Web Travel Group (ASX: WEB) experienced a significant drop of 29.5% last Friday, following an announcement regarding a Spanish tax audit that raised concerns among investors. This event has drawn comparisons to the challenges faced by Corporate Travel (ASX: CTD), whose shares have been suspended since August due to investigations uncovering serious issues in its UK and European operations, including incorrect revenue recognition and overcharging clients.
While the term “audit” can be alarming, there are several reasons to believe that the market’s reaction was overly cautious. Spain is not a major region for Web Travel Group, and the company has never reported it as a standalone entity. The firm operates two subsidiaries in Spain—Busy Bee SL and Sunhotels Mundo—compared to around 10 subsidiaries in Europe and the UK.
In the company’s first-half FY26 results presentation, Web Travel Group highlighted its strategy to achieve equal transaction volume from its top three regions: Americas, Europe, and APAC. This indicates a balanced approach to growth across different markets.
Analysts have generally viewed the potential financial impact of the audit as minimal. This perspective was reinforced by a subsequent trading update that reaffirmed the company’s FY26 guidance. Additionally, early insights into FY27 were presented, showing double-digit bookings growth and stable TTV margins.
Despite the uncertainty, most brokers assessed the scope of the audit as relatively minor, especially when compared to other regions where the company operates. Here are some key insights from major brokers:
JPMorgan maintained its Overweight rating with a target price of $6.00, unchanged. They view the audit as uncertain but limited in detail, with the reaffirmation of FY26 guidance supporting confidence in continued TTV growth despite margin pressures and an undemanding valuation.
Jarden also kept its Overweight rating but lowered its target from $5.90 to $5.70. It sees the audit as immaterial based on available data, noting that trading is tracking medium-term targets and that ongoing confidence in margin expansion is driven by strong conversion rates and AI tools.
Ord Minnett maintained its Buy rating, lowering the target from $7.00 to $6.16. It emphasizes that the audit is unlikely to impact group earnings, highlighting the resilience in FY26 EBITDA guidance and a positive outlook for FY27 growth and market share gains.
UBS noted that Web Travel Group undergoes regular tax reviews and audits, with three separate tax audits since the second half of 2025. Their analysis of Sunhotels suggests cumulative revenue of approximately €80 million (~A$130m) over a 3.5-year period. UBS believes this entity likely includes revenue derived outside of Spain, and even applying a 21% tax rate would result in a relatively small amount, especially considering the more than $400m loss in market capitalization on Friday.
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