Webjet Limited (ASX: WEB) shares are 5 per cent higher at $13.10 this morning after the digital travel business told investors to expect underlying EBITDA between $157 million to $167 million over FY 2020. The mid-point of its guidance would equal an increase around 37% over the prior year.
The star performer is the WebBeds business that is forecast to deliver 25% organic EBITDA growth after adjusting for the impact of the DOTW acquisition.
WebBeds effectively acts as a digital middleman between hotels and travel operators that book rooms on a wholesale basis.
Group travel is still a growing industry as its more cost effective and travellers from regions like Asia and the Middle East enjoy the perceived security and other advantages of it.
As the middle classes rise in these large emerging markets it's possible demand for WebBeds' services continues to rise over the long term.
Webjet's eponymous consumer-facing travel booking website in Australia is not growing so strongly and the competition it faces is a potential weak link.
Overall though Webjet's performance is relatively strong in the context of Flight Centre Travel Group Ltd (ASX: FLT) reporting the local leisure travel market is weak on the back of a slowing economy.
