Webjet shares plummet 10% despite profit upgrade, warns of low growth in tourism sector

The cracks in the travel market continue to worsen. Shares in online travel group Webjet have fallen 10% this morning despite an upgraded profit forecast, after the company said it has continued to track low growth levels over the past four months.

The update comes alongside continued bad news in the travel industry, with the market being slugged with higher taxes this year and recent warnings tourism is adopting a “two-speed” fracture between city and country destinations.

In a statement this morning, Webjet managing director John Guscic said the leisure travel market is under pressure – and that in the last four months that pressure has been seen at both a unit price and transaction volume level.

Month-by-month data also shows a decline in domestic prices, he said.

Shares in Webjet were down by 7.5% to $3.8 at 11.50 AEST.

But Guscic said this weakness presented an opportunity, announcing the business has increased its marketing expenditure as a percentage of total spend by about $1 million for the half year.

That spend has been reflected in market share, he said.

“As these development activities continue in a travel market where the macro level is not exhibiting strong significant growth there has been a concentration on managing for margin in all areas of our activities.”

The announcement is just the latest disappointment in the travel market, which has already lamented the increase of passenger exit fees this year – although it won that battle in June.

More recently, a MasterCard survey found there is a growing fear the market could develop a “two-speed” structure as tourists head to cities rather than rural areas.

However, there has been some good news, with record numbers of Chinese tourists providing a welcome reprieve.

 

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