It’s profit forecast downgrade season.
This week another two travel companies joined the ever-increasing party of businesses attributing economic uncertainty due to tariffs, and more generally the US, as the reason they believe results will be softer than initially expected.
On Wednesday I reported in Travel Daily on Amex GBT’s downgrade, where it very politically correctly pointed the finger at the “uncertain economic environment” rather than just saying it was old mate Trump, his tariffs, and seemingly random behaviour.
When Thursday came around, Travel Daily editor Adam Bishop punted a breaker out the door after Helloworld announced a similar downgrade. Like Amex GBT, it too was uncertain about the future.
“Given the inherent market volatility and economic uncertainty over the second half of FY25, HLO now expects to achieve UEBITDA of between $52 million and $56 million, subject to no material adverse change in operating conditions over the remainder of the financial year,” it stated.
That was a drop from between $56 million and $62 million which it had forecast on 26 Feb and, at the time, was apparently tracking at the mid-point of the range.
Amex GBT and HLO joined CTM and FCTG which had already downgraded forecasts, as we had reported.
CTM pointed to “uncertainty” and went so far as to out the tariffs for its 4% softer forecasts, while FCTG, surprise, also mentioned “uncertainty”, but again was a little edgier by outing the US, saying it was “volatility brought about by uncertain (cyclical) trading conditions, including the recent changes to United States trade and entry policies”.
Now, before we go all alarmist on your Saturday morning, let’s put some context around this. Most of the downgrades have been slight, and some, like FCTG, are downgrading while still likely to achieve record TTV.
One senior voice on the supplier side even suggested to me that in some cases (not all), these “downgrades” were more a case of companies tracking in the low-mid range of their “spirited” forecasts and seeing an opportunity to score an easy goal, while taking the pressure off by suggesting it was due to all this “uncertainty”, as opposed to overzealous forecasting.
So, where do we really sit as an industry? And are all these downgrades actually pointing to a bigger issue, or is there context here that suggests otherwise?
From what I gather, it doesn’t seem like the travel industry world is about to end.
There are a few factors that point to the situation being less dire than what certain headlines would suggest (of course, I’m not talking about Travel Daily and Cruise Weekly headlines – they are always balanced). Here are three:
Firstly, advertising spend is a good way of figuring out whether a business believes there is opportunity in the market. If there is spend, there is opportunity out there.
One of the oracles of the advertising industry, Pearman’s Steve Allen, shared with me stats pointing to buoyancy in the travel marketing sector early in the year.
“The travel category commenced this year with a bang, well above the previous trend, up 25% in January,” he told me.
“February was just above last year – strong never-the-less, but apparent exuberance on the wane. Seemingly caution was already creeping in.”
He admitted that since then, spend has shifted in the wrong direction, as Trump entered office, but more than that, predicted soft advertising spend results in April and May (which we don’t have as yet) would be, more than anything else, down to the uncertainty that a federal election created.
An election period is always a bad time to advertise – you will be drowned out by political messages and consumers aren’t receptive to much else. But that is normal.
Allen believes the spark will reignite, with Australians still wanting to travel, brands still believing they can increase their share of the consumer’s wallet by advertising, and next week’s predicted RBA cash rate cut re-sparking the industry.
The second reason is redundancies – or lack of them. Speaking to another senior industry exec on the supply side, they shared that quite often, with downgrades come redundancies, and often large groups of them.
While they suggested that businesses often move too quickly to kill budgets and cut overheads when there are downgrades on forecasted profit, they noted that these recent downgrades from various business had not come with any mention of significant redundancies.
FCTG noted on Wednesday there would be a hiring freeze, but that feels like a glass-half-full move.
Again, it’s important to note that many are still on track for solid, if not record-breaking years – just not at the original forecasted level.
Finally, there is the idea that the success of the travel industry is more aligned to the health of equity markets than anything else.
This can be challenged, but on a base level, if the markets are healthy, people will travel, for both business and pleasure. It could be heavily argued that this is more aligned to luxury travel, but it’s worth mentioning here anyway.
None of the NASDAQ, ASX or FTSE are particularly challenged at the moment. All are up for the year, all had their somewhat alarming blip in early April, all have now recovered.
Mapped to the theory that the fortunes of the industry are closely aligned to the equity markets, you could argue that the blip, which came before the aforementioned four downgrades, did indeed have a bearing.
But if we take off the theory hat (or conspiracy theory hat – whichever way you look at it) and just hone back in on the thoughts of the industry, this note provided to me on background about one particular business, is important.
“There has been no great debate in our business as to whether or not the US is a problem. I get that some people might be put off, but statistically, our cancellation figure is less now than what it was this time in 2024.
“Business isn’t easy but it’s still healthy, and the outlook is positive. We could be looking at multiple rate cuts and an AUD that heads relatively quickly towards the US70c mark. That would kill a lot of the uncertainty.”
The rest of the week…
Moving on from downgrades, there was plenty of other news that made its way onto the pages of Travel Daily and Cruise Weekly this week.
MG Bedbank has announced it will offer its services to Australian travel agents for the first time.
Southeast Asia’s largest bedbank said it would bring an “unmatched portfolio” of more than 350,000 hotels to the market, including highly sought-after properties in popular destinations like Bali, Singapore, Bangkok, and Phuket.
Meanwhile, arguably the biggest news of the week in cruising was Trafalgar expanding into river cruising, with The Travel Corporation (TTC) brand to set sail in Europe next year.
It will launch in Europe with two itineraries along the Rhine and Danube launching in spring 2026.
Staying with cruising, Carnival Cruise Line Vice President Sales & Marketing Kara Glamore will be leaving the business.
A global review of Carnival’s sales and marketing team has seen Glamore’s role made redundant. Her final day will be 01 June.
Glamore led Carnival’s Australian team from her ascension to her role in July 2021 through to the integration of P&O Cruises Australia into CCL earlier this year.
It’s also worth a mention that Cruise360 2025 may not have taken place yet, but Cruise360 2026 has already been confirmed to take place in Sydney on 17-18 Sept. Mark it in your cals.
And finally, global travel aggregator TPConnects Technologies revealed a tenfold increase in Qantas NDC bookings via its Iris platform over the last six months.
The majority FCTG-owned tech firm suggested the numbers represent a “clear signal” that there is a growing demand for modern airline retailing among advisors.
Glass more than half full, it turns out.
That’s it for the week. If you’re in Sydney like us, rug up, it’s going to be a chilly one.
Damian Francis
Editorial Director
