The Flight Centre Travel Group (ASX: FLT) share price is in focus after it announced plans for expansion in Japan.
Flight Centre and Japan
Flight Centre said that it plans to launch its FCM travel management business in Japan via a joint venture with Tokyo based business NSF Engagement Corporation.
The company said that this is a significant addition to the global FCM network, with Japan being the world’s fourth largest corporate travel market.
Flight Centre’s FCM Travel
Flight Centre’s corporate travel arm FCM has a presence in 97 countries.
Management said FCM had strong growth before COVID-19, with “significant investment” made during the pandemic towards optimising travel programs and technology focusing on traveller experience. The company hopes that the significant investment will fast track recovery and drive future organic growth.
Flight Centre thinks it’s doing well with new corporate customer wins, it mentioned that it has secured corporate business accounts that were spending $US1.4 billion annually before COVID-19.
FCM Japan will operate from January 2022 with a newly formed Japan board of directors.
Management comments
Flight Centre Managing Director Graham Turner said: “Japan is a key corporate market because of its size and importance within the global economy as a business hub for multi-national companies.
“By securing an equity position in this crucial market, we will enhance our ability to win new local, regional and multi-national accounts, while also gaining greater control over and enhancing the service we provide to our existing customers with operations in Japan.”
Final thoughts on the Flight Centre share price
At the time of writing the Flight Centre share price is virtually flat in response to the news of the Japan expansion.
In the northern hemisphere there seems to be a strong return of demand in regional travel, so it’s potentially not too far away for the rest of the world too. The Flight Centre share price looks expensive for the current level of profit, however that expected return of travel seemingly could justify the current price.
In the ASX travel share world, Webjet Limited (ASX: WEB) is my preferred option because it’s entirely online and could benefit from stronger economies of scale.
