Travel companies face myriad challenges as 2021 draws to a close, with the combo of a Covid-19 surge and bad weather leading to thousands of flight cancellations. Still, many travel stocks have done well recently on hopes that the Omicron version of the coronavirus will be overcome in 2022. If so, further gains could be seen in stocks, especially with the return of business travel.
Shares of cruise operator Carnival (ticker: CCL) were up 14% last Tuesday since December 17, while the S&P 500 index gained 4% over the same stretch. Marriott International (MAR) was up 11% and Delta Air Lines (DAL) about 8%, despite flight cancellations. “As the virus continues to move through the general population, the same is true for airline employees,” said Helen Baker, an airline analyst at Cowen.
Baker, who is upbeat about the industry’s 2022 prospects, said recent flight cancellations, although cumbersome, were less prevalent than in some prior years. For example, in 2013, the total number of cancellations and inbound and outbound international flights during the holiday season for domestic flights was around 10,000, mostly due to weather issues.
According to Baker, during this year’s Christmas weekend, including December 27, total cancellations were about 4,000.
It has been a rough season for cruise companies as well, given the reports of Covid outbreaks on ships. Still, the stocks have performed well in December. For cruise-stock investors, tracking Omicron’s impact on bookings will be important. Cruise lines are currently in “wave season,” when travelers typically book trips for spring and summer.
Another wild card, especially for some hotel chains and airlines, is business travel. Since it usually drops sharply during the holiday season, it is difficult to estimate Omicron’s exact impact.
“The big question is, how big of a jump are we going to see in the first week of January?” asks Steve Reynolds, CEO of Tripbeam, which helps companies with hotel and airline bookings.
Business travel will also depend on how quickly offices reopen and employees return. In a recent note, Baker wrote that he expects business travel to return two to four weeks after people return to the office, and that “we will reach 80% of pre-pandemic levels by the end of 2022.” Will be inside.”
As far as hotels in the US are concerned, a representative for STR, which compiles stay data, says occupancy has been “week-on-week” over the past few weeks, “but this is normal weather. “
Write Lawrence C. Strauss at [email protected]