If you’re planning a getaway after two years of staying put in your city, you’re not alone. Turns out, plenty of people are finally seeing through their travel plans as online travel agency Webjet (ASX: WEB) reports that travel bookings are at 95% of pre-pandemic levels in the first half of FY23.
Webjet credits this revenue boost to domestic border openings in NSW and VIC particularly, which led to an increase in bookings. Thanks to that, in FY22, the Company’s three major businesses, WebBeds, GoSee and Webjet OTA, have been picking up steam.
In the second half of FY22, its B2B travel intermediary WebBeds, garnered profits largely driven by the North American and European markets. Since May of this year, WebBed’s bookings have been more than 100% of pre-pandemic levels.
North America is now its 2nd largest region and the APAC region is already at pre-pandemic levels, even though key markets are still affected by travel restrictions.
On WebBed’s growth, Managing Director John Guscic commented, “WebBeds has had an exceptional northern hemisphere summer trading period. Bookings have been ahead of pre-pandemic levels since May. July was the record TTV month in the history of WebBeds and August has surpassed July.”
WebBeds will target new e-commerce opportunities and expand its airline partner base for the coming year.
Webjet also reimagined Online Republic, its car and motorhome inventory solutions, rebranding it to “GoSee” in October 2021. As per its report, Online Republic was detached from business requirements and lacked awareness. GoSee is expected to reverse that and deliver greater efficiencies, enhance the customer experience and improve underlying performance.
As for Webjet’s online travel agency (OTA), the business is recovering from border closures and Omicron’s impact. However, the capacity is yet to return to pre-pandemic levels, especially owing to high ticket prices right now.
According to the Company’s report, Webjet OTA is on track for EBITDA margins to be more than 35% for the full financial year, even with capacity significantly below historical levels.
Webjet also focused on acquisitions in FY22, investing in Trip Ninja in 2021 that will “enable lower pricing, unique content and greater choice for customers.”
The Trip Ninja technology will be launched next month for multi-stop journeys.
As for its falling EBITDA margin, the Company expects the improving travel economy to bring its EBITDA margins back on track to be higher than 50% for the first half of FY23. He added, “During the peak seasonal months of July and August, we hit our aspirational “8/3/5” profitability target.”
Despite growth, the Company did experience a statutory loss of $85 million after tax in the past year, and its share prices are at 50% of pre-Covid levels.
Keeping that in mind, Chair Roger Sharp noted in his address, “Of particular concern for us has been the partly broken nature of many parts of the travel value chain. From airports to borders, from customer service to flight cancellations, it just isn’t quite back to normal – yet.”
Since June 2022, the Company’s share price has fallen from $6.02 to $5.18. Still, the Company is optimistic about FY24, and expects Webjet to exceed pre-pandemic earnings by then as it anticipates the travel market to return to 2019 levels.
Alinda is a Business Reporter for The Sentiment
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