Criterion: As the travel sector loses altitude, acquirers fly in for the kill
Webjet Group's depressed valuation has attracted a private equity bidder with a lowball offer
Despite the pressures, the key travel stocks are better placed financially than in previous downturns
Like a rapidly fading post-holiday suntan, the post-pandemic travel boom has been abruptly curtailed.
Tariff and cost-of-living concerns have crimped travel budgets, while there's evidence that haphazard US customs policies are deterring visitors there.
As sure as night follows day – although not necessarily on an overseas flight – acquirers are sniffing out unloved stocks.
This week, private equity group BGH lobbed a non-binding for flight booking portal Webjet Group (ASX:WJL) which demerged from its business-to-business hotel arm Web Travel Group (ASX:WEB) last October.
BGH's offer came after the group built a 10.76% relevant stake in Webjet. On a nostalgic note, that was with the help of 1980s corporate raiders Ariadne Australia and Gary Weiss.
Adding to the intrigue, Helloworld Travel (ASX:HLO) has accrued a surprise 5% Webjet Group stake.
In the meantime, the out-of-sorts Kelsian Group (ASX:KLS) is in the process of selling its legacy Kangaroo Island ferry business and other tourism assets, in favour of focusing on commuter transport.
Losing altitude
The corporate manoeverings come amid earnings downgrades from the key operators.
Early this month, Flight Centre cited 'short term results volatility brought about by uncertain (cyclical) trading conditions, including the recent changes to US trade and entry policies.'
Things were going OK until March, when US 'policy changes' started to impact both corporate and leisure sales.
Corporate Travel Management (ASX:CTD) then said full year revenue was likely to be 4% softer than forecast, with underlying earnings likely to be down $30 million relative to expectations at the half year results.
The company cites 'broad economic and tariff uncertainty in North America and Asiahas led to reductions in client activity resulting in slower growth than expected during what is traditionally the busiest period of the year.'
Helloworld last week trimmed its full year guidance to underlying earnings of $52-56 million, down from the previously indicated $56-62 million.
Helloworld's outbound US bookings are only marginally down, while there's strong demand for premium seats across the board.
Not everyone is sharing the cost-of-living pain, evidently.
Tapering airfares tell the story
According to UBS, as of March domestic airfares had fallen an average 9%, reversing the momentum of 2024.
International fares fell an average 4%, or 11% in the case of Virgin.
At face value, cheaper airfares are positive for demand, but not if folk are unwilling to travel because of geopolitical and economies uncertainties.
The trends suggest that travellers are eschewing long-haul trips, in favour of destinations such as Bali, Fiji, Hawaii and Japan.
This is consistent with cost-of-living pressures as well as reports of chronic overtourism in favourite European spots.
Merger mania
If last year's Webjet bifurcation was aimed at making the businesses easier to take over, it has succeeded in its objective.
While BGH's 80-cents-per-share tilt was at a 40% premium to Webjet's 'undisturbed' share price, the stock has traded above that level.
RBC Capital markets notes Webjet has $100 million of net cash worth 26.7 cents a share – one-third of BGH's offer price of 80 cents per share.
The firm opines that even without a takeover premium, Webjet shares are worth $1.05 to $1.30 a share. With a suitable control premium, the board would start talking turkey at $1.26 to $1.50 a share.
Not even close!
Don't panic, we're not going down
The downturn doesn't mean that that travel stocks should be avoided.
On the contrary, they tend to overreact to both good and bad conditions.
Insofar as Australians are more likely to take a domestic break, the conditions are amenable to local plays such as Experience Co (ASX:EXP), which runs skydiving venues and tree walks.
Experience Co this week reported soggy trading because of soggy weather, but notes an 'opportunity to capitalise on sentiment generated by recent US tariff changes'.
Helloworld benefits from the enduring strength of cruising, with bookings expected to be 40% higher this year.
Like a tired hotel room, there's room for a lick of paint.
