Travel demand and best tech behind Webjet’s return to profit

Online travel booking site Webjet has powered back into profit in a strong half-year result attributed to a major tech overhaul.

Webjet managing director John Guscic has lauded the company’s “spectacular turnaround” in the first half of the 2023 financial year after a near-death experience during Covid.

After a “near death experience” in 2020, online travel agent Webjet has pulled off an $88.4m turnaround to post a $72.5m underlying profit for the six months to September 30.

The result was within striking distance of pre-pandemic first half profit at 64 per cent, thanks to 3.4 million bookings across the Webjet, GoSee and WebBeds sites.

Webjet shares surged 12 per cent after managing director John Guscic attributed the “spectacular turnaround” to pent-up travel demand and a technology overhaul undertaken during the pandemic.

He said simplifying the technology had helped generate 35 per cent more bookings per full time employee than pre-Covid.

“That’s what we’ve been working on in essence, to ensure we get the right product in front of the right customers at the right time and the results indicate we’re on track,” Mr Guscic said.

The WebBeds site was leading the charge, accounting for the lion’s share of bookings and revenue thanks to the strong northern hemisphere summer.

Although limited airline capacity constrained flight bookings to 79 per cent of pre-pandemic levels, the average amount spent on each fare rose 8 per cent to $957.

“We would prefer to have more people flying at cheaper prices,” said Mr Guscic.

“I think in the 2023 calendar year we will see greater supply influencing the lead in prices to some of the airfares, which will make it more affordable.”

Self-booking leisure travellers were still the main users of the site but Mr Guscic said one in five customers were now corporates on both the Webjet OTA and WebBeds sites.

He attributed the corporate take-up to “convenience, choice and simplicity” but said they had no intention of becoming a corporate travel agency.

“We offer the easiest way to do a mix and match where you can take one airline on the way up and another on the way back,” Ms Guscic said.

“No other website in the world does it as efficiently as Webjet does, and that’s the major reason the corporates are using us.”

The results were well received by analysts, who noted the $72.5m earnings before interest and tax was 25 per cent ahead of expectation, and positioned Webjet well for a big full-year profit.

“Driving the result was growth in bookings and margin strength in both segments, while as expected revenue margins were more muted,” said Citi Research analyst Samuel Seow.

“Working through the outlook we estimate full year earnings of 8 per cent ahead of consensus, however we note current trends suggest this could be conservative.”

Mr Seow also noted Webjet had ample liquidity to make a sizeable acquisition.

Mr Guscic said they were constantly on the lookout after acquiring Canadian travel tech company Trip Ninja for what was believed to be a modest sum in 2021.

“We don’t have a high conversion rate (for acquisitions) but we’re looking every single day,” he said.

With the travel recovery expected to continue in 2023 and beyond, Webjet’s future was bright even in the competitive online landscape, Mr Guscic observed.

He said the investment in technology had helped the company recover faster than its rivals, with Webjet able to “ensure its relevance” to the market.

To that end, a focus on sustainable travel would continue with initiatives such as the recent addition of a carbon offsets option.

Mr Guscic said usage was increasing on a daily basis just weeks after the offsets launch.

Webjet shares closed up 10 per cent on the back of the results’ announcement, at $6.19 a share still a long way from the pre-Covid high in excess of $10 a share.