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Webjet hotel beds bounce but cruise bookings hit ceiling

February 26, 2019 Headline News No Comments Email Email

Beds on land are doing better than cabins at sea for Webjet, which has reported a first-half profit rise of more than one third, a spectacular result which sent shares soaring and was described by managing director John Guscic as “outstanding”.

The Melbourne company’s revenue grew 33% to AUD 175.3 million and earnings were up 30% to AUD 51.8 million.

It made a post-tax net profit of AUD 25.2 million, including one-off charges and amortisation expenses – 37% higher than a year ago.

Cruise bookings, however, were another story. Webjet’s cruise bookings fell because of lower supply.

The Canberra Times quoted Guscic speaking of a flattening of cruise demand stemming from constraints on supply – a ceiling, effectively.

“As a consequence, some of the cruise ships that did come down [to Australia] are no longer coming down,” Guscic said.

The paper quoted Joel Katz, managing director of Cruise Lines International Association (CLIA), confirming that Sydney’s cruise terminal at Circular Quay had hit capacity over summer.

Webjet’s booking arm WebBeds, launched in 2013, generated more than half of Webjet’s earnings.

MEANWHILE, RIVAL FLIGHT CENTRE, which backs its online activities with Australia’s largest chain of travel agencies, revealed on the same day last week that its half-year revenue dropped 7.4% to AUD 1.4 billion and profit after tax fell 16.9% to AUD 85 million compared to the same period last year.

Flight Centre in Queen Street Brisbane

Flight Centre said the leisure travel market in Australia was volatile and that was unlikely to continue as the business moved into its busiest trading months.

“Flight Centre is currently trending toward the bottom of its guidance range for the full year,” the company said.

It had previously issued a forecast of underlying profit before tax between AUD 390 and AUD 420 million.

Compare that to the performance of Flight Centre’s American operations: TTV was up 18%, revenue lifted 17% and profit before tax jumped 292% to AUD 33 million.

Also, Flight Centre’s New Zealand arm says its profit is up almost 65%. Flight Centre does not break out figures for its New Zealand business, the New Zealand Herald noted, but combined with Australia it has turnover of AUD 6 billion.

“The firm says that in this country [New Zealand] its turnover for the six months was a record,” the paper said.

Written by Peter Needham

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