As part of a much-needed 'brand refresh', Webjet Group plans to double its ticket turnover to $3.2 billion by 2030, including a push into hotel and package offerings.
The players are more resilient financially than during the 2007 GFC, or pandemic.
In the early days of the plague, Flight Centre executed a $700 million emergency capital raising. Now the company is buying back $200 million of its own shares.
There's no need to assume the brace position - but expect some more turbulence and keep the seat belt buckled just in case.
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ABC News
an hour ago
- ABC News
Do class actions really deliver justice?
Sam Hawley: On average, there's a class action launched in Australia every week. But do they really help bring justice to groups of Australians exposed to wrongdoing? Today, Anne Connolly on her Four Corners investigation into the class action traps leaving victims short-changed and lawyers richer. I'm Sam Hawley on Gadigal land in Sydney. This is ABC News Daily. Sam Hawley: Anne, in Australia, class actions have become pretty common, haven't they? It's a really important way to address injustices in this country. Anne Connolly: Well, yes, that's what class actions are designed to do. And I mean, when there were some really major catastrophes, such as the Victorian bushfires, the Queensland floods, class actions were taken to get some money back for those people. News report: Property owners around Horsham in Victoria have banded together to bring the first class action arising from the Black Saturday bushfires. Anne Connolly: Same with the pelvic mesh issue against Johnson & Johnson. News report: The federal court found Johnson & Johnson had been negligent and driven by commercial interest and ordered them to pay compensation. Anne Connolly: There's many, and they're very varied. Sam Hawley: Yeah, and you found during your Four Corners investigation, this is a billion dollar industry, but it's not always in favour of the individual victims. So to explain this further, why don't we look at a recent case, Anne, a legal fight between more than 8,000 Australian taxi drivers and Uber. Anne Connolly: Well, I mean, I think most people remember when Uber entered the market, obviously the taxi industry was absolutely decimated. They just couldn't compete any longer. One of the taxi owners I spoke to is a man called Stephen Lacaze. He said he had a licence in Queensland, which was at the time valued at about half a million dollars. It went to being virtually worthless once Uber came along. Stephen Lacaze, taxi owner: Oh, it was devastating. People virtually went into shock. Anne Connolly: So when Maurice Blackburn, which is one of the biggest class action firms in Australia, came along and proposed a class action, he was very keen to sign up. Stephen Lacaze, taxi owner: We were friendless. And here comes Maurice Blackburn with their Bradman-like batting averages, and their 'we fight for fair' banner, and we're there with bells on. Sam Hawley: OK, so Stephen was keen to fight this. Maurice Blackburn lawyers take it on, and they get a third party, a litigation funder, to pay the costs. Just explain how that works. Anne Connolly: Yeah, so what happens is Maurice Blackburn doesn't want to go this alone. So what they do is they engage somebody called a litigation funder. And litigation funders, they pay the lawyers' fees, they support them, and if they lose, they pay all of the costs, so there is some risk. But in return for taking that risk, they want a percentage of any payout that they win. So in this case, with Maurice Blackburn, they had a partnership with an offshore firm called Harbour Litigation Funding, which is actually registered in the Cayman Islands. It's a tax haven, and there's quite a few litigation funders in tax havens. Under this deal, they said, we want 30% of the proceeds. And Stephen signed up for that, as did most of the taxi drivers. Stephen said he did that because he thought they were going to get a payout worth billions because that's how much they'd lost. Sam Hawley: So in this case, Maurice Blackburn, the law firm, ends up settling this class action. So just tell me what happens then. Are the taxi drivers elated about this? Anne Connolly: Well, the night before the trial was due to start in March last year, Maurice Blackburn brokered a deal with Uber. That would be that Uber would pay $272 million in compensation. Now, once Harbour took its commission, that came out at $81.5 million. Maurice Blackburn took its legal costs, which came to $39 