The travel sector has been disproportionately impacted by the pandemic. With global border closures and the disastrous health impacts of COVID-19 still present, it’s hard to foresee a future in which travel as we’ve known isn’t completely altered.
Travel stocks are an important player within the global stock market – so what will they look like post-pandemic? Considering the slow return of domestic travel (and international travel to New Zealand) across Australia, investors could find success diving into travel stocks soon.
To get some further insight, we spoke to Josh Gilbert, a Market Analyst at eToro about what investors should look out for when buying shares in the sector post-pandemic.
How travel stocks have performed over the pandemic?
“From 14th February 2020 to 20th March 2020, the US Global Jets ETF plummeted 60%,” said Josh, highlighting how the stock market took as the initial repercussions of the pandemic began to set in.
“This ETF provides investors with access to some of the world’s largest airliners and shows how badly the industry was affected. Other travel stocks such as Expedia and Booking Holdings were also decimated.”
While these numbers may seem grim, there is hope. As more people globally are vaccinated, stocks are starting to recover from the lows of March 2020.
“Expedia’s share price has jumped by 110% in the past year,” noted Josh.
Will the risk of investing in travel stocks be heightened post-pandemic?
It’s important to remember that there are always risks involved when investing. Investors with a long-term mindset may expect to see travel return to pre-pandemic levels in several years.
“Moving forward, investors will need to trend tentatively as cases continue to appear around the globe, with snap lockdowns still ongoing. Airliners have lost millions of dollars a day during the pandemic, which may affect their bottom lines for many years to come,” said Josh.
Josh also noted that the impending 2021 summer season across the US and Europe could also see the sector begin to slowly bounce back.
What travel stocks should investors look at buying post-pandemic?
Josh noted that Airbnb is a travel company worth keeping an eye on at the moment. It was listed on the US market in December 2020 and has proven popular amongst many investors.
“Despite international travel restrictions still in place across the globe, Airbnb has demonstrated resilience in its booking numbers, with domestic travel and long term stays responsible for driving revenue in Q1. Airbnb reported 64.4 million nights and experiences booked, illustrating an increase of 39 per cent from Q4” noted Josh.
“As the economic upcycle continues, we can anticipate Airbnb to be a benefactor of the travel industry’s resurgence, especially with the unique and quirky nature of the stays available on the platform. It also means consumers don’t have to mix via busy hotels.”
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