The Corporate Travel Management Ltd (ASX: CTD) share price has jumped 10% after the ASX travel share revealed a big UK contract win.
Corporate Travel Management is one of the world’s largest business travel businesses.
UK contract win
Corporate Travel Management announced that it has been awarded the Bridging Accommodation & Travel Services contract by the UK Home Office.
Home Office has estimated this contract to be worth around A$3 billion of total transaction value (TTV) starting 1 March 2023 for two years, with the ability of a one-year extension in line with ongoing demand requirements.
Corporate Travel said that this work involves “highly complex services and logistic support” that will be delivered by an already-established dedicated team within Corporate Travel Management that has “both the experience and specialised knowledge to support this week.”
This region is already Corporate Travel Management’s strongest contributor to the ASX travel share’s financial results, and as a result this contract will “have a significant impact on the further growth” of its European operations in FY24 and beyond.
My thoughts on the Corporate Travel Management share price
I think this is a very promising update. It’s a huge win and gives the business more prestige to bid for other large contracts.
This is the type of business where adding more scale (TTV) is very helpful for profit margins because it’s utilising the same internal business structure. I think this can really benefit Corporate Travel Management’s net profit after tax (NPAT).
Scale adds benefits for both the company’s financials and for customers. So, I can definitely understand why the Corporate Travel Management share price has soared 10% in response to this news.
I’d rate Corporate Travel shares a buy because of the strengthening of its market position and rising profit margins. A bonus could be the growing dividend as its profit continues to climb.