Travel promotions suffered huge losses during the pandemic. However, there is optimism that the wider industry could fully recover in the next two years. If the pandemic restrictions are eased, vaccines are released in more world countries. Nevertheless, analysts warn investors about investing in this sector.
Airlines and cruise ship companies may face additional obstacles due to rising fuel, food, capital, and labor costs. Significant because interest rates can increase even more. Meanwhile, some hotel and travel booking companies are already trading at pre-pandemic levels. This means that it is possible to return to normal mode shortly.
It is worth noting that rising inflation and expectations of higher loan rates are disrupting the household budget, weakening the enthusiasm. Business travel may return later as companies become accustomed to virtual meetings. Analysts say not everyone will be ready to travel – even if they can afford it. COVID is declining. However, some hesitation is expected from the population. This is a pattern of behavior that needs to change for a group of people.
Investors who want to bet on travel pay need to be careful about which stocks and segments to invest in. According to some experts, investors should avoid cruise lines and airlines in the first stage. However, their stock price is significantly lower than the COVID level. High costs and debt levels are a big problem for both sectors and increased competition, especially when these companies fight for travelers who want to travel.
Cruise companies are problematic for investors. This is because many were not eligible to receive state subsidies. Consequently, they were forced to go deeper into debt; Stocks were even sold for survival. Hotel promotions may deceive investors, but a return to pre-pandemic levels gives hope. Part of the analysts recommends Walt Disney. The company will increase capacity in its theme parks worldwide. Credit card companies such as Visa and Mastercard will benefit from a broader increase in travel expenses.
According to investment officers, the pandemic concern will completely disappear in a few months, and the range will change. It would be better if investors avoided volatile sectors such as cruise ships airlines.
Some analysts believe that airlines have never been a good business before COVID. During the Covid period, their situation became even worse. Consequently, this business will not be reliable after a pandemic. Cruise lines may be a better solution; Because many travelers are loyal to them. However, the costs will be higher against the background of rising interest rates and inflation.
Analysts estimate that travel promotions are better suited for short-term investors; Those who try to take advantage of the rapid movement of stocks; And not long-term investors – like its clients who are looking for a stable income. The travel sector is excellent for short-term investments. However, the best advice for long-term investors is to avoid it.
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