The Webjet Limited (ASX: WEB) share price could fly higher today with the travel agency business revealing its blockchain solution and a religious offering.
Webjet is a digital travel business spanning both global consumer markets (‘B2C’) and wholesale markets (‘B2B’). It was established in 1998 and now claims to be the leading online travel agency (OTA) in Australia and New Zealand. Webjet says it was the world’s first to use ‘Travel Services Aggregator’ technology and is now leading the industry in blockchain innovation.
Why The Webjet Share Price Could Soar
Webjet released a presentation to investors after the market had closed yesterday.
The travel agency business outlined two initiatives that could really help Webjet’s future profit
RezChain – Webjet’s Blockchain Solution
Webjet’s blockchain technology is called RezChain, which it believes will help reduce costs, improve efficiency and remove friction points for the customer check-in.
Management describe the settlement between hotel suppliers and travel partners as complex, time consuming and a costly process that uses multiple IT systems that create risks along the distribution chain. Apparently approximately 5% of hotel bookings are disputed at invoice time.
Webjet thinks Rezchain will allow both parties to verify bookings and will be notified if there are any discrepancies.
Thomas Cook is due to be connected to this later in 2019.
Umrah Holidays International
This business is being launched to be the first online B2B provider for religious pilgrimage.
Named after the pilgrimage to Mecca, Saudi Arabia, the business is aimed at Muslims. Saudi Arabia has a goal of 30 million annual religious visitors by 2030, the country’s plan includes improving visa procedures, integration of e-services and a range of new facilities.
A key difference about this business is that it offers simple e-service to facilitate planning, processing and issuance of visas for pilgrims.
By FY22 Umrah Holidays is expected to make a “meaningful” EBITDA contribution to WebBeds AMEA (click here to learn what EBITDA means), which would be useful to complement the rest of the fast-growing WebBeds business.
FY19 Guidance
Webjet confirmed that it is on track to deliver at least $120 million of EBITDA, excluding the DOTW acquisition costs.
I think Webjet looks like a fairly exciting idea at the current value. According to CommSec it is valued at 24 times financial year 2019’s estimated earnings.
I am cautious about what a recession might do to Webjet’s earnings, it might be better to invest in one of the proven and reliable ASX shares in the free report below.
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