Serko says it will be slow-going for business travel post-COVID-19

Travel booking & expense management software stock Serko (ASX:SKO) believes it’s going to take some time for business travel post-COVID to pick up.

The New Zealand-headquartered company was, like all other stocks in the travel sector, decimated by COVID-19.

This morning it released its full-year results for the New Zealand financial year. Because this period is April 1 to March 31 there was minimal impact from COVID-19.

Serko’s peak annualised transactional monthly revenue was $27.5m in February and bookings grew 2 per cent from the previous year.

But the pandemic hit the company in March, causing a sharp decline in revenues. While it raised $45m in late 2019 to fund expansion, this money will now help it survive with minimal downsizing.

“This has allowed us to maintain our operating capacity and retain our key people to best position Serko when travel volumes recover,” chair Claudia Batten said.

Victoria’s COVID-19 surge a problem

Serko maintained that the long-term outlook remained rosy. It noted its key markets, the Australian and New Zealand domestic and trans-Tasman markets, were primed to recover first.

But the company admitted it would be a slow road to recovery, with the proposed Trans-Tasman bubble delayed by Victoria’s outbreak.

Even in COVID-free New Zealand, domestic bookings in June are only a quarter of what they were last June.

Serko anticipates these markets will be 40-70 per cent of pre-COVID levels by March 2021 but could not put a number on possible revenues.

The slower uptick in business travel is likely to be due to more cautious travellers, according to Serko. But the company reckons it is up to the challenge of catering for business travel post-COVID.

“We are seeing greater cost management by corporations and a focus on traveller wellbeing, duty of care obligations and change management,” said Batten and CEO Darrin Grafton in the company’s annual report.

“We are actively assessing changes in corporate and traveller needs to ensure that we can support the market, our customers and our growth as the industry recovers.”

Shares plunged from over $5 to under $1 in the March quarter. Although it has clawed back up to just under $3, shares slid 4 per cent this morning.