Webjet (ASX:WEB) share price edges higher on strategy update

The Webjet (ASX:WEB) share price is edging higher after the company advised it is focusing on initiatives to reduce costs and drive margins.

| More on:
rising ASX share price represented by paper plane made from news paper

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Webjet Limited (ASX: WEB) shares are edging higher today after the company released a transformation strategy update. At the time of writing, the Webjet share price is trading 0.65% higher at $6.22. In comparison, the S&P/ASX 200 Index (ASX: XJO) is currently trading 0.32% lower.

Let's take a look at what the travel company reported.

The road to recovery for the Webjet share price? 

The Webjet share price is in the green as the company's transformation strategy update puts the spotlight on its WebBeds business in a post-COVID-19 world. The company highlighted the significant global opportunity, stating that the pre-COVID global accommodation market had a value of more than $800 billion in total transaction value (TTV). Of this, WebBeds has captured some ~4% market share. 

Post pandemic, Webjet believes this remains a critical distribution channel supporting the travel industry's recovery. As the travel industry picks up, the company aims to take advantage of changing travel patterns, expand into new regions and emerge as the #1 global B2B provider. 

New revenue opportunities 

North America is a historically underrepresented region for Webjet's WebBeds business despite being the largest destination within its network. With only 1% market penetration in the Americas, the company is focused on leveraging new opportunities such as targeting new market segments and expanding contracted inventory in key cities. 

Europe also represents an important region for the business given the significant number of independent hotels. Webjet aims to increase its footprint across Eastern Europe to leverage the $26 billion B2B market opportunity.

The APAC region was on track to be the largest region by booking volume for Webjet pre-COVID. The company believes this region has the potential to deliver the most significant growth post COVID. According to the company, the pandemic will likely bring about new opportunities in the region, with entry into areas of the domestic market that were once impenetrable. 

Webjet outlook 

Webjet's transformation strategy update did not provide an update regarding earnings but instead focused on its cost efficiencies and margin improvements. 

Delivery of the company's cost efficiencies are on track with its 1H21 costs down 42% over 1H20. This should help Webjet achieve its 8/3/5 target which represents 8% revenue/TTV, and 3% costs/TTV to drive 5% of earnings before interest, taxes, depreciation, and amortisation (EBITDA)/TTV. 

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX managed to bank a small rise this Tuesday.

Read more »

Sport trainer talking to little girl who is climbing wooden ladder in gym.
Share Gainers

Why Vault Minerals, Droneshield, Westgold Resources shares are climbing higher today

These shares are gaining on Tuesday, but why?

Read more »

A hipster-looking man with bushy beard and multiple arm tattoos sits on the floor against a sofa reading a tablet with his hand on his chin as though he is deep in thought.
Share Market News

ASX 200 slides on unexpected RBA interest rate call

The ASX 200 is tumbling on the RBA’s latest interest rate announcement.

Read more »

A young woman smiles as she rides a zip line high above the trees.
Financial Shares

5 best ASX 200 financial shares of FY25 (CBA didn't make the cut!)

These stocks were well and truly 'in the black' for share price growth last financial year.

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Beetaloo, Botanix, Cobram Estate, and Origin Energy shares are falling today

These shares are having a poor session on Tuesday. But why?

Read more »

Two parents and two children happily eat pizza in their kitchen.
Broker Notes

Morgans reveals 4 ASX All Ords shares to buy now — and 2 may surprise you

The top broker has revealed a buy rating on four ASX All Ords shares from different market sectors.

Read more »

Excited group of friends sitting on sofa watching sports on TV and celebrating.
Share Gainers

Why Amaero, Black Cat, Domino's, and Ramelius shares are racing higher today

These shares are having a good session on Tuesday. But why?

Read more »

Five happy miners standing next to each other representing ASX coal mining shares which some brokers say could pay big dividends this year
Broker Notes

Macquarie predicts 63% upside for this ASX 200 mining stock

Which ASX 200 stock is it?

Read more »