Travel and Tourism Companies Begin to Rebound

The travel and tourism industry was decimated by the COVID-19 pandemic but recent data shows signs of hope for the industry.

Data shows an uptick in the third quarter of 2020 in earnings transcript sentiment scores, according to GlobalData.

The latest research shows that hotels’ sentimental growth was influenced by improvements in occupancy rates, and airline companies’ sentiments were largely influenced by enhanced liquidity.

“There has been a surprisingly early sentiment rebound in the [travel and tourism] sector, which has taken a hit due to the COVID-19 pandemic,” said Rinaldo Pereira, senior business fundamentals analyst for GlobalData. “Companies in this space have been supported by government relief packages, but questions arise on the [travel and tourism] sector’s future stability despite as COVID-19 will likely cause disruptions well into 2021. Travel and tourism companies will need to enhance digital infrastructure further as the use of contactless services become the only option in the new normal.”

The hotel industry has been buoyed by both growth and technological advancements.

For Hyatt, higher occupancy rates and the addition of new hotels boosted sentiments.

“Hyatt’s recovery in China boosted sentiments, with occupancy reaching 65 percent in the country during the quarter,” said Pereira. “The hotel chain’s net rooms grew by around 6 percent year-on-year, as the company added ten new hotels to its portfolio in Q2 2020. The management’s comments on being able to sustain business in upcoming quarters despite uncertainty also positively influenced sentiment score.”

Hilton Worldwide Holdings also experience occupancy and revenue return despite financial downturns driven by recoveries in the U.S. and the Asia-Pacific region.

Hilton was also assisted by its investment in technology.

“Hilton’s digital investments before the COVID situation helped the company, as contactless services can be managed seamlessly via its app,” Pereira noted.

Wyndham also found some success in the second quarter.

“Wyndham’s improving occupancies, RevPAR rates, and cost-saving initiatives supported the company during Q2 2020,” said Pereira. “Furthermore, despite the COVID-19 impact, Wyndham opened 62 new hotels during the quarter while generating a positive EBITDA due to cost-cutting.”

Airlines are also slowing beginning to see sentiments improve.

“Several airlines have seen sentiments recover. United Airlines’ sentiments, for example, grew by around 30% as domestic passenger revenue per available seat mile (PRASM) improved in June,” said Pereira. “Interestingly, the company’s cargo revenues also grew during Q2 2020, while stringent cost-cutting measures helped it reduce expenses and bolstered liquidity.”

“The net bookings uptick in May 2020 influenced Southwest Airlines’ sentiments,” he noted. “Delta Air Lines and American Airlines Group were other airlines that also witnessed an uptick. Government grants under the Cares Act have pulled several US airlines, including United, Southwest and American, out of a nosedive.”

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