Today’s presentation was about WebBeds, which before COVID-19 was the second largest global B2B (business to business) provider. Yet that only represented a 4% market share. The company believes it has a significant growth opportunity.
Webjet has had a long term goal of ‘8/4/4’. Its aim is to see revenue be 8% of total transaction value (TTV), costs as 4% of TTV and the EBITDA margin (EBITDA explained) being 4% of TTV. What that essentially means is that WebBeds would have an EBITDA margin of 50%. Webjet says that it’s tracking ahead of its plan to achieve this.
The ASX travel share said that COVID-19 has provided an opportunity to transform the business.
Post COVID world
Webjet said that ‘bedbanks’ remain a critical distribution channel to support the travel industry recovery.
The strategic objective for WebBeds is to become the number one B2B provider across the world.
Management are currently working through initiatives to make the business 20% more cost efficient when it’s at scale.
WebBeds is also looking to find new revenue and cost reduction opportunities in a post COVID-19 world. The ASX travel share is expanding into new regions, serving new customers, taking advantage of changing travel patterns, simplifying and refining technology and processes across the business.
Webjet is targeting A$10 billion of TTV.
North America
WebBeds thinks that the North American market is a particularly good opportunity. It’s a large wholesale market, but WebBeds only has a market share of 1% in the Americas, compared to 4% in Europe and 3% in Asia Pacific.
With that in mind, WebBeds is targeting new market segments, increasing the share of top 20 clients and expanding directly contracted inventory in key cities.
Management has estimated that there’s a A$20 billion TTV addressable market in North America.
Other regions
The ASX travel share also said that in Europe there’s a A$26 billion TTV opportunity. It’s expanding the footprint in Eastern Europe.
In Asia Pacific, the WebBeds opportunity is a A$24 billion TTV opportunity – it sees the highest growth potential here after COVID-19.
In the Middle East and Africa, there’s a A$ billion TTV opportunity with a focus on Umrah Holidays International once Saudi Arabia restrictions lift.
Rezchain and LockTrip
Rezchain is booking verification technology which can help reduce costs significantly, particularly manual costs needed to address disputes.
There’s also the opportunity for Rezchain to be used in other industries such as real estate, pharmaceuticals and fashion.
Webjet also revealed a US$4.1 million investment in LockTrip, which provides its own decentralised public blockchain, Hydra chain, powered by the Hydra coin.
The investment could accelerate its development of its blockchain expertise, integrate LockTrip into the Webjet online travel agency for its consumer hotel offering and it could also lead to the potential migration of the Rezchain application onto the Hydra chain because Hydra solves many of the issues that prevent the wholesale adoption of blockchain as an underlying platform.
Summary thoughts about the Webjet share price
Webjet is now targeting 8/3/5, meaning it’s expecting the EBITDA margin to be higher (at 62.5%) than pre-COVID.
The Webjet share price is pricey based on the current situation. But if travel goes back to normal – or a new normal – then Webjet could be long term opportunity. It’s hard to say what the B2B market will be like in the future with the digital changes we’ve seen. But Webjet could be one to watch.
