The Boat Has Already Sailed On Hospitality Stocks

The Boat Has Already Sailed On Hospitality Stocks
Andrew Rummer

about 3 years ago1 min

As coronavirus spread around the world in early 2020, hospitality and tourism stocks were unsurprisingly among the worst affected.

The MSCI World Hotels, Restaurants & Leisure Index – a gauge of global stocks in those sectors, shown in blue on the chart – dropped by 48% between mid-January and mid-March last year. 

As rich countries including the UK set out plans to lift lockdown restrictions, however, anyone hoping to pick up a bargain or two in the tourism sector may be sorely disappointed: the index has already recouped all its losses and even hit an all-time high this week.

Hospitality stocks have rebounded far faster than analysts can lift their profit projections for the sector. The pink line on the chart shows how much profit analysts expect companies in the index to report in the coming year – it’s off last year’s lows but still only a third of pre-pandemic expectations. 

It looks like investors are betting pent-up demand will see spending on travel and leisure reach new records before long, despite lingering fears of illness. If that doesn’t happen, these stocks may suffer.

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