Webjet expects pre-tax earnings to rise 17 per cent this year although it has cautioned that the domestic leisure travel market will remain flat in the second half.
The weakness in the local market is reflected in the price of air fares, which Webjet estimates have risen only 1 per cent over the last four months despite an end to the capacity war between Qantas and Virgin Australia.
The online travel company, which has expanded into hotel and car-hire bookings, has forecast pre-tax earnings of $27 million this financial year, compared with $23 million previously. The guidance includes $1 million in costs from the acquisition of SunHotels in Europe.
Despite a weak domestic leisure market, the company said flight bookings over the last four months had risen by more than 10 per cent compared with the same period last year. It has also reported record total transaction value – the price at which goods and services are sold – for the first four months of 2014-15.
Webjet managing director John Guscic said he expected the domestic travel market, from which it generates the bulk of its earnings, to remain flat for the rest of this financial year.
"There is nothing that we can see coming down the pipe that is going to stimulate demand to get people to travel at a greater rate than they have historically," he said after Webjet's annual meeting on Wednesday.
"You would have thought there would be more of a price increase [in domestic fares] but there hasn't been in the mix of business that we have done. There is still excess capacity in the market."
Earlier this month Virgin Australia chief executive John Borghetti emphasised that consumer confidence generally remained subdued, particularly demand from leisure travellers.
While the domestic market was weak, Mr Guscic said Australians were still travelling overseas in record numbers, despite a weaker Australian dollar making their holidays more expensive.
Webjet director Don Clarke also suffered a protest vote against his re-election at the annual meeting in Melbourne after proxy advisers such as ISS urged a no-vote because of a lack of independent directors on the board, and the fact that he was a partner in a law firm which provided services to the company during the year. About 24 per cent of votes were cast against his re-election.
The company's operations include Zuji brands in Australia, Hong Kong and Singapore, which it bought for $US25 million in late 2012 in what has been its biggest foray into Asia's booming travel market.
Mr Guscic said Webjet intended to expand its businesses in Asia via acquisitions over the next two to three years, targeting companies of a similar size and ilk to SunHotels.
The travel company has attempted to reduce its exposure to air travel in recent years by expanding into hotel, car hire and insurance bookings.
Booking fees as a percentage of Webjet's revenues have continued to fall. Last financial year, Webjet made 29 per cent of revenue from booking commissions, down from 59 per cent three years ago.
Webjet expects its Zuji operations to break even this financial year, while it is counting on a $5 million pre-tax contribution from its business-travel focused operations.
The company is targeting annual growth in pre-tax earnings from its consumer travel business over the next five years, and 20 per cent from its SunHotels and Dubai-based Lots of Hotels units which are focused on business travel.
Shares in Webjet fell 2 cents to $3.11 late on Wednesday.
