In August, we wrote a report on the travel and tourism names. At the time, we highlighted that US businesses Trip Advisor, Booking Holdings and Airbnb had reported a softening travel outlook; in hindsight, these warnings should have been listened to with the sector struggling over recent weeks. Year-to-date, the ASX200 is up +13.2%, including dividends, with all but one of the travel/tourism stocks underperforming the broader market:
- Travel & Tourism stocks YTD: SiteMinder (SDR) +30%, Flight Centre (FLT) +5.7%, Helloworld Travel Ltd (HLO) -24%, WEB Travel Group (WEB) -30%, and Corporate Travel (CTD) -36%.
New reports show that, after years of inflation and rising travel costs, global travellers may finally be curtailing their travel plans, which is concerning for the industry, e.g. intentions to travel have dropped 11% in France and 6% in Germany since 2022. Research house Morning Consult believes pent-up demand is ending – “That’s not to say that travel will decline significantly again, but … in short, most of those waiting to take their post-COVID trips have already done so,”. This outlook was echoed by a recent report from economic advisory firm Oxford Economics, saying, “Pent-up demand fuelled travel in Asia-Pacific in the first half of 2023, but since then, the trend is starting to reverse.”
- The appetite for travel is starting to wane due to the delayed effects of tightening monetary policies, which have hit consumers’ free spending.
Interestingly, the US-related names have also delivered mixed performances so far in 2024. Of the three mentioned, only online travel business Booking Holdings (BKNG US) is making investors happy, and its business model is AI-focused.
