the long-term earnings potential of our company. And for this, we focus on 3 main initiatives. Most importantly, we want to close the deal with Global Hotel Alliance and capture the synergies. As I said, ideally, we will start to get members across as early as this summer. And we're also lining up or basically putting all the building blocks in place for the hotel business part that I just mentioned. Beyond that, we further want to improve the ASMALLWORLD Collection, the offering we have and build scale to really sort of accelerate the growth there, to make that a more important part of our business and then drive up the contribution from that part. And then we want to continue to improve the ASMALLWORLD social network experience to acquire more members and increase the renewal rates there and also feed our other businesses with the members that are joining that part of the business. And the final slide I want to go through is the guidance for 2022 on Page 32. As I said, we expect moderate growth on gradually improving market conditions. We expect net sales to increase to a level of about CHF 17 million to CHF 18 million for the full year here, that corresponds with a 10% to 70% increase. The member base should grow actually quite significantly once we close the GHA deal, because we then bring their customers into ASMALLWORLD, and that depends on how quickly they come over and make the move across. So there's quite a few uncertainties here like how many people will actually then move over, but we anticipate that we will grow the member base to somewhere around 75,000 to 80,000 members by the end of the year. And in terms of profit, we believe that we can achieve an EBITDA in the range of CHF 2.6 billion to CHF 2.8 million, which would correspond to an increase of 8% to 17% year-on-year. This is it from my side. That concludes the presentation part of this call. And I now gladly open up the Q&A section. So John, over to you. If there are any questions, we can go ahead with those.

[Operator Instructions] We have 1 question coming in, Pierre Gauthier.

This Global Hotel Alliance is a premise that you are making in your presentation in terms of maybe a game changer to the business of ASW. What about the other partners. I have been trying to look at who owns or who is really influential into that alliance, could not find a breakdown of shareholders. With 10%, to what extent ASMALLWORLD has a say in the future of that alliance?

Yes. It's a privately held company as such. They do not really share too much information about the way the business is going and to shareholders. But on Page 27, you will see the third bullet on the left basically list out the shareholders there. It's Kempinski from Germany, Minor Hotels from Thailand, Corinthia Hotels, Pan Pacific group and Oracle is actually the tech company; they joined because they build the tech systems for the alliance. They're all sort of in the 10% to 20% range to sort of equal parts. That's sort of what I can say. So I mean, are we with 10% a decision-maker or somebody like changes the course of the company drastically, I'd say no, right? And we're also only the second non-hotel brand, if you want to call it that, next to Oracle, right, for a business that is mainly focused on the hotels. I hope, however, it will be beneficial to ASMALLWORLD, right? And we can not only do business with the Global Hotel Alliance directly, but also potentially with the partner brands individually that are in this group. So the shareholders or also the brands that you see on Page 28, right, given that we're also a travel agency and we're doing events and so on and generate sales. So we will get a Board seat. I think that's probably important to mention. So I will actually join the Board as soon as the transaction is completed. And we also will welcome Chris Hartley, the CEO of Global Hotel Alliance to the Board of ASMALLWORLD, right? So we said that that's important to both of us given that we will work closely with each other going forward. That we both have sort of an influence or say in each other's business. To which degree that will work? I mean it's always a bit -- how these things work, it always depends a bit on the dynamics of the Board in general. But obviously, I will try to influence decisions in a direction that they're favorable for ASMALLWORLD going forward.

Another question, if I may. You buy into this firm by acquiring shares. Is that part of capital increase or is that buying from an existing party? And the good news seems to be that this business has been breaking even because you are suggesting that dividends can be a possibility by '23. So is it fair to say the business is a healthy one at this stage?