Finally… after 24 months Australia is about to welcome international tourists back as we reopen our borders in two weeks time.

Following a briefing by the national security committee, PM Scott Morrison made the decision on Monday to allow fully vaccinated tourists to travel to Australia starting on February 21.

Whilst fully vaccinated people do not need to quarantine, unvaccinated travellers (like Novak Djokovic) would still need to apply for an exemption to come to Australia.  They also have to undergo hotel quarantine even if they were granted permission to enter the country.

The PM said he won’t change the definition of ‘fully vaccinated’, which will still refer to two jabs (instead of three) under the entry requirements.

“I know the tourism industry will be looking forward to that, and over the next two weeks they’ll get the opportunity both for visitors to be coming and for them to be gearing up to welcome international visitors back to Australia,” the PM told reporters.

Investors gave the decision a big thumbs up, sending most ASX-listed travel stocks surging on Monday.

Top ASX travel stocks

Code Company Price %1 Day %Yr MktCap
DNA Donaco International 0.043 13.2% -29.5% $46,944,797
HLO Helloworld Travl Ltd 2.6 13.0% 17.6% $356,564,044
REX Regional Express 1.375 12.7% -26.1% $134,388,338
FLT Flight Centre Travel 19.07 8.5% 29.6% $3,507,107,289
CTD Corp Travel Limited 22.14 7.6% 23.1% $2,914,523,301
EXP Experience Co Ltd 0.34 6.3% 77.8% $240,727,279
WEB Webjet Limited 5.5 6.0% 10.2% $1,974,845,961
CYQ Cycliq Group Ltd 0.018 5.9% -35.3% $5,907,783
QAN Qantas Airways 5.475 5.5% 16.2% $9,788,571,983
ENN Elanor Investors Grp 2.16 3.3% 39.4% $254,804,072
ALO Alloggio Group 0.16 3.2% N/A $16,250,200
SKO Serko 4.98 3.1% -6.0% $579,216,484
AQZ Alliance Aviation 3.84 2.1% -10.5% $604,362,461
EVT Event Hospitality 14.17 1.5% 39.2% $2,250,289,473
SGR The Star Ent Grp 3.6 1.4% -3.7% $3,379,650,446
AIZ Air New Zealand 1.485 1.0% -2.3% $1,650,581,014
CWN Crown Resorts Ltd 12.575 0.8% 28.6% $8,444,163,639
SKC Skycity Ent Grp Ltd 2.76 0.7% -2.8% $2,082,962,273
KLS Kelsian Group Ltd 7.17 0.0% 13.3% $1,565,921,174
BYI Beyond International 0.6 0.0% 20.0% $36,802,181
EBG Eumundi Group Ltd 1.05 0.0% 16.7% $43,620,500
RCT Reef Casino Trust 2.77 0.0% 18.9% $135,899,070
SYD SYD Airport 8.705 -0.1% 51.4% $23,505,679,204
ATL Apollo Tourism 0.51 -1.0% 45.7% $95,867,718
XRG Xreality Group Ltd 0.073 -1.4% 421.4% $24,915,807
AQS Aquis Ent Ltd 0.155 -6.1% 355.9% $5,893,664

 

Back in business

As of February 21, our borders will have been closed to international tourists for 704 days.

Prior to the pandemic, tourism was Australia’s fourth largest export industry, contributing $45 billion in  export income each year.

The executive chair of Australian Chamber-Tourism, John Hart, said the closure has so far cost billions of dollars in tourism revenues.

“Every month of delay is costing the economy $3.75 billion, and the reopening of our borders is long overdue,” Hart said.

“Businesses that are primarily reliant on international tourist arrivals have been savaged by border closures over the past two years.

“Most operations have recorded more than a 60 per cent fall in turnover, while many have mothballed their operations entirely.”

Hart acknowledged there will be a lag between the reopening of the international borders, and when international visitors actually come to Australia.

Senior analyst at Forager Funds Management, Alex Shevelev, agreed the recovery will be gradual, but said the industry will be hoping the initial trickle of tourists will be followed by a torrent of arrivals.

“Importantly, many operators have lowered their cost bases and will be more profitable when arrivals approach pre-COVID levels,” Shevelev said.

On the ASX, the travel sector is not all about airlines, but includes travel-adjacent categories ranging from adventure tour providers to casinos and consumer products.

Could adventure stocks rebound?