million. It means that the drivers were left with just over half the payout. Now, we don't know what individual taxi drivers will get. Stephen Lacaze believes he'll get about $20,000 once all of these fees and commissions come out of his payment, which he says is nowhere near what he lost. Sam Hawley: What did Maurice Blackburn have to say about that? Anne Connolly: They said the federal court had approved the settlement as fair and reasonable, and Harbour, the funder, said that the case was long-running and there were significant risks. Sam Hawley: Hmm, OK. So, Anne, that's the case of the taxi drivers against Uber, and we're going to talk about another really concerning case in a moment. But before we do, let's just look at the system more deeply. The worry here is that the whole class action system is set up to make profits for the law firms and the funders, but not deliver the justice to the victims, right? Anne Connolly: Well, there's some people who are concerned about that. I mean, the lawyers and the funders will say, without us, people would get nothing. The problem is that what's happening now is most people think a class action begins with a group of victims, but that's not really the case anymore. Now everything has changed because litigation funders have now entered the Australian market. So what happens is, it's the law firms and the litigation funders getting together and seeing, what are these issues that we could launch a class action on so that they can make money and then they can sign up the group members? So the concern is, are they really seeking justice for people or are they actually just finding a business opportunity so that they can make as much profit as they possibly can? Sam Hawley: Anne, let's now look at another case where the victims are left with, in comparison, petty change. Just tell me about Minnie McDonald. Anne Connolly: So Minnie McDonald is a woman in her 90s. She lives in Alice Springs and she was approached by Shine lawyers to become what's called the lead plaintiff in a class action in the Northern Territory for stolen wages of Indigenous workers who worked on cattle stations and missions for little or no money. Minnie McDonald, lead plaintiff: No shoes, get up in the morning, go to work. Come back afternoon, cold. Anne Connolly: So this case relates to the treatment of people like Minnie who, along with a lot of other... ..thousands of other Aboriginal men, women and children worked for little or no pay between the 1930s and the 1970s. Look, I just think, you know, one of the things I want to say about this is if ever there was a class action needed, perhaps it was in this particular case. I mean, there's questions about why the governments didn't just actually pay people what they deserved instead of being forced to court and forced to pay out compensation. But in any case, what Shine says and what the litigation funder says is we were doing our very best to get right a particular historical injustice. Sam Hawley: So the law firm Shine takes on this class action along with the litigation funder, Litigation Lending Services, and Minnie becomes the lead plaintiff. But the thing is, Anne, we know with legal cases, there's a lot of paperwork and Minnie had to sign a lot of that and she can't read or write. Anne Connolly: That's right, she can't read or write. So Minnie had her granddaughter Elizabeth to help her. However, Elizabeth does say, you know, it was complicated. It was difficult to understand at times. So Minnie did sign one document which said that Shine's costs had increased by $10 million and she signed off on that. I asked her about it and I asked her granddaughter if they remembered it. They didn't. I asked Shine, did they check that Minnie had the capacity to understand the complex legal and financial issues around class actions? They said being unable to read or write is no indication of intelligence and that they had an Indigenous barrister who helped to cross these cultural barriers and explain the process to them. Sam Hawley: So tell me what ended up happening with the case. Anne Connolly: So there were two class actions in WA and the NT and they both settled. So they didn't go to court. In Western Australia, there was a settlement for $180 million. In the Northern Territory, it was $200 million. Which sounds, you know, really positive. But what has to come out of that are the legal costs and the commission for the litigation funder. So they're not going to end up with that much. They'll end up with at least $10,000 and some will end up with more