June 28, 2021
With vaccination rates rising and pandemic restrictions easing, more consumers are looking to resume travel plans this year. The American Automobile Association (AAA) predicted that Memorial Day travel would increase 60% compared with last year. While that is still around 6 million fewer than there was pre-pandemic, it is a sign that more Americans are comfortable moving around.
The pandemic had an undeniable crippling effect on virtually every travel-related industry in 2020 – many of which recorded their worst performing year on record. But 2021 is shaping up to be somewhat of a bounce-back year for those industries dependent upon leisure and business travel. Here’s how some representative companies are faring.
Carnival Corporation & plc (Tii:CCL)
Shutdowns of international borders battered the world’s largest fleet of cruise ships during the pandemic. The British-American cruise operator paused guest cruises in mid-March 2020, returning over 260,000 guests home, repatriating 90,000 crew members and processing billions of dollars of guest refunds and cruise credits while developing new cruise protocols. However, the company is ramping up operations again. As of June 24, Carnival announced that 42 ships, representing over half of its capacity, have been scheduled to return to serving guests by this fiscal year-end. As a result, booking volumes for all future cruises during the second quarter of 2021 were 45% higher than booking volumes during the first quarter of 2021. Carnival’s shares have gained 38% for the year as of June 25, 2021.
Hyatt Hotels Corporation (Tii:H)
Hotels also suffered major setbacks in 2020 as both business and leisure travel dried up. The American Hotel and Lodging Association (AHLA) estimated that COVID-19’s impact on the travel industry in 2020 was about nine times that of the September 11 terrorist attacks – the last major disruptive event for the industry. With a portfolio of 974 hotels and more than 230,000 rooms, Hyatt oversees 13 full-service hotel brands. In the fourth quarter, total management and franchise fee revenues decreased 67.4%, contributing to a net loss of $203 million. However, as of March 31, 2021, 96% of total system-wide hotels (94% of rooms) were open, and first-quarter results exceeded expectations as business conditions improved. Management cited increased demand levels in both March and April of this year. Hyatt Hotels shares have increased 14% for the year, as of June 25, 2021.
Delta Air Lines Inc. (Tii:DAL)
Like many others in the travel industry, Delta Air Lines experienced the most challenging year in its history in 2020, with nearly $1 billion in losses directly attributed to the pandemic. According to the International Civil Aviation Organization, global air traffic dropped from 4.5 billion in 2019 to 1.8 billion in 2020. As a result, Delta’s adjusted operating revenue of $3.5 billion declined 69% on 62% lower sellable capacity last year on brutal business conditions. Though Delta reported a pre-tax loss of $2.9 billion and adjusted loss per share of $3.55 for the first quarter of 2021, management sees improving conditions. “Recent demand trends are encouraging with rising confidence in air travel as vaccination rates improve and travel restrictions ease, with current domestic leisure bookings 85% recovered to 2019 levels,” said Glen Hauenstein, Delta’s president, in the quarterly report. The airline’s shares have increased 14% for the year, as of June 25, 2021.
Six Flags Entertainment Corporation (Tii:SIX)
As the world’s largest regional theme park company and the largest operator of waterparks in North America, with 27 parks across the United States, Mexico and Canada, bringing in crowds is critical to Six Flags’ business success. Last year was brutal for the theme park operator, as total attendance for the full year 2020 declined 79% compared to 2019. While 1.3 million guests patronized Six Flags theme parks in the first quarter of 2021, the sum still represents a decline of 238,000 from the first quarter of 2020. However, the company reported that attendance continues to climb as states roll back capacity restrictions, and management expects revenues to hit pre-pandemic levels by the end of 2022. Six Flags shares have increased 35% for the year as of June 25, 2021.
Exxon Mobil Corporation (Tii:XOM)
Though the oil and gas giant is obviously not in the travel industry, it was nevertheless hammered by a halt in business and leisure travel. As consumers remained home and avoided travel, gasoline and jet fuel prices declined sharply. This lack of demand for fuel last year contributed to a fourth-quarter loss of $20.1 billion and triggered aggressive cost-curtailing measures. This year, however, lowered cash operating expenses and higher commodity prices are improving the company’s results. Earnings for its most recent quarter totaled $2.7 billion, compared with a loss of $610 million in the first quarter of 2020. The company’s shares have gained 55% for the year, as of June 25, 2021.
Companies and investors in the travel/leisure industry appear to have weathered the worst of the pandemic’s fallout. According to Travel Pulse, a news source for travel agents, suppliers and travelers, 61% of consumers feel hopeful about travel in 2021, of whom 83% will take two or more domestic trips and 44% plan for two or more international getaways. This portends an improved 2021 and perhaps a robust recovery next year.
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