ASX travel shares on watch as US border reopens

ASX travel shares are in focus as the US borders is on track to open.

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The US borders are going to open to travel, which could put the share prices of the ASX travel shares in focus.

According to reporting by international media, such as the BBC, the US is planning to reopen its borders for fully vaccinated travellers from 33 countries on 8 November 2021. That means it’s less than a month away.

Vaccinated people who want to travel just need to have a negative test in the 72 hours before travelling.

Which countries will the US open up to?

The list includes the UK, Brazil, China, India, Iran, Ireland, South Africa and Schengen countries. The Schengen countries are 26 European countries that allow unrestricted travel between them, these are: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.

In other words, the US is going to be opening up to most of the global population and most of the global economy.

These travellers will not need to go into quarantine after entering the country according to the reporting.

The US is also going up open up its land borders with Canada and Mexico for fully vaccinated foreign nationals. However, unvaccinated travellers will continue to be barred from entering through the land borders.

How will this affect ASX travel shares?

There are several businesses which may be affected by this change.

For example, Webjet Limited (ASX: WEB), Flight Centre Travel Group Ltd (ASX: FLT) and Corporate Travel Management Ltd (ASX: CTD) all have exposure as global travel businesses.

With the release of Corporate Travel Management’s FY21 result, it said that it experienced a rapid return to positive underlying earnings before interest, tax, depreciation and amortisation (EBITDA) in the fourth quarter of FY21, led by its increasing exposure to a recovery momentum in North America and Europe.

After its Travel & Transport acquisition, the company is now estimated to be the world’s fourth largest global travel management company.

Corporate Travel Management commented:

The lucrative Transatlantic and intra-European segments are opening or expected to re-open in the first half of FY22 and should materially continue to group revenue and profitability in both regions.

WebBeds also has exposure to the northern hemisphere with its WebBeds business. Management suggested profitability for this business in each of the FY22 months so far. It has seen “strong demand” as travel restrictions ease in North America and Europe, suggesting “significant upside” as more international markets reopen.

The ASX travel share said:

We see a world of opportunity for Webjet. All our businesses have significant potential to grow market share by expanding into new market segments and benefiting from consumers shifting to buy travel online. Transformation initiatives are underway and we are on track to reducing costs by at least 20% once the company gets back to scale. As a result, as conditions normalise, we believe our Webjet businesses will have higher market share, lower costs and greater profitability.

While the exact timing is uncertain as our growth opportunities are driven by the opening of borders, we know demand for travel will return and we are absolutely ready to capture it.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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