After a year and a half of Covid-19, the tourism sector has been through a lot. It battled through a complete standstill in 2020 due to global lockdowns. Then we had closed borders and mismatched travel rules between countries. And the promising summer holiday of 2021 disappeared thanks to the Delta variant. It’s safe to say the sector is not running at full speed.
Doom and gloom, you might say. But there have been some developments due to Covid-19 that the tourism industry might benefit from in the future. On top of that, the real comeback of the global economy is still getting started.
Remote working gives the tourism sector more options
Many professionals have come to appreciate working remotely and have made flexible agreements with their employers. This could continue post-Covid. With a good internet connection and a laptop, you can work from wherever you like. Many will use this opportunity to book working trips using services like Expedia, Booking, TripAdvisor and Airbnb.
In fact, Brian Chesky, co-founder and CEO of Airbnb, is very optimistic about the future of his company and the tourism sector in the Airbnb 2021 report. “We see three fundamental shifts in travel as people become less bound and more flexible. They travel to more places and stay longer. The boundaries between traveling, living and working are blurring.” The company is upgrading its platform to make it easier to integrate travel into people’s lives and make it simple for people to rent out their homes.
If the combined travel and work trend continues, the tourism sector will benefit across the board. Ride-sharing companies like Uber may cash in on extra trips. And airlines such as Air France-KLM, Deutsche Lufthansa and Delta Air Lines will certainly benefit from an increase in travel.
Revenge travelling: the great comeback of tourism?
During the lengthy lockdowns, a new concept emerged in 2020: revenge travelling. Those that can afford an annual holiday or long-distance trip have saved a lot of money during the lockdowns and they had plenty of time to fantasise about a dream vacation. The continued lockdowns have also made travellers desperate to get away.
Consulting firm McKinsey & Company have surveyed this topic across the globe. They found that people are eager to travel if the rules allow it. Most high-income people haven’t lost their jobs either, according to the data. McKinsey reports that this demographic now has 10-20% more savings than before the pandemic, and these people like to spend money on traveling.
A recent International Air Travel Association (IATA) survey of 4,700 respondents from 11 countries found that 57% of people expect to travel within two months of the pandemic being contained. That would be a significant and welcome financial boost for the tourism sector.
Piggybacking on the tourism comeback
Many tourism stocks have been struggling for a year and a half, but could benefit from a resurgence in travel. And therein lies an opportunity for investors. For example, one strategy could be purchasing tourism stocks while their value is relatively low and then hope for a possible comeback, which could raise the value of shares again.
Nobody knows when the pandemic will be under control enough for the tourism sector to fully flourish. But it’s an interesting trend to watch as an investor. It’s helped by the fact that many tourism companies have been supported by state aid and may soon be able to thrive on their own with the increase in remote workers and revenge travellers.
- Airbnb 2021 Release: 100+ innovations and upgrades across our entire service.
- The Washington Post: Revenge travel is the phenomenon that could bring back tourism with a bang, JD Shadel.
- McKinsey & Company: A travel boom is looming. But is the industry ready?, Vik Krishnan, Darren Rivas, and Steve Saxon.
All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.