Webjet returns to profit as travel demand climbs; hotel booking website performing strongly

The online travel agency is on track to return to its pre-pandemic earnings in the current financial year, with its hotel booking website performing strongly.

Online travel agency Webjet is on track to return to its pre-pandemic earnings in the current financial year, with its global hotel booking website well ahead of pre-pandemic levels.

But the company’s airline booking business is suffering from the inability of carriers to return to pre-Covid-19 performances.

In a trading update on Wednesday, Webjet managing director John Guscic says all of the company’s business are now profitable for the 2023 financial year and the company expected to produce a $100m cash surplus from its operations for the six months ending September 30. But he noted marked changes in hotel booking patterns as a result of the pandemic.

Travellers are eschewing luxury accommodation for two and three-star hotels, choosing shorter trips, and leaving hotel bookings to the last minute. They are also steering away from cities to leisure destinations across North America and Europe.

“What we have seen is two and three star hotels have recovered faster than five star hotels and people are starting to book more trips of shorter duration and they are booking closer to the travel date. Their booking lead time is down by a third and they are more likely to book a three star hotel than a five-star hotel. Leisure destinations are outperforming city destinations,” he said, adding that WebBeds sells 100,000 hotels into 150 countries.

Mr Guscic said WebBeds had returned to 95 per cent booking volumes across the entire enterprise because of its ‘outperformance in Europe and the Americas.’

WebBeds produced record bookings in the northern hemisphere in July and August, he said.

Bitez Beach in Turkey. Picture: Alamy

In Australia, Mr Guscic said the challenge for the local airline industry was the fact that its biggest market, China, was shut. “You won’t get back to pre pandemic levels until the Chinese start travelling again…they were around 20 per cent of the market and that has gone.

“If the aviation market returned to pre pandemic volumes we would expect to be higher than 2019 volumes, we have picked up market share across the board.

“This is because we have streamlined our tech at the right price to the right customer,’’ he said.

“(But) the airline site performance is a reflection of the overall market activity in Australia which is a long way from its pre pandemic numbers. We are at 80 per cent bookings for domestic, around 68 per cent bookings for Trans Tasman and around 50 per cent for international.”

Mr Guscic expects Webjet to exceed pre-pandemic earnings in the 2024 financial year which will be ‘well head of when the broader travel market is anticipated to return to 2019 levels.”

But RBC capital markets said notwithstanding the positive trading to date, Webjet highlighted that macro economic indicators suggest a slowing of the travel market and that elevated ticket pricing and travel disruptions are negatively impacting flight demand.