than that. Minnie McDonald, lead plaintiff: So somebody might... get a car and just take me for a picnic somewhere, you know, have a feed. But... I didn't get enough. Anne Connolly: You didn't get enough to buy a car? Minnie McDonald, lead plaintiff: Yeah, yeah. Nothing. Not enough. Anne Connolly: On the other hand, what's happened is Shine Lawyers is going to get about $30 million for its work. And the funder, Litigation Lending Services, they will take a commission of about $57 million. Sam Hawley: And you've had a really good look, haven't you, also, at the amount the law firm Shine was actually charging. Anne Connolly: Well, that's very interesting because Shine was roundly criticised in both WA and Northern Territory courts by the judges there. In one instance, Shine was charging for law clerks, charging them out at $375 an hour, even though many of them were unqualified uni students. They hired at least a dozen barristers that cost almost $3.5 million. One of those barristers charges almost $5,000 an hour. So, you know, the legal costs are the things that's really interesting. Sam Hawley: All right. So, Anne, the law firms and the funds are making a lot of money from these class actions in many cases. They do argue, as you mentioned, that they're actually giving people a chance to have these cases heard. What has Shine told you? Anne Connolly: Well, Shine said we were the only ones who were willing to take this on. We have given Aboriginal workers a chance to tell their stories. They've received compensation and they're being acknowledged for the historical injustices that they've suffered. And they said that these cases require experienced and well-resourced lawyers. And Litigation Lending Services, they said that they're proud of their involvement and that their commission was lower than the standard market rates because they wanted to reflect the social justice nature of these claims. Sam Hawley: And you spoke to the head of the Association of Litigation Funders. So this is a group that represents the firms that financially back these class actions, the funds. Its head is John Walker. So what's he had to say? Anne Connolly: Well, he said, look, you know, this is a market. This is a financial market that they operate in. They're trying to get some justice for people, but at the same time they're trying to make a profit and they don't shy away from that. John Walker, Association of Litigation Funders : We underwrite the project. We'll pay everybody if we lose, but in return, if we win, then we get a share of the recovery. We don't see it as gambling. We see it as investing. It's a market, and I don't step away from that. Anne Connolly: He essentially says, look, what we're doing is we're trying to correct the bad behaviour. Even if these class members are not getting enormous sums, it's sending a message to the big end of town that you can't operate in this way any longer. John Walker, Association of Litigation Funders : I'm absolutely proud of what's happened with class actions in Australia. They're absolutely essential to create accountability in respect of the big companies and governments. Sam Hawley: But, Anne, it does sound like a system that's not really working as it should. That is for the everyday people who need it. Anne Connolly: Well, I think what happens is a lot of people look at a class action sum and they believe that the sum that's been publicised is what people are getting. They don't realise that up to half of it can disappear in fees and commissions. The other point being the only class actions that actually get funded and get run are those that turn a profit. So when you're talking about others that might be very worthy, they won't get up if the bottom line doesn't look good. I think the problem arises when you're talking about people who have really suffered, such as these Aboriginal workers in the stolen wages cases who thought that they were going to get some proper compensation and what they're getting is simply a fraction of what they really deserve. And when they do see litigation funders and lawyers walking away with tens of millions of dollars, it makes it difficult for them to understand and sometimes it can feel like they've been exploited all over again. Sam Hawley: Anne Connolly is an investigative reporter with the ABC. You can see her Four Corners report on ABC TV tonight at 8.30pm or you can catch it on iView. This episode was produced by Sydney Pead. Audio production by Sam Dunn. Our supervising producer is David Coady. I'm Sam Hawley. Thanks for listening.
ABC News
3 hours ago
- ABC News
Tourism Australia nabs Robert Irwin, Nigella Lawson for new international marketing campaign
Australia's tourism bosses have hired wildlife ambassador Robert Irwin and British celebrity chef Nigella Lawson to front a new multi-million-dollar campaign aimed at luring international travellers Down Under. Tourism Australia is set to launch a fresh wave of advertisements across five countries, backed by a $130 million investment that builds on its "Come and Say G'day" platform first rolled out in 2022. Loaded with "mates," "G'days", and a nod to Paul Hogan's infamous "throw a shrimp on the barbie" catchphrase, the $130 million campaign serves up a fresh spin on well-worn Aussie cliches — this time starring a global cast to reel in the tourists. The advertisements feature the animated mascot Ruby the Roo and are tailored to individual markets, a shift from the traditional one-size-fits-all approach. "Traditionally tourism campaigns have leveraged one famous face across every market," Tourism Australia managing director Phillipa Harrison said. "But for our latest campaign, Ruby will be joined by well-known talent from five different markets to showcase personal lasting memories of a holiday to Australia." Tourism Australia is no stranger to bold and sometimes divisive campaigns. From Paul Hogan's 1984 invitation to, "Slip an extra shrimp on the barbie" to Lara Bingle's infamous, "Where the bloody hell are you?", the agency has a long history of attention-grabbing efforts. Hogan helped sell Australia as the land of laid-back charm and Tourism Australia has been chasing that magic ever since. They've previously enlisted Thor (Chris Hemsworth), and Delta Goodrem and poured millions into glossy global advertisements. The 2006 Bingle campaign was briefly banned in the UK for its language, but like the latest instalment, it showcased geographical icons like Uluru and the Great Barrier Reef. Professor Daniel Gschwind from the Griffith Institute for Tourism said campaigns packed with Aussie icons and big-name talent can still strike a chord. He said cliches like kangaroos, wide landscapes and even throwbacks to the "shrimp on the barbie" line can be powerful if they reflect what Australia genuinely offers. "They exist for a reason, people respond to them," he said. "Why not build on brand familiarity? Tourists want to see the Australia they imagine and if trusted celebrities can help tell that story, it can absolutely work." He said Paul Hogan's campaign was a game changer for Australian tourism. "There's a whole generation, mostly baby boomers, who still remember that ad and the humour of it. So yes, absolutely, why not lean into it and build on that familiarity? When the campaign launches in the United States visitors will see 21-year-old conservationist Robert Irwin hooning across sand dunes in South Australia's Lincoln National Park, before rescuing an American tourist whose phone has been stolen by an emu. Audiences in the United Kingdom will see television cook Nigella Lawson hosting a winery lunch in Western Australia's Margaret River, where a guest drops the line, "throw another shrimp on the barbie" — prompting an awkward pause before someone corrects him, "Mate, we actually call them prawns". Other localised advertisements feature Indian influencer Sara Tendulkar, Chinese actor and TV host Yosh Yu, and Japanese comedian Abareru-kun who are joined by Australian actor Thomas Weatherall. The campaign is being previewed for Australian audiences ahead of its international debut, with official launches staggered across key market starting in China this week, followed by India later in August, the US, UK, Japan and Germany in September and South Korea in November. The advertisements will run across TV, streaming platforms, YouTube, cinema, outdoor billboards and buses. The campaign comes as Tourism Research Australia data shows international tourism to Australia continues to recover from border closures due to the COVID-19 pandemic. There were 7.7 million trips to Australia in the year ending March 2025, an 11 per cent increase compared to the previous year. New Zealanders made up the bulk of visitors, followed by China, the United States, United Kingdom and India. Federal Tourism Minister Don Farrell said the number of international arrivals to Australia was expected to reach a record 10 million in 2026, growing to 11.8 million in 2029. "Tourism is the lifeblood of so many communities right around the country and creates hundreds of thousands of jobs," he said.
