Friday, June 24, 2022
The need to get out of the already too familiar space of the home, often with an office role, is added to the natural desire for novelty and routine release, with possibilities amplified by the savings made during the pandemic.
The result is a growing demand for travel, unequally distributed globally, despite price increases for both transport and accommodation, meals and services at the destination.
Regions largely detached from pandemic constraints, such as North America and Europe, are in contrast to Asia, where the impact of China’s restrictions is strongly felt.
The level of reservations is announced, in some desirable destinations, to be above that of 2019, although, in aggregate, the market is not seen to reach comparable levels until next year.
And recreational activities outside the home, “out-of-home entertainment” are again in high demand, both for locals and tourists, stimulating the travel market in both accommodation and transportation.
Participation in concerts, sporting events, theater and other shows exceeded expectations in Australia, where it is estimated (CommBank iQ) a value of 14% over 2019, with 35% increases for theme parks.
This, despite the inflation that “swallows” daily from the free allocations and the massive increase in the cost of fuel, which is seen in the price of tickets and transport in general, but also other services such as guided tours to destinations or tourist buses.
Even there is pressure on European railways, with rising energy and diesel costs, although not everyone decided to answer the same way.
In order to stimulate the use of public transport, Germany has reduced the monthly train, bus and subway pass to EUR 9 / month during the summer in an attempt to encourage public transport and reduce fuel consumption.
Compared to normal prices, the reduction reaches about 90%, depending on the city, the estimated cost being 2.5 billion Euros.
How did investors view the recent signals regarding the tourist season?
For Hilton Worldwide, profit has returned, and expectations are rising: after a loss of $ 0.72 billion in the starting year of the pandemic, the company turned a profit of $ 0.41 billion last year, and in Q2 is expected a gain of $ 1.04 / share from $ 0.71 in Q1.
Shares lost 7.8% this year, and 15.2% from the peak reached in April, but gained 23% from the pre-pandemic peak and 28% from January 2021, calculating until the close on Friday, June 3.
Marriott it also peaked in April at $ 195.9 / share. It fell by 10.8% from then until Friday, but is up 6.4% this year and about 14.1% above the pre-pandemic peak. From $ 1.25 / share in the first quarter, profit is estimated to increase to $ 1.54 / share in Q2.
An interesting situation is that of shares Airbnb. Listed at a much different rating from the initial one, in the midst of the sector’s suffering, a year and a half ago, Airbnb still managed to grow significantly, by more than a third, in the first part of its stock market.
Hopes for a quick reopening translated into investors in the chances that the agile and competing player in the new “sharing” economy would pick up the cream of reopening.
Although things seemed to stay that way for about two quarters, major changes did occur. Airbnb shares reached a high of $ 212.58 per share, but the course has been strong downward since then.
The uncertainty induced by the conflict in Ukraine, but also the decision to withdraw from the Chinese market pulled down the quotations, which are currently (at the close on Friday) by 33.2% below the level of April 5, and by 43.7 % below the peak in November.
For Booking Holdings, the local peak was in February, and the consistent declines: from a peak of $ 2,715 per share in February, it reached a low of 1,796 on March 8. The stock is now trading at $ 2,335 / share, a sharp return, but still at 14% highs.
Tourism in some regions has been the victim of the war in Ukraine, being affected by both reduced availability or even the ability to travel and higher costs.
The Russian authorities have told the population not to travel to Europe, but rather to go to Turkey, India, Sri Lanka.
According to data from Greece, only 1.1% of revenue came from there. However, Cyprus and even Turkey could be affected by the reduction in the number of tourists in the current geopolitical context.
From 4 million Russian tourists, the estimates of a tour operator association in Turkey reach 2 million this year, meaning lost revenues of 3-4 billion dollars. Cyprus could lose almost 290 million euros, a fifth of tourist income.
On the other hand, Asia suffers heavily from China’s restriction on international tourism.
For countries accustomed to a torrent of Chinese tourists, the situation is serious. Globally, travelers from China led the global top in 2019, with 154 million vacations abroad, compared to just under 100 million made by Americans.
In the Cambodia an attempt was made to stimulate domestic tourism to save the industry: 4.6 million domestic travelers used the services by April, 10 times more than foreign tourists.
In the Thailand, limitations, the cost of an access permit and the risk of being quarantined have severely hampered the return.
There are hopes of a return, some measures being eliminated and others would disappear, but the climb is steep: the level of visitors is at 25% in 2019, compared to 72% in Singapore and 65% in the Philippines.
In general, headlines in the hospitality and reservation services segment were poised to “take off” ahead of geopolitical, inflationary or restrictive shocks in China.
The return trend, supported by accumulated travel desires, has a chance to continue, but with huge regional differences.
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