The S&P/ASX 200 index was out of form last month and dropped 0.4% lower over the period.
Whilst this was underwhelming, it was notably better than how the Flight Centre Travel Group Ltd (ASX: FLT) share price performed.
During the month the Flight Centre share price dropped by 10.5% to end the month at $42.59.
Why did Flight Centre tumble lower in October?
Investors were quick to hit the sell button last month following the release of a trading update at the Morgans Queensland conference.
That update did contain several positives. One being that online leisure sales in Australia had doubled during the three months to September 30. This was despite a relatively challenging trading climate.
Management also reported that its total transaction value (TTV) had continued to increase solidly across the company during the first quarter.
However, this was overshadowed with management's expected trading patterns for the year.
Although no concrete guidance will be provided until its annual general meeting this month, it warned that its first half profits would be down on the prior corresponding period.
Why will profits be lower in the first half?
As well as cycling a strong first half a year earlier, tough trading conditions for its leisure business have weighed on its performance.
In addition to this, the company revealed that unrest and uncertainty has negatively impacted the business. As has an increase in costs following the introduction of a new wage model. The latter has led to the company paying an additional $4.2 million in wages to its leisure salespeople during the first quarter of FY 2020.
One positive is that management appears confident that the second half will be stronger. But that hasn't been enough to keep some shareholders on board.
Should you invest?
At around 16x estimated full year earnings, Flight Centre's shares do look reasonably good value now.
However, I would suggest investors wait for its guidance at its annual general meeting before making a decision.
In the meantime, I would buy Webjet Limited (ASX: WEB) shares for exposure to the travel industry. I feel they are trading at a very attractive level following a recent pullback.