The Australian
5 hours ago
- The Australian
Collapse in private-sector job creation as public sector surges
Private-sector job creation has collapsed as employment funded by federal and state governments soars to five times the normal rate, sparking warnings of unsustainable distortions in the labour market that are at the heart of the nation's productivity slump. Analysis of labour-market data shows that 82 per cent of all jobs created over the past two years were government-funded positions, with the private sector adding only 53,000 jobs in 2024. This marks a dramatic reversal of normal labour market trends, in which the private sector typically contributes about two-thirds of total job creation. While Jim Chalmers has ruled out discussion of industrial relations at this month's economic and productivity summit, employer groups are demanding that dysfunction in the labour market needs urgent attention. Australian Industry Group analysis shows that the historically low unemployment rates maintained since the pandemic are masking a fundamental shift in the composition of job creation, which lies at the heart of the nation's productivity slump. It warns that labour-market resilience, as shown in official unemployment data, was being supported almost entirely through government spending, leading to an excess of job vacancies in the private sector. This was unsustainable, according to the Ai Group, which also pointed to a dramatic fall in mobility rates – the frequency of workers changing jobs or roles – to a record low in 2025 that was directly linked to productivity. The analysis showed that the number of new jobs needed for the economy to maintain an unemployment rate of about 4 per cent was approximately 400,000 a year. 'Since the pandemic, this has been achieved, however, the composition of job creation has changed dramatically,' the Ai Group analysis said. 'Typically, the private-market sector accounts for about two-thirds of job creation in Australia. However, as the economy has slowed since 2023, private-sector job creation rates have collapsed. 'In 2024, the sector only added 53,000 new jobs – about a fifth of its normal level of job creation. In its place, two government-supported sectors took up the slack. 'Employment in these government-supported sectors has boomed since the pandemic, adding an additional 670,000 jobs over the last two years. This is over five times higher than the normal growth rate, and ultimately accounted for 82 per cent of all job creation in Australia. 'It was driven by significant uplift in public-sector staffing levels, as well as the rapid expansion of the private-sector (but government-funded) care-economy workforce. One of the Albanese government's key election boasts was its maintenance of low unemployment and job creation. But the bulk of those jobs have been in the public sector (where workers are directly employed by government), and the non-market sector (industries such as healthcare and education) which are driven by government funding decisions. 'Job creation has become unsustainably dependent upon government spending,' the Ai Group research said. 'Growing regulatory burden has raised the costs of private sector employment generation. Job mobility rates have rapidly declined, while excess vacancies and skills shortages have disrupted business operations and efficiency.' The public sector was the least productive part of the economy and, with public spending showing signs of easing, unemployment rates have begun to rise. Last month, the jobless rate surprised experts by jumping from 4.1 to 4.3 per cent. This prompted economists to call for the central bank to lean in further on interest-rate cuts, following its surprise decision last month to keep them on hold, to protect the economy. Ai Group chief executive Innes Willox said the historically low headline unemployment rate had created a 'blind spot to labour-market trends that are decreasing our productivity, our wellspring to national wealth'. 'While the labour market has remained resilient, with the jobless rate around 4 per cent for the past three years, in many other respects it is failing to meet the broader needs of our economy or productivity,' Mr Willox said. 'There are four key areas that are a material drag on productivity: job creation has become almost entirely dependent on government spending; a growing regulatory burden has increased private sector costs; there is a persistent overhang of excess job vacancies; and mobility is declining. 'These all make job creation more expensive and difficult, reduce the efficiency of matching jobs to employers, while disrupting productivity and sapping business growth.'' Mr Willox said there was an urgent need for the private sector to resume its role as the primary job creator 'or our labour market resilience will be at risk'. 'Regulation has pushed up employment costs since the pandemic, with growth in superannuation, workers compensation and payroll tax adding $14bn to the annual wage costs,' Mr Willox said. 'The regulatory costs for employment, on top of wages, have grown to 15.6 per cent from 14 per cent in the past three years. 'We have a plague of excess job vacancies, which disrupts business operations, make it harder to allocate resources properly and less likely to pursue new opportunities for growth.' Mr Willox said the intervention by governments to prop up job creation through their budgets had starved the private sector with about 330,000 jobs remaining unfilled at the beginning of 2025. This was 100,000 more than the historical average. 'This persistence of excess vacancies has exacerbated a further challenge for employers: a crippling skills shortage,' Mr Willox said. 'The sectors with the most chronic shortages – healthcare and social – also delivered the worst productivity outcomes, so there is a clear link between the two.' Mr Willox said the issue needed to be a central piece of the productivity debate at the Treasurer's roundtable this month. Nation A massive pro-Palestine protest brought Melbourne to a standstill as activists clashed with riot police, harassed officers, blocked traffic, and targeted fashion brand Zara – defying Premier Jacinta Allan's warning of swift action. Nation The PM's energy infrastructure tsar and a pro-renewables independent are worried concerns about one of Australia's largest proposed solar farms are being ignored.
