FLT, WEB, HLO: How are these ASX travel stocks performing?

Highlights

• Tourists majorly seek leisure and New South Wales is amongst the top destinations for foreign visitors to Australia.
• New Zealanders and Chinese tourists are among the most frequent visitors to Australia.
• In the past few months, there has been an obvious increase in number of visitors from India.

Tourism is a crucial industry, one of the key catalysts to Australia’s economic prosperity. The tourism sector contributes to more than AU$150 billion to the economy, supports over 300,000 businesses and employs over 660,000 Australians. As a country with superlative offerings in nature, wildlife, and cultural experiences, the tourism industry was one of the fastest-growing sectors of the Australian economy prior to the Covid-19 pandemic.

The Covid-19 virus, which disrupted both domestic and international travel in 2020 and caused a sharp drop in income, brought an unexpected blow to the expansion of the travel industry. So much so, Australia lost almost AU$80 billion in tourism revenue in 2020, as per Deloitte’s The Value of Tourism report.

After combatting some tough times, Australia is gearing up to stick out in the highly competitive international tourism market. Of the many moves towards this, a global tourism campaign Come and Say G’day was recently launched, a critical step to rebuilding the visitor economy and supporting the tourism industry.

Besides, recent statistics from the Australian Bureau of Statistics on international travel arriving in Australia show an upward trend- arrivals totalled 1,212,850, a monthly increase of 141,330 trips.

Tourism sector outlook

Only from February 2022- when Australia eliminated border restrictions for vaccinated people, arrivals began to considerably pick. Looking ahead, tourism activity is projected to continue to regain as supply-side concerns are resolved and global tourism picks up. As per the Reserve Bank of Australia (RBA), most liaison contacts suggest that full recovery might not occur until at least mid-2023, while many expect it to take a few more years. 

Tourism Research Australia (TRA) predicts total visitor expenditure to exceed pre-pandemic levels this year and total AU$227.7 billion by 2027. TRA also believes that turnaround for domestic travel is progressing quickly.

The Corona Crash had a particularly devastating effect on ASX travel stocks, as demand was practically gone in just a few weeks. Over the previous couple of years, the travel industry has recovered very slowly, but now businesses are claiming that profitability has either been restored or is about to be.

However, most businesses are still operating below pre-pandemic levels, and the International Air Transport Association (IATA) predicts that pre-pandemic levels of travel won't be reached until 2024.

On this note, let us skim through three ASX-listed travel companies.

Flight Centre Travel Group Ltd (ASX:FLT)

Online travel agency and corporate travel manager Flight Centre Travel Group Limited (ASX:FLT) functions in over 20 nations, including New Zealand, the United Kingdom, South Africa, the Americas, Europe, the UAE, and Asia. It has its own leisure and business travel operations.

Through a joint venture (JV) with Tokyo-based NSF Engagement Corporation, Flight Centre started its leading FCM travel management operation in Japan, the fourth largest corporate travel market in the world, about one and a half years ago.

FCM was amongst the top travel management companies with the fastest growth rates before Covid-19 (TMCs). In order to accelerate recovery and foster future organic growth, a sizable investment was made during the pandemic. As part of FCM's global growth to win strategy, the company heavily invested in cutting-edge technology that was focused on improving traveller experiences and travel programme optimisation.

Shares of Flight Centre closed trading at AU$15.39 per share, up 0.65% on ASX on 11 January 2023. The company's shares have grown 4.13% in the last five trading sessions but only 2.33% in the last month. However, they have fallen over 11% in the last six months.

Webjet Limited (ASX:WEB)

Webjet Limited (ASX:WEB) sells travel-related goods online, right from flights to hotel rooms. The company's operations are divided between two retail business-to-business (B2B) businesses, Webjet OTA and GoSee, and a business-to-business (B2B) wholesale division that includes WebBeds.

In the first half of FY23, the company was back to pre-pandemic booking levels. Results showcased  a turnaround of AU$88.4 million in underlying EBITDA from the 1H22 loss of AU$15.9 million. WebBeds is on track to exceed pre-pandemic profitability in FY23 and Webjet OTA and GoSee are expected to be consistent with 1H23 results.

Webjet shares ended the day at AU$6.47 each, up 0.94% on ASX on 11 January 2023. Shares of the travel company climbed more than 2% in the last five trading sessions and almost 22% in the last six months.

Helloworld Travel Limited (ASX:HLO)

Helloworld Travel (ASX:HLO) is a top distributor of travel services. Worldwide, clients are served by the company's domestic and international travel goods and services. Three divisions make up the business: Australia, New Zealand, and the Rest of the World.

Helloworld’s business has continued to improve. EBITDA was AU$3.2 million in October, taking the YTD total EBITDA to AU$8.5 million. Total Transaction Value (TTV) for October was AU$227 million, taking the YTD result to AU$ 788 million.

Shares of Helloworld traded at AU$1.68 per share, down 4.35% on ASX on 11 January 2023. However, shares have recorded more than 13% growth in the last five trading sessions. They have jumped by over 19% in the last one month.