ASX travel share Serko Ltd (ASX: SKO) is edging higher in morning trade, up 1.2% to $6.75 per share.
Serko focuses on the provision of online travel booking and expense management technology.
Below we take a look at the company's latest business update.
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What update did Serko report?
Like most every ASX travel share, Serko's business model is facing hefty headwinds. This comes as the Delta variant of COVID-19 has sent much of New South Wales into an extended lockdown. And now other states, including Queensland, are impacted as well.
However, Serko's share price has held up well and is gaining in intraday trade today.
This morning Serko released an update on its current trading conditions and Booking.com for Business platform migration. It noted that trading conditions remain volatile with continued pandemic-related travel restrictions.
The ASX travel share reported that its New Zealand travel bookings are still strong. However, its Australia travel bookings are well down.
June bookings in New Zealand were at 166% of the June 2019 levels (prior to the onset of COVID). While July figures came in at 137% of the July 2019 levels.
Australian numbers went the other way. Domestic booking fell to 56% of 2019 levels in June and 35% of the volumes for July.
Commentary from management
Commenting on the update, Serko CEO Darrin Grafton said:
We planned for further lockdowns to occur in our core markets during the current financial year as vaccination programs progressively roll out. We have factored these disruptions into our capital management plans.
As such, we continue to target an average monthly cash burn of between $2 million and $4 million despite the persistent Australian lockdowns. We remain optimistic that Australasian travel bookings will revert to the levels seen at their peak in April 2021 once the travel restrictions in Australia lift, based on previous recovery trends.
Serko also reported solid progress with the migration of companies to its new Zeno powered Booking.com for Business platform. It said there are now more than 150,000 existing businesses activated on the platform.
The ASX travel share said the migration phase is being extended by two months beyond the original end date of 31 July.
Looking ahead, Grafton commented:
Following completion of the migration we will move into an engagement phase. This will be timed with an expected return to travel by businesses following the European summer break and supported by the widespread global vaccination programs.
In line with expectations, the majority of revenue to be generated in FY22 from the new Zeno powered Booking.com for Business platform will be back-ended to the second half of the financial year.
How has this ASX travel share been performing?
Unlike most ASX travel shares, Serko's share price is now well above where it was trading before the onset of the pandemic. Shares are up around 46% from 21 February 2020.
Over the past 12 months Serko's share price has gained 123%, compared to a gain of 26% on the All Ordinaries Index (ASX: XAO).
Year to date the ASX travel share has continued to outperform the benchmark, up 25%.
