They say hope floats. The travel industry is perhaps in a phase where they need more than hope. Since the pandemic hit in 2020, the travel and tourism industry has seen businesses wipe out their fortunes. From business travel and leisure, airlines to hotels, all those associated with the hospitality industry are reeling. According to Global Business Travel Association, global travel expenditure fell 54% in 2020 to $661 bn. They predict it would grow 14% in 2021, away from the near $1 trillion value mark that was ‘normal’ before the pandemic.
Another agency, World Travel Organisation or UNWTO, highlights 1 billion fewer international arrivals in the nine months to September 2021 than the year-ago period. The losses to the travel and tourism industry were to the tune of $1.3 trillion, with 100 to 120 million jobs directly or indirectly affected.
The surging Omicron infections have put a spanner in the slow recovery. Globally, there are 296,496,809 confirmed cases of COVID-19, including 5,462,631 deaths according to the global body World Health Organisation, the rapid spread of the virus is nasty.
The third wave has already arrived in major cities in India. In line with protocols, local governments have already triggered restrictions of movement. It is widely expected that the authorities would manage the situation better than the previous incidents of waves. There is a level of experience in the management of the pandemic now. There is a hope that the new variant will not cause death and lockdowns that bring the entire travel sector to the ground.
There are several surveys published citing consumer interest in local and international travel. They predict that individuals will make travel plans in the next three months. There is a lot of interest in travel and hotel-related companies. Share prices of Indian Hotels, the Tata Group company that owns the Taj properties in India and worldwide, have jumped over 50% in 2021. A benchmark index like Sensex rose 22% during the same period. The outperformance of Indian Hotels could be in anticipation of a jump in leisure and business travel. However, in the past two weeks, planning for holidays appears to have been affected. Shares of Club Mahindra fell 10% in just a month’s time.
A key to profits for businesses in the hospitality industry is business travel. Before the pandemic, global business travel spending was estimated to be $1.4 trillion. According to the Global Business Travel Association data, that is expected to see those levels only in 2024. The challenge to that estimate is the increased use of the work-from-home culture. It is likely to become a permanent feature as people can save on daily commute or long-distance business travel. That is terrible news for the sector, though. There are fewer high-value air tickets sold, hotel rooms booked, or expenses incurred over the business. While companies make substantial savings, those factors would make it hard for companies in the sector.
Recent trends in the stock market suggest a stall in the sector’s recovery. Leisure and business travel could be affected by the sharp surge in COVID-19 patients in the first half of 2022. The second half of 2022 could lead to a rise in leisure travel. Business travel may wait.
Thank you for reading this post, don't forget to subscribe!