March 28, 2022
The COVID-19 pandemic brought travel to a screeching halt, resulting in massive layoffs and a mind-numbing impact on the global economy. The World Travel & Tourism Council’s (WTTC) annual Economic Impact Report estimates that the pandemic cost the global travel and tourism sector nearly $4.5 trillion in 2020. With infection rates lowering in the U.S. and consumers returning to their normal lifestyles, here are a few brands banking on 2022 becoming the year of the tourist.
American Airlines Group Inc. (Tii:AAL) offers nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries. When the lockdowns came, and international cities placed restrictions on entry, the entire airline industry took a massive hit in 2020, American Airlines included. The company posted a net loss of $8.9 billion, on 62.1% lower total operating revenues in 2020. For 2021, the airline bounced back somewhat, narrowing its full-year loss to $1.993 billion on 72.4% higher total operating revenues. American Airlines could see a substantial uptick in recreational flyers with the plethora of weddings (resulting from canceled matrimonial plans in 2020-2021). In fact, the airline plans to launch daily nonstop service from Miami to Anguilla next month and is bringing back alcohol sales on domestic flights.
Lockdowns also docked cruise ships for months in 2020 and part of 2021. As the world’s largest cruise operator with a fleet of 87 ships, Carnival Corporation & plc (Tii:CCL) suffered a gut-punch, losing more than $10 billion in 2020 alone. In 2021, the cruise industry bounced back somewhat, welcoming almost 13.9 million passengers worldwide. While this improved over 2020 when most cruise ships rested in docks, it still represents less than half of the passengers that cruised in 2019. However, on the positive side, the Cruise Lines International Association (CLIA) reported that nearly 80% of travelers who have cruised before say they will cruise again – the same percentage as before the pandemic.
With a portfolio of 18 world-class brands comprising more than 6,800 properties and more than 1 million rooms in 122 countries and territories, Hilton Worldwide Holdings Inc. (Tii:HLT) is one of the world’s largest hotel companies. After a 2020 in which full-year revenues declined 54%, Hilton experienced continued recovery throughout 2021, increasing revenues by 34.38% compared with its prior year. Hilton ended 2021 with robust net unit growth of 5.6%. The company’s development pipeline includes nearly 2,670 hotels representing approximately 408,000 rooms, almost half of which are under construction.
Market research provider IBISWorld calculated the travel industry market size plummeted from $56.8 billion in 2019 to $20.6 billion in 2020. While the numbers improved in 2021 with a $34.6 billion market size, IBISWorld pegs the market’s 2022 value at $47.8 billion – below pre-pandemic levels. Online travel shopping platforms such as Expedia Group, Inc. (Tii:EXPE), Booking Holdings Inc. (Tii:BKNG) and Tripadvisor, Inc. (Tii:TRIP) are mostly optimistic about summer travel but are keeping a wary eye on the possibility of returning restrictions. In other positive news for the online travel booking companies, Tripadvisor’s Spring Travel Index found that despite the rising cost of fuel and inflation overall, 53% of Americans plan to travel this spring, with 39% planning on taking two or more trips. This represents a significant increase from the 35% of Americans who reported traveling this winter.
While there remains some uncertainty regarding when and if the travel and tourism industry will return to pre-pandemic levels, there are certainly indications that this “new normal” will include recreational and business travel – two critical contributors to the U.S. economy.
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