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Summer is here and usually at this time of year I would be writing articles about getