Highly ready for a holiday: Tourism stocks: Which holiday stocks benefit the most after the Corona crisis | message
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by Klaus Schachinger, Euro am Sonntag
E.In May it should start. Then holiday airlines from Lufthansa subsidiary Eurowings will fly British holidaymakers from Birmingham and Manchester to Mallorca twice a week. Additions to the flight plan will be analyzed over the next few weeks. For the first time, Eurowings holiday airlines are taking off from Great Britain in the direction of the holiday island, which is also popular with many Germans. The early arrival of the British is possible because Great Britain is making progress much faster with corona vaccinations than Germany and the EU.
By March 4, the UK had given 33 doses of vaccine per 100 population. In Germany it was only 8.5 cans, the EU average was 8.7. The goal of vaccinating at least 15 million of Britain’s residents by mid-February has been achieved, according to the government.
The British are gripped by the travel bug
When Prime Minister Boris Johnson therefore announced that holiday flights would be permitted on May 17th, provided that the spread of the pandemic and possible mutants of the virus remain under control, the British immediately caught the travel bug. With low-cost airlines such as Easyjet, Ryanair and Eurowings, bookings increased from their very low levels with high three-digit percentage growth rates.
The UK subsidiary of the TUI Group also saw an increase of 500 percent. If the British government succeeds in keeping the pandemic under control with the vaccination campaign that has so far been successful, the rising travel business will certainly make itself felt in the tourism company’s balance sheet.
With around six million customers in 2019, the UK is TUI’s second largest market, behind Germany with seven and ahead of France with five million travelers. UK TUI boss Andrew Flintham wants to work with the government on solutions so that British holidaymakers can travel.
At the start of the ITB tourism fair, which was online this year, Europe’s largest tour operator was also confident about Germany. TUI firmly assumes that the travel warning for Mallorca will be lifted soon. Germany boss Marek Andryszak expects “short-term bookings for the Easter holidays”. Because the decisive factor is not the warnings from politicians before traveling, but the risk classification of the Robert Koch Institute. This adheres to the incidence value – and this has long been well below the risk area threshold of 50 in Mallorca, with a downward trend. From March 27, before Easter, TUI wants to fly to the Balearic Islands from Dsseldorf, Frankfurt and Hanover and offer offers with stays in hotels. In summer, TUI fly jets are scheduled to take off for Mallorca from seven German airports every day.
TUI expects good summer business
Andryszak expects a sharp increase in bookings, similar to the one in Great Britain, should the travel warning and thus the up to ten-day quarantine obligation cease to apply. In a few weeks, the manager is hoping for quarantine-free trips to the Canary Islands, Greece and Turkey. “In July and August we will be operating with very high capacities in the Mediterranean,” believes Andryszak.
On the stock exchanges, the new confidence in the industry boosted the shares of tour operators, airlines, airport operators and cruise lines. The shares of US media giant Walt Disney also rose when it became known that Disneyland, California, could open under strict conditions in April. The vaccinations in the USA are running at full speed and so far very successfully.
The global travel industry is facing the biggest slump in its history. According to the World Tourism Organization (UNWTO), 74 percent fewer people traveled from January to the end of October 2020 than in 2019. Before Corona, it was 1.5 billion, almost a fifth of the world’s population. The world association estimates the financial damage at 1.3 trillion dollars. In Spain, for example, the world’s second most popular destination for travelers, the gross domestic product (GDP) shrank by eleven percent last year. In an average year, tourism provides 13 percent of Spain’s GDP. The decline in the number of tourists worldwide in 2020 was similar in the various regions.
Experts expect the majority of travelers to book holidays in their home country or in the neighboring countries by 2021. This is particularly helpful for online platforms such as Expedia or Booking. Many US citizens will probably spend their vacation this year in their own country or in neighboring Canada. As in the previous year, this should bring vacation rental agent Airbnb better into the business. The financial burdens on online providers are much lower during the crisis than with traditional tourism groups such as TUI with their own hotels and cruise ships. Experts do not expect a return to normality in tourism until 2023.
Evidence of vaccination should help
However, evidence of corona vaccinations could accelerate recovery. According to a survey by the online portal Cruise Critic, 40 percent of those surveyed would book a cruise as early as 2021. However, more than 80 percent of those surveyed would only board a ship if proof of a corona vaccination is mandatory. In the USA, with the two large providers Royal Caribbean and Carnival, the certificates could be introduced earlier than in other regions.
The EU wants to introduce voluntary digital proof of corona vaccinations by the summer. The data should then also be able to be transferred to apps on cell phones.
Companies from the tourism industry are now using the good mood among investors to raise capital. New stocks brought in a billion dollar cruise line Carnival, based in Miami. Low-cost airline Easyjet raised 1.2 billion euros in bonds. Competitor Ryanair has cash reserves of around 4.5 billion euros and, according to calculations by analysts at Bloomberg Intelligence, can cover its fixed costs for almost two years.
The low-cost airline based in Dublin, Ireland, is clearly ahead of the competition, say the experts. Probably also because Ryanair’s costs per seat at 45 euros are much lower than the low-cost competitors Easyjet with 81 euros and Wizz Air with a good 59 euros. This gives the Ryanair share price an extra boost.
Because of Corona, the revenue of the world’s largest online broker of travel accommodations also shrank by 55 percent to 6.8 billion dollars in 2020. The group is currently valued at a discount compared to newcomer Airbnb. Wrong: Of Bookings 28 million offers, 6.2 million fall into Airbnb’s category. Airbnb has 5.6 million listings and is posting losses. Booking is profitable and has a large inflow of funds. To buy.
The analysts from Bloomberg Intelligence estimate TUI’s monthly outflows from the reserves currently at 250 to 300 million euros. The 2.1 billion euros in liquidity at the end of February give the group a few more months of leeway. However, hopes for better business must be confirmed at Pentecost and in summer at the latest. An investment for the brave.
At the end of March, at the end of the financial year, they will have at least three billion euros in reserves. 80 percent of the fleet are financially unencumbered, which is little compared to the industry. This means that Europe’s largest low-cost airline will start from the front row when holiday flights are recovering in Europe. In the new financial year, analysts expect a net profit of more than 300 million euros, a year later it will be 1.6 billion euros.
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