Post-Covid travel coupled with increasing prices has created a bittersweet cocktail for online travel agency Webjet (ASX: WEB), which saw bookings rise but still remain lower than pre-Covid levels.
Webjet’s international bookings grew even as it battled inflationary pressures and reduced discretionary spending. The Company’s international flights market share grew 24% compared to H1 FY23, with flight booking software company Trip Ninja playing a key role in providing unique content and savings for customers.
Even as airlines reported dwindling capacity rates—which is expected to be the case till 2025 globally, bookings remained high. The Company also reported higher margin revenue opportunities that offset the lower commissions paid on international bookings. Compared to pre-pandemic levels, hotel bookings were 50% higher.
Moreover, Webjet’s travel trade marketplace division WebBeds saw bookings in H1 FY24 increase by 32% on H1 FY23, driven by the reopening of Asia Pacific, organic growth in North America and new client wins. To serve more people, the division also hired more people in the half.
Webjet’s Managing Director, John Guscic, said, “WebBeds Bookings, TTV, Revenue and EBITDA were all significantly ahead of both 1H23 and pre-pandemic levels, reflecting the transformation work we undertook when the pandemic hit to capture growth as travel returned. We’ve broadened our distribution base, expanded our global presence and introduced new product innovations. As a result, we are now selling more products to more customers in more geographies, all while being more efficient and delivering best-in-class EBITDA margins.”
Overall in H1 FY24, the Company saw its total transaction value increase by 35% from $2.1 million to $2.8 million. Its NPAT increased significantly from $4 million in H1 FY23 to $47.3 million. Its bookings shot up to over 4.3 million from about 3.4 million.
Webjet’s bookings data does not include bookings made using flight credits, which are estimated to comprise 10 to 15% of all bookings. For Webjet, higher average booking values reflected limited supply but major demand, which drove revenue. Its revenue was up 18% on H1 FY23, and Trip Ninja helped drive about $2 million in EBITDA improvement.
It’s not just international travel that is driving growth. Within Australia, people have been opting for car rentals and caravans to explore local bounty. In fact, in 2022, people collectively spent over $10 billion on caravan and campervan rentals. No wonder then, for Webjet’s car rental and campervan hire, GoSee, H1 FY24 bookings saw a 15% uptake, even though it was 39% lower than pre-Covid levels.
Average booking value also reduced by 14%, and its overall EBITDA of $1.1 million—though down 83% on pre-Covid levels—was up from H1 FY23’s $600k. Its international capacity into New Zealand remained constrained, and motorhome supplies were low, as people had to deal with high prices. Still, it is hoping that inbound tourism can perk up its numbers.
Going forward, there is still no certainty for when things will pick up for good as inflation keeps putting pressure on people’s income. However, the post-Covid travel demand is still thriving. Webjet expects FY24 EBITDA to exceed pre-pandemic levels, forecasting it to be between $180 million and $190 million—about 14 to 20% ahead of 2019.
Alinda is a Business Reporter for The Sentiment
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