Helloworld Travel (ASX:HLO): Looking to make more money from less people than less money from more people

Helloworld Travel (ASX:HLO) is one of the smaller travel stocks on the ASX, capped at over $200m. Its last two results (FY24 and 1H25) were negatively received, but FY25 might be different if reaction to the updated EBITDA guidance is anything to go by.

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Overview of Helloworld Travel

Helloworld is best known as a travel agency and indeed it is with its own branded outlets but also offering holiday packages too. It was founded in 2013 following a consolidation of several legacy brands including Harvey World Travel, Travelscene, Jetset and Travelworld.

The AOT Group (then a stand-alone safari operator) came in 2016 as did a name change to Helloworld as well as the hiring of Andrew Burnes as CEO – he had been the founder and CEO of AOT and ‘came with the package’, as did his wife Cinzia who had founded Australian Travel Bureau in 1982 but eventually shifted to AOT.

The pandemic wiped out demand resulting in the need for it to stand down many workers, raise $50m to stay afloat and certain individual outlets wound down. Demand came back and shares recovered, but didn’t quite reach pre-COVID levels. Then shares fell after its FY24 and 1H25 results.

It is easy to put the former down to profit taking, but 1H25 saw declines in TTV (Total Transaction Volume), revenue and underlying EBITDA. This downturn was attributed to a challenging fiscal environment in Australia, including cost of living increases impacting leisure travel demand and lower airfares.

The ASX saw a need to issue the company a query letter, asking the company if it knew earlier and should have given investors guidance earlier. The company claimed not to have been aware until shortly before the results were released and also pointed out that despite implicit surprise by investors, prior earnings would not be a reliable indicator of future performance.

The future: More money from less people

Helloworld is set to report FY25 results at the end of August. Investors responded positively because it upgraded its underlying EBITDA guidance. It guided to $56-62m, then downgraded it to $52-56m, but upgraded it to $58-62m whilst warning the final figure would be subject to audit.

The company told investors that TTV had declined due to marginally lower customer numbers and changes in destinations from higher spending long-haul trips (i.e. Europe) to cheaper destinations like Japan, Bali, Thailand and Fiji.

But on the flip side, the company reported margins improved slightly, a gain on the revaluation of the company’s Webjet (ASX:WJL) shares would be recorded, and the company’s cruise sales and Ready Rooms business was going well – the latter was up 110% on the prior corresponding period. It claimed that forward bookings for the rest of 2025 and 2026 were strong.

The situation facing Helloworld and its peers

Helloworld appears to be stuck in the same situation that many of its peers are in. That the revenge travel boom is over and people are being more ‘cost-conscious’. Well, except retirees and high net worth individuals. So many companies in the sector have decided it is better to make more money from less people than less money from more people and investors have too.

Flight Centre is one company to have responded, buying Scott Dunn in 2023 and Cruise Club UK in 2024. Qantas has been going premium-heavy in its new long-haul aircraft, first the 787s and soon the A350s. The challenge for Helloworld will be how it can differentiate itself in a highly competitive market and seek out more affluent consumers.

Conclusion

The travel sector is a highly competitive space and there is little to distinguish various companies other than branding. This is a challenge for Helloworld, but also an opportunity…and we might here more in the months ahead.