A new survey shows that many Aussies are looking to quench their thirst for excitement and adventure in 2022, after two years of social restrictions.

The survey showed that more than a third of Australians (or 35%) intend to try an adventure activity this year.

Shevelev said the return of international tourists will boost this sector further.

“These companies have struggled through the COVID travel decimation for two years while working to improve their businesses. When tourists return they will be well positioned to finally benefit,” Shevelev said.

Stocks in the adventure sector include XReality Group (ASX:XRG), which has surged by 6x in the last six months.

Formerly known as Indoor Skydive Australia, XRG operates indoor skydiving facilities across Australia.

Since rebranding to XRG however, the company has turned its focus on virtual reality (VR) and metaverse experiences including FREAK, an entertainment venue that allow players to walk around an open arena while exploring a parallel universe.

Experience Co (ASX:EXP) is another company that offers skydiving, while also offering deep ocean diving and rainforest tours at the Great Barrier Reef.

Started in 1999, the company now manages 12 outdoor skydiving drop zones, as well as the recently acquired Trees Adventure, Australia’s leading operator of aerial adventure.

Apollo Tourism (ASX:ATL) is focused on manufacturing, rental, sales and distribution of a range of RV (recreational vehicles) including motorhomes, campervans and caravans.

In December, the company announced a plan to merge with NZ-listed Tourism Holdings (NZX:THL) to establish a diversified global travel company.

 

Are airlines and travel agencies poised for a rally?

Last year, Qantas (ASX:QAN) said it will operate at 50% to 70% of pre-pandemic level for international travellers until June this year, but yesterday’s reopening news could revise that guidance upwards.

Investors are however still betting on a surer thing – Qantas’ ability to service the domestic market – with some predicting it will surpass pre-Covid levels for domestic flights this year.

Regional airlines play Regional Express (ASX:REX) focuses on the lucrative domestic network.

Rex’s long stated goal is to service the “golden triangle”, one of the busiest routes in the world that connects Sydney-Melbourne-Brisbane.

The company reached that goal in December after launching double-daily flights between Melbourne and Brisbane, and between Sydney and Brisbane.

While waiting for international flights to restart, Webjet’s (ASX:WEB) B2B segement WebBeds has been making a profit.

WebBeds is a B2B travel intermediary or “bedbank, providing accommodation and ground services to the travel industry”.

Flight Centre’s (ASX:FLT) strong omni-channel presence of physical shops, e-commerce, call centres, and its B2B segment has spared the business from the worst of the pandemic.

Last year, the company was operating at 40% of pre-COVID levels in its corporate travel segment, and at 60% in the leisure segment.

Its strategic expansion to enter Japan’s corporate market is expected to benefit greatly from the reopening, diversifying FLT’s revenue sources into the lucrative area.

Difficult operating conditions over the last 18 months have forced Helloworld Travel (ASX:HLO) to divest some of its assets.

In December, the company announced a deal to sell its corporate and entertainment travel businesses in Australia and New Zealand to Corporate Travel Management (ASX:CTD) for $175 million.

Could embattled casino groups rise?

International tourists could boost this troubled industry.

Crown Resorts (ASX:CWN) has indicated it was likely to accept the latest takeover bid it received from Blackstone.

The latest offer valued CWN at around $8.9 billion, approximately $400 million more than Blackstone’s previous bid.

Crown had earlier faced a ban in Victoria, with the state’s Royal Commission determining that it engaged in “illegal, dishonest, unethical and exploitative” conduct at its Melbourne casino and hotel.

Meanwhile, Star Entertainment Group (ASX:SRG) has just forecast a net loss of $73-75 million for the first quarter.

The embattled casino group, which is facing regulator reviews in NSW and Qld, is also facing accusations that it underpaid wages to certain existing and former employees.

Daigous to make a comeback?

A handful of companies are hoping the reopening will attract the arrival of Chinese international students, who could kick-start the daigou sales channel once again.

Daigou, literally ‘surrogate shopping’ in Mandarin, is where an individual in Australia purchases commodities like infant milk formulas from retailers, and sends them to China at a hefty markup.

A2 Milk (ASX:A2M), one of the biggest beneficiaries of the daigou sales channel, could benefit from this.

The A2M stock price has taken a 50% tumble in the last 12 months, as China sales channel dried up along with a falling birth rate in the country.

Bubs Australia (ASX:BUB) and Blackmores (ASX:BKL) are also some of the other stocks that could benefit from the coming of international students.