There is no doubt that the travel industry is facing a seismic shift and the ‘do or die’ rhetoric coming from these beleaguered businesses is long overdue. Not only has the pandemic grounded all travel for long periods of time, but the longer it goes on the double-whammy of on-going costs gnawing away at companies, coupled with a potentially permanent shift in would-be travellers’ expectations could mean this past 15 months is something the travel sector never recovers from; at least not in its current form.
On the face of it TUI’s package holiday model is untenable if holidaymakers are not allowed to travel. The budget airlines’ no frills model that makes air travel cheaper than train travel is again as dead as a dodo if free-wheeling leisure travellers, time-strapped business people and rat-race commuters are not free to travel – or no longer need that once all-important face time and so don’t bother to fly.
Is the travel sector one to invest in right now? Will this pandemic be over one day? The answer to both has to be yes, but the wait is likely to be long and turbulent.
And let’s not forget that there are a whole host of other companies whose fortunes also hang on the fate of the travel industry. From hotels to airport operators and the shops, restaurants and pubs that operate in them, to insurers, taxi firms and rail and coach operators that take travellers to and fro – all in “carnage” by Covid.
As Toby Sims reports in his latest
Sector Watch on investing in travel companies, struggles have been many but there have been some bright spots, as companies have adapted to the changing times. For now, when you look at the travel industry, it is clear that there is a whole world of largely dormant activity and potential opportunity out there, that will come good, one day.
Important information: Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.