The Webjet Limited (ASX: WEB) share price could be on the move on Tuesday after the online travel agent introduced Rezchain and Rezpayments at an Ord Minnett investor session.
What are Rezchain and Rezpayments?
Rezchain and Rezpayments are expected to be key drivers for delivering scale benefits for Webjet.
The presentation explains that the blockchain-based Rezchain technology is a time-stamped series of immutable records of data that is managed by a cluster of independent computers not owned by any single identity in a peer to peer network.
One of the problems it is expected to solve is the settlement between hotel suppliers and travel partners. This is a complex, time consuming, and costly process which often leads to a painful reconciliation process and high risk of error.
As a result, significant financial exposure and heavy resourcing requirements are all known, accepted risks, and costs across the current distribution chain.
Rezchain is a simple solution designed to allow any two parties to verify that booking data matches and parties are notified if any discrepancies exist that could lead to a dispute.
To test the technology Webjet looked at 40 randomly selected “in-dispute” bookings. A total of 11 hours of labour was required to investigate these bookings, with 70% of them resulting in a hard loss.
However, had the Rezchain technology been used to flag these discrepancies before travel/invoice, the company found that 90% of these losses could have been avoided.
Pleasingly, the technology is in use on the company’s WebBeds B2B platform and is delivering against the company’s expectations. This has reduced costs and is allowing the company to offer a competitive service advantage.
As a result, the company believes it will be an integral component in its move from its “8/5/3” structure to an “8/4/4”. This refers to its target of 8% revenue/TTV, 4% costs/TTV, and 4% EBITDA/TTV.
Rezpayments is the company’s in-house Payment Card Industry (PCI) compliance solution. All companies that accept credit card payments are required to comply with the PCI Data Security Standard.
The release explains that it reduces scope of risk impact in its overall environment by isolating the company’s impacted environment for PCI compliance testing, ensuring it has control while keeping its core systems completely free of credit card data.
Management took this opportunity to reconfirm its FY 2019 guidance. This means Webjet is on track to deliver at least $120 million EBITDA (excluding one-offs associated with the acquisition of DOTW), including all start-up costs associated with Umrah Holidays International.
This positive guidance is one of the reasons that Webjet’s shares have been strong performers in 2019, rising over 34% since the start of the year.
Things haven’t been quite as positive for industry peers Corporate Travel Management Ltd (ASX: CTD) and Flight Centre Travel Group Ltd (ASX: FLT). These two travel shares are up 6% and down 4%, respectively, this year.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management Limited, Flight Centre Travel Group Limited, and Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019