Helloworld’s outlook upbeat with recovery, vaccines

Signs of a recovery in domestic travel, coupled with fresh news of positive COVID-19 vaccine trials, has bolstered Helloworld’s outlook.

Helloworld’s outlook upbeat with recovery, vaccines.

Signs of a recovery in domestic travel, coupled with fresh news of positive COVID-19 vaccine trials, has bolstered Helloworld’s outlook, with the diversified travel group forecasting a return to pre-coronavirus financial levels earlier than it had expected several months ago.

The Melbourne-based agency previously forecast it did not expect a return to pre-pandemic total transaction values until the 2025 financial year, but given the success of vaccine trials it is hopeful that the recovery will occur sooner.

Helloworld, which has almost 2500 retail travel agents and travel brokers, said it was already seeing a recovery in domestic travel, while the amount of trans-Tasman and international inquiries for travel, particularly for late next year and into 2022, was encouraging.

Meanwhile, the complexities of travel in a post-COVID-19 world were expected to drive greater demand for the services of retail travel agencies, chief executive Andrew Burnes said at Friday’s annual general meeting.

“While the significant uplift in wholesale bookings through our various brands for travel in Australia, New Zealand and within (the) Trans Tasman bubble will not replace the very significant revenues we had from global international travel, it will at least in the short term provide a much-needed boost to our revenues and the revenues of our retail travel agencies,” Mr Burnes said.

The reopening of state borders is expected to strongly benefit Helloworld’s corporate divisions given 70 per cent of this business is generated domestically. Helloworld said it expected a significant uplift in corporate business from January.

Helloworld’s retail and wholesale bookings are improving daily, along with its total transaction values, according to the briefing to shareholders.

Next year, Helloworld expects the announcement of several bilateral travel bubbles with Asian countries, which could include Japan, Singapore and Taiwan but it does not expect travel to Britain and Europe or the US to open until around the end of next year.

Helloworld directors said many of the major cuts made to the business operations during COVID-19 would remain in place permanently and the company would emerge from the pandemic as a more efficient travel distribution business.

“Several of the additional cost saving initiatives implemented as a result of the COVID-19 pandemic are expected to yield longer term benefits and further improve margins once domestic and global travel returns to previous levels,” the company said.

However, Helloworld expects to continue to incur an underlying earnings before interest, tax, depreciation and amortisation loss of between $1.5m and $2m a month while the pandemic continues.

But it also believes its retail travel agencies will win further market share because there are now less bricks-and-mortar agencies in Australia and offshore due to the contraction of other major travel companies.

Helloworld, which recently purchased CruiseCo, said it had enough cash to maintain operations well into 2022 or longer based on current liquidity levels and cash burn rate.

Helloworld’s shares closed down 3.9 per cent at $2.94.