Web Travel Group (ASX: WEB) hosted a conference call with the investment community on Feb. 9, 2026. It was held in response to the 30% stock price slump on Feb. 6, 2026, when the company announced that the Spanish Tax Agency had commenced an audit of one of its Spanish subsidiaries.

Why it matters: Management appears genuinely dumbfounded by the savage market reaction to the Spanish audit announcement. It repeatedly stressed that nothing fundamental has changed, with current earnings guidance, future earnings power, and the entire business model fully intact.

  • In fact, operating performance is tracking to our fiscal 2026 (ending March 2026) EBITDA projection of $150 million despite USD and euro headwinds. Early signs for fiscal 2027 indicate market-share gains and steady revenue/total transaction volumes of 6.5% to continue.
  • Management seems almost offended that the market is drawing a comparison between the audit of its one Spanish subsidiary and the crisis facing Corporate Travel Management, whose shares have been suspended since August 2025 due to accounting irregularities and customer overcharging.

The bottom line: We reinstate our $6 fair value estimate on Web Travel, and see no fundamental basis to change our earnings forecasts. An adverse outcome from the Spanish audit is possible, but the potential quantum of liability is a mystery to even management at this stage.

  • For sensitivity purposes, every AUD 100 million net tax liability/penalty would reduce our intrinsic assessment by 5% or around AUD 0.30 per share. Unlike the Corporate Travel Management situation, there are no customer charging/trust issues to affect future earnings power.
  • As such, we see shares in no-moat-rated Web Travel as very undervalued. Even if we assume $300 million of liability from the audit, shares would still be worth around $5.00 versus the current price of $3.51. We understand investors’ unforgiving mood, but the current discount is excessive.

Reinstating Web Travel’s Fair Value Estimate

Web Travel Group demerged its B2C units in September 2024, and is now a pure global online B2B accommodation bookings provider.

Web Travel Group’s sole operating business is its B2B booking platform, WebBeds. The business contracts supply from independent hotels, chains and third-party providers, aggregates and supplies the inventory to travel retailers. The business allows smaller hotels to increase distribution channels. For travel intermediaries, WebBeds increases the available inventory for end customers.

The B2B accommodation market is estimated to be $70 billion, when measured by total transaction volume, or TTV. Around 80% of this market is made up of independent hotels, representing a significant target market of suppliers lacking the distribution and marketing resources to maintain limited vacancies without the use of a B2B distributor.

Web Travel Group’s key objective is to grow market share, through leveraging scale and technology, to be one of the lowest cost travel providers. Since inception in 1998, Webjet has completed six acquisitions. Acquisitions within the B2B sector allow Web Travel Group’s WebBeds to quickly increase scale and inventory through access to new hotel contracts. In turn, the company can expand its customer base.

This strategy has proven successful to date, with the most recent purchases of Jacktravel in 2017 for $330 million and Destinations of the World in 2018 for $240 million significantly boosting WebBeds’ B2B TTV. Unfortunately, this has concealed organic growth, the rate of which is difficult to ascertain given the highly competitive and cyclical nature of the industry.

On Feb. 6, 2026, Web Travel announced that the Spanish Tax Agency has commenced an audit of its Spanish subsidiary. Management is silent on what triggered the audit, the quantum of taxes being scrutinized, and the scope of the audit. On a risk-weighted basis, we do not believe the potential cost is likely to be material to our fair value estimate. For sensitivity purposes, every $100 million net tax liability/penalty would reduce our intrinsic assessment by 5% or around $0.30 per share.

Bulls say

  • Investments made to increase the technological capabilities of the group generate scalability benefits as travel activities return to prepandemic numbers.
  • Growth potential is significant as WebBeds is currently the world’s second-largest B2B accommodation booking provider, but with only a 4% market share of the fragmented $70 billion global B2B accommodation market.

Bears say

  • Travel conditions are likely to remain volatile due to uncertain economic conditions.
  • Travel suppliers may increasingly leverage their own technological capabilities to engage in direct bookings with customers.
  • On Feb. 6, 2026, Web Travel announced that the Spanish Tax Agency has commenced an audit of its Spanish subsidiary. There is uncertainty to the potential outcome.

Get Morningstar insights in your inbox

Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.