The
travel and tourism industry contributes 3 to 3.5% of the global GDP. If
we also count related industries, the total contribution of tourism to
the global GDP nears 10%. The entire part of the global economy was hit
hard with the coronavirus pandemics. As the economies were locked down,
the revenue declined by more than 90%. Now the economies reopen, it may
be estimated the hospitality industry would recover. According to Alpho analysts it will very likely take a long time.
Stocks of
global leading brands like Marriott International, Hilton Worldwide,
InterContinental Hotels Group, Best Western, and more, fell mostly by
50% to 60% between the mid of February and March.
Since then,
the stocks have not fully recovered. The market price developed for
several weeks close to the levels of 2016 or 2017. They reached mostly
70% to 80% of the mid-February levels, and they are being traded on
those levels until today.
But there
would be still one hit segment of the hospitality industry, which is the
conference tourism. For example, the Marriott International CEO Arne
Sorenson expects the full recovery may not be coming before the end of
2021. What’s coming back first are the domestic travellers who are
haltingly returning to leisure travel, particularly at drive-to
destinations, guests who join us via the nostalgic road trip. This will
be followed by domestic air travel, then international air travel, and
finally, by group travel“, Mr. Sorenson said.
There is
still risk of the outbreak of the second wave of the pandemics, however
experts believe that it would not be necessary to lockdown the entire
countries like during the first wave. Alpho analysed the industry
recovery after the 2008-2009 recession to learn that it took three years
to start accelerating, and about seven years in order to reach the
number of transactions of the pre-crisis level.
We can also
expect that countries which rely on tourism crucially would accept
measures to attract the client from abroad, especially Mediterranean
countries. It is also very likely that tourists would prefer countries
with relatively low number of Covid-19 cases, so the risk of infection
is also very low.
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Contacts
Milosh Pham
Chief Analyst Alpho
+442080689907
support@gulfbrokers.com
