The second half of 2021 saw some recovery from the paralysis that had gripped the travel industry since the arrival of Covid-19 in March 2022. In particular, Mediterranean locations, the Caribbean, and Central America experienced some of the biggest rebounds in tourist activity. Still these hot spots remained 54%, 37%, and 56% below the levels of 2019, respectively.
The World Tourist organization (UNWTO) reported that, “The pace of recovery is slow and uneven across world regions due to varying degrees of mobility restrictions, vaccinations rates and traveller confidence.” The appearance of the Omicron strain last November held back recovery even more, so that December bookings were lower than hoped. UNWTO expects the industry to get fully back on its feet by 2024.
Tourists last year spent more time and money at their destinations than in 2020, so that the direct gross product of the travel industry increased 19% to reach $1.9 trillion. However, if we look at the revenue produced, it was only a little over a half that of 2019. Also, global travel recovery has not been evenly spread. The numbers of people visiting the Asia Pacific and the Middle East actually dropped further in 2021, compared with 2020, from 79% below pre-pandemic levels to 94% below.
Let’s take a closer look at today’s travel industry for some insight for those with an eye on online trading as CFDs.
Too Much Demand?
“People want to make up for lost time”, says Brandon Berkson of Hotels Above Par. He believes travel in the new year will actually exceed pre-pandemic numbers. If there is a big surge in demand of this kind, there may be a need to rehire many pilots and provide them with the opportunity to refresh their skills. “The speed and force of demand could catch some travel industry players off guard”, explains Manoj Chacko of WNS. After 62 million people in the travel sector lost their jobs in 2020, employment levels in the industry are expected to improve by 18% in the year to come. But not all those who were employed in the sector will be taking back their positions. Many have abandoned the industry out of a sense of hopelessness, which presents a host of practical difficulties for people like Jon Bortz of Pebblebrook Hotel Trust, who said, “It’s hard to find cooks and enough servers to deal with the surge and the recovery of demand in the industry.” One interesting result of the labor shortage may be an increased use of technology like Artificial Intelligence focussed specifically on cleaning and room service delivery.
As one of Europe’s biggest airlines, easyJet reported large numbers of bookings for beach destinations this year. Looking toward summer, CEO Johan Lundgren says, “We see a strong summer ahead, with pent-up demand that will see easyJet returning to near 2019 levels”. Early in January, the UK announced there was no more need to for pre-departure testing and that, from February 11th, all travel restrictions would be lifted, which gave encouragement to Lundgren and the UK travel industry.
In the last fiscal year, the Indian economy shrank by 6.6% and Indians suffered from high levels of unemployment and diminished disposable incomes, which presented obstacles to many locals who wanted to travel. The government, however, has set aside $529.7 billion to inject into economic growth, particularly public infrastructure like highways, housing and trains. The budget is “A firmly growth-oriented one”, declared Aurodeep Nandi of Nomura. In January, the government sold Air India, which had been making a loss, however the nation’s biggest airline, IndiGo, is anticipating considerably improved revenue to roll in from April. CEO Ronojoy Dutta said that, after December 15th 2021, when travel restrictions came into place due to high Covid infection rates, bookings slumped. However, “The worst has come and gone, things are slowly getting better”, he says. Interglobe Aviation, which is the parent company of IndiGo, reported a net profit of $17 million in the months before December 31st 2021.
What’s on the Cards?
As of the end of January, a survey indicated that one third of pilots globally have still not retaken their spots in the cockpit since the pandemic struck. Cathay Pacific Airways, for instance, has lost hundreds of its pilots since 2020. Many of the pilots still flying indicated they were concerned about their job security. Rehiring pilots in sufficient numbers may not be that straightforward a process.
One pilot reported back his impression that, although North America’s passenger numbers are nearing full recovery, “The rest of the world, especially developing nations, are still struggling to get vaccines, and are still not travelling.” The tasks of improving employment figures and boosting the general economy in India and other developing nations will not be accomplished overnight. Traders will be monitoring the success of India’s economic injections in the coming months, as well as world economic recovery and the controllability of the pandemic. For those online trading CFDs of airline companies and hotel booking sites like Booking.com, the news is your greatest source of insight at the moment.