Australia’s travel and tourism sector took a step back again yesterday with the latest round of border closures – this time to South Australia.

A fresh COVID-19 outbreak in South Australia led to four states and territories closing their borders to the Festival State.

This came after arguably the sector’s best hope in months with the Pfizer vaccine news. This was followed up further news overnight of a second vaccine candidate, this one by US manufacturer Moderna. It’s apparently over 90 per cent effective.

On top of this there was a commitment from all the states bar WA to open by Christmas, but inevitably, yesterday’s news has put that in jeopardy.

The last 48 hours has undoubtedly dented the confidence of the sector and travellers – but has it destroyed all hope for a solid Christmas?

 

‘It’s pretty disappointing’

Stockhead spoke to Simon Westaway, executive director at the Australian Tourism Industry Council yesterday afternoon.

He admits it has been quite an eventful few days for his industry with the vaccine news and South Australia border closures.

“There’s finally been, up until 24 hours ago, a lot of forward progress as the states were pretty focused collectively on getting their borders reopened using Christmas as the marker,” Westaway explained.

“And obviously Victoria’s had a strong few weeks and we are in a pretty good place.

“But now we’ve had the hotspot stuff which is another glaring issue that’s emerged. They couldn’t get agreement at national cabinet on this and you had the states going off doing what they tend to do – not uniform, obviously.

“It’s quite disappointing really. It’s not to be ignorant of the public health issue, but we’re not talking about a mega-cluster by any stretch – it may well grow bigger – but it’s pretty disappointing.”

He said alternative measures should be considered, including rapid testing.

 

Intrastate travel to dominate

Nevertheless, with border closures here to stay, Westaway reckons intrastate travel will dominate over the next coming months.

“I think you’re going to see people stay relatively close to home. Over the coming months as people have confidence to truly get out and get moving I think you’re going to see markets turn back on,” he said.

But will this be a complete transfer of the 11 million annual trips Australians take overseas?

“The answer is no they won’t because people travel overseas for a few reasons and some of those drivers won’t be there for people who translate that to intrastate travel,” Westaway said.

Westaway tipped several regions to do well but others may not.

“People out of Perth will go to Broome, people out of NSW to the South Coast or the Hunter Valley, Victorian the Mornington Peninsula, Great Ocean Road, some of the interland areas – you’ll see those regions do particularly well,” he predicted.

“The cities might suffer – that could be the irony of it all – people will head to the hills and not necessarily head to the bright lights of the city.

“So that could be the missing link in the intrastate travel [market] and that will have an effect on the numbers because people who stay and recreate in the city tend to spend more money.”

 

ASX stocks still down but some looking stronger

In the last 12 months ASX travel stocks are now only in the red by two per cent with many stocks recovering from their COVID-19 lows.

In the last week stocks gained 13 per cent since the Pfizer break through. Most stocks saw modest gains yesterday despite the border closures to South Australia.

Admittedly the biggest winner, travel agency Helloworld (ASX:HLO), only gained 3.48 per cent and trading only lasted 20 minutes due to technical issues at the ASX.

Here are the ASX’s travel and tourism stocks and their performance:

Swipe or scroll to reveal the full table. Click headings to sort.

Code Company Price %Mth %SixMth %Wk %Yr MktCap
ATL Apollo Tourism 0.355 39 25 48 -24 $65.1M
HLO Helloworld Travel Ltd 2.38 19 60 31 -45 $356.6M
DNA Donaco International 0.038 27 3 27 -54 $46.9M
IDZ Indoor Skydive Aust 0.017 13 325 21 70 $6.1M
WEB Webjet Limited 5.09 22 57 21 -40 $1.7B
EVT Event Hospitality 10.05 8 34 20 -23 $1.6B
CTD Corp Travel Limited 19.84 13 86 19 3 $2.6B
AQS Aquis Ent Ltd 0.026 -26 117 18 4 $928K
RCT Reef Casino Trust 2.17 20 10 17 -7 $104.5M
FLT Flight Centre Travel 16.08 12 55 15 -56 $3.1B
ENN Elanor Investors Grp 1.61 22 47 15 -27 $187.7M
QAN Qantas Airways 5.19 21 46 14 -25 $9.6B
EXP Experience Co Ltd 0.26 16 136 13 8 $144.1M
CWN Crown Resorts Ltd 9.55 7 5 8 -24 $6.4B
SGR The Star Ent Grp 3.8 9 45 8 -20 $3.5B
VRL Village Roadshow Ltd 2.4 10 23 5 -23 $478.6M
SLK Sealink Travel Grp 6.65 12 72 3 33 $1.4B
REX Regional Express 1.45 4 22 1 10 $159.4M
AQZ Alliance Aviation 3.42 -7 58 0 31 $552.0M
SVH Silver Heritage Grp 0.01 0 0 0 0 $12.6M
CYQ Cycliq Group Ltd 0.003 -14 200 0 200 $5.9M
BYI Beyond International 0.52 -1 -26 0 -44 $31.9M
EBG Eumundi Group Ltd 0.91 0 5 0 -5 $37.8M
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Some stocks have been able to thrive through COVID-19. One example is transport operator SeaLink Travel Group (ASX:SLK) which has been winning thanks to operating commuter ferry services.

Another is airline Regional Express (ASX:REX) which survived the onslaught thanks to government subsidies and is progressing plans to launch capital city flights next year.

Qantas (ASX:QAN) and Virgin Australia (ASX:VAH) are likewise ramping up flights but the latter stock will delist from the ASX once the Bain takeover is complete.

Qantas shares are still 25 per cent down on 12 months ago but have rallied significantly in recent weeks. As for Virgin, it suffered a plunge of 40 per cent in the March quarter until it entered voluntary administration.

Entertainment venue operators Experience Co (ASX:EX1) and Indoor Skydive (ASX:IDZ) have also seen a share price resurgence in recent weeks and are in positive territory compared to a year ago.

Travel agencies – including Helloworld (ASX:HLO), Flight Centre (ASX:FLT) and Webjet (ASX:WEB) – have continued to lag as confidence remains weak.

Curiously though, business travel focused  Corporate Travel Management (ASX:CTD) has made a recovery to its pre-COVID levels.

Casino operators, Crown (ASX:CWN), Reef Casino Trust (ASX:RCT), Aquis Entertainment (ASX:AQS), Star Entertainment Group (ASX:SGR) and SkyCity (ASX:SKC) are all in negative territory over 12 months – albeit to varying degrees.

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