The 2024-25 de-merger of Webjet created two entities, ripe with promise of additional value for investors in a post-COVID, travel-heavy climate. But have rising interest rates and the fuel crisis created a double whammy for these ASX travel shares?
The de-merger saw Webjet Ltd (ASX: WJL) strengthen its focus on business-to-consumer (B2C) travel. Web Travel Group Ltd (ASX: WEB) focuses on business-to-business (B2B) travel, primarily through WebBeds, a platform that connects travel agents and hotels, airlines and online travel agencies.
The share price of Web Travel Group is down 30% over the past year, currently trading at around the $2.80 mark, down from the $5 range at the tail end of FY25. While Webjet has seen small growth, around the 10% mark, over the last 12 months to $0.58, it doesn't appear that the value investors hoped the de-merger would release has materialised.
So, what's happening now? Is it just the current climate or is there more to the story? And are these ASX travel shares a buy right now?
Image source: Getty Images
What's happening in the broader travel space?
Australians love to travel. And although cost-of-living pressures, concerns about the fuel crisis and the safety of travel during the Middle East war are putting the brakes on for some travellers, Australian travel authorities are still forecasting growth in the coming months.
But when household budgets are squeezed, travel is often one of the first items on the chopping block. And current airfare elevation due to fuel prices and supply concerns is not sweetening the pot for already stretched travellers.
Business travel is, of course, less likely to be affected by cost. However, many companies are showing caution, possibly due to safety concerns and/or the optics of extensive travel as the fuel crisis continues. In late March, it was reported that Wesfarmers Ltd (ASX: WES) had suspended travel for all corporate team members.
Is Webjet a buy right now?
As a B2C travel brand, Webjet is feeling the pinch. Despite positive volume forecasts within the travel industry, investors are wary. Its 1H26 reporting showed a 3% decline in Total Transaction Value (TTV) on the prior corresponding period (PCP).
Webjet's discretionary, consumer-facing and volume sensitive model is exactly the kind investors tend to avoid late in an economic cycle.
That said, the business itself is not in bad shape. It has good margins within an industry known for thin ones and a net cash balance of $111.9 million with no debt. In addition, its non-air income streams are a solid contributor at over 30% of OTA revenue.
So is this ASX travel share a buy? If you believe that global travel volume will bounce back, the current share price is an attractive entry point for a business with a good balance sheet.
Is Web Travel Group a buy right now?
Web Travel Group is a different proposition as it doesn't work directly with consumers and isn't as tied to the Australian economic context. It earns its revenue from transaction volumes across a diversified global network.
It delivered some solid 1H26 results:
- TTV up 22% on the prior corresponding period (PCP)
- Above guidance TTV margin
- WebBeds EBITDA up 21% on PCP
- Solid cash position with $481 million cash, $699 million available liquidity and a $200 million undrawn revolving credit facility
Of course, this was before the Middle East war and the resulting impact on travel. Investors are clearly unsettled across the sector, with most ASX travel shares seeing significant volatility. There may also be some poor sentiment, with some investors feeling the de-merger has not delivered on its promises yet.
In addition, Web Travel Group is a more complex model, deriving revenue from across multiple jurisdictions and currencies. This complexity can make it less appealing to investors when there are significant sector-wide cyclical challenges.
That said, in my opinion, Web Travel Group is a buy right now. While it may not have fully delivered on its de-merger promises yet, for me, it is a solid global travel platform that has been temporarily mis-priced due to macro and sector uncertainty.
