Investing in Travel in Uncertain Times
Demand has been hindered but not permanently impaired by COVID-19.
We believe now is an opportune time to review investment opportunities in the travel industry, given that demand and share prices have been disproportionately affected by the global spread of COVID-19, which we see as largely transitory. In fact, as of July 31, shares of our cruise line, hotel, online travel, global distribution system, and gaming coverage were down 35% on average year to date versus a 2.5% increase in the Morningstar Total U.S. Market Index. This has left investors questioning when demand will return for travel operators and, importantly, which companies have the financial health to weather the storm.
In building out our travel and leisure coverage forecast, we’ve reviewed decades of historical travel demand and overlaid that analysis with Morningstar’s near-term and long-term GDP forecasts. The result is our bifurcated outlook, which incorporates a more difficult near-term prognosis with a relatively sanguine long-term outlook. We assume that travel demand will normalize over an extended time horizon, once either the COVID-19 outbreak is managed at a global level or a vaccine is proved effective at stemming the spread.
Dan Wasiolek has a position in the following securities mentioned above: NCLH. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.