Qantas, Webjet, Flight Centre riding high on leisure travel demand

The strength of leisure travel is turbocharging the balance sheets of Qantas, Flight Centre and Webjet, with Macquarie analysts saying not even the treat of a recession can clip their wings.

Qantas is ranked among Macquarie’s “winners” from global travel trends that favour companies focused on leisure rather than corporate travel. Picture: James D. Morgan/Getty Images

The strength of leisure travel is turbocharging the balance sheets of Qantas, Flight Centre and Webjet, even with the threat of a global economic downturn.

Macquarie research examining global travel trends found the outlook for companies focused on leisure travel was generally positive as consumers placed a high priority on holidays.

Total travel spend to the end of March accounted for 12.1 per cent of household budgets versus 9.8 per cent four years ago.

“Leisure businesses should benefit from stronger-than-expected consumer spending,” said the Macquarie report.

Recessionary impacts were considered the main risk to travel demand but as yet there was “no obvious sign of a slowdown”, the report said.

“Flight Centre believes ‘travel is a high priority discretionary spend’ and that pent-up revenge demand is yet to be completely realised, and expects customers will reduce rather than remove travel budgets in times of economic uncertainty,” the report said.

“The data from our research and recent airline commentary supports this view.”

The outlook was more challenging for business travel specialists such as Corporate Travel Management, with the sector yet to fully recover from Covid-related restrictions that saw virtual technology replace face-to-face meetings.

Citing data from the US, the research noted ticket sales volumes for corporate travel agencies were at 75 per cent of 2019 levels, compared to traditional travel agents at 113 per cent.

Despite airfares stepping back from last year’s highs, domestic ticket prices in the US were still 17 per cent above 2019 levels even with capacity exceeding that of the pre-Covid period.

In Australia domestic airline capacity remained below 2019 levels in April at 94 per cent, and international was sitting around 83 per cent.

Looking ahead, Webjet, Flight Centre and Qantas shares were forecast to outperform current prices by more than 10 per cent. Macquarie’s outlook for Corporate Travel Management was for more modest growth of up to 10 per cent, based on subdued demand for business travel.