Mortgage-free baby boomers helping pump up Skroo’s huge earnings boost

Flight Centre earnings  for the first quarter has tripled to $102 million as tourism starts a big recovery underpinned by cashed-up baby boomers and the view that travel was no longer discretionary.

Nov 15, 2023, updated Nov 15, 2023
The tourism recovery is well underway (Photo TEQ)

The tourism recovery is well underway (Photo TEQ)

Managing director and co-founder  Graham “Skroo” Turner said the company expected an underlying profit before tax of between $270 million and $310 million for the full year.

“The mid-point – $290 million – represents almost 175 per cent growth on full year 2023 and is broadly in line with current market consensus,” Turner said.

For the first quarter, the total transaction value, which includes all revenue for services sold through the business, was just $200 million below the record levels of four years ago. Revenue growth was up 38 per cent and managing director and co-founder Turner said revenue margins jumped to 11 per cent, a 160 basis point increase.

The biggest hurdle for the company now was airline capacity and competition and Turner said conditions were gradually improving although there was concern about the lack of seats between Australia and Europe through the Middle East.

He said international airline capacity was now at 90 per cent of pre-Covid levels and 88 per cent in Australia and some of the big airlines were expected to ramp up services in coming months.

Travel bargains were also returning.

“Despite interest rate hikes in some countries, travel demand remains fairly healthy with industry volumes generally up on the prior year but below historic highs, as expected, given we are still 12 months or so away from the anticipated timeframe for full recovery, ” Turner said.

“We believe the ongoing demand that we see reflects our leisure customer base’s leverage to demographics that are less affected by mortgage stress, specifically the luxury sector and baby boomers and a relatively widely-held customer view that travel is not discretionary – a priority product they are prepared to budget for and invest in every year.

“Travel’s resilience is further underlined by consistent year-on-year market growth pre-Covid. Downturns have been relatively rare, short-lived and, in some cases, they have been followed by sharp rebounds.”

Australian Bureau of Statistics data showed Queensland’s tourism recovery since Covid has led to 135,000 short term arrivals in September, a 55 per cent increase on last year and just 25,000 short of the same time in 2019.

The recovery has been led by tourists from New Zealand.

The number of Kiwis entering the state was now only about 600 short of the September 2019 level. Japan visitation was still well down, but the UK was recovering strongly as was South Korea.

The missing piece, China, remains 63 per cent below its 2019 level, but flights from the country have started in recent weeks and a trade mission this month, which coincided with the visit by Prime Minister Anthony Albanese, was aimed at netting more.

Brisbane Airports Corporation said 75 per cent of Queensland’s international visitors transited through Brisbane Airport so securing additional flights and capacity from China was important for tourism and hospitality businesses right across the State, not to mention our farmers and local businesses who export perishable and time sensitive goods via air freight.

Tourism and Events Queensland has also launched a new campaign in China under the theme of its ‘A Beautiful Way to Be’.

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Before Covid, China was Queensland’s number one international tourism market, welcoming 497,000 visitors who spent $1.6 billion. By 2032 it is predicted Chinese visitation will deliver $2.9 billion.

The launch of the new brand platform will be supported by three campaigns with travel partners in Northern China, three in Eastern China and five in Southern and Western China starting this month.

A ‘Queensland is Calling’ industry mission, led by TEQ, will visit China in March 2024.

The ABS data showed the national recovery had also been strong with visitor numbers 110,000 short of the September 2019 level. Once again, New Zealand visitors were leading the way.

Analysis of travel routes within Australia has also found that the strength of the mining industry was delivering benefits for travel, particularly to regional Queensland.

Corporate Traveller found that the Brisbane to Mackay route had a 69 per cent increase in bookings, the Brisbane to Emerald route was up 39 per cent and Brisbane to Moranbah was up 22 per cent. Nine of the top 10 regional business routes were in Queensland.

The company’s managing director Tom Walley said these routes would continue to grow along with growth in the mining and renewable sector.

He said there were several reasons behind Queensland’s prominence as a regional business travel hub.

“Queensland boasts a wide range of economic activities, including a thriving mining sector and booming tourism industry. The State’s mining industry alone creates 50,000 jobs. Queensland is also the world’s largest supplier of silver,” he said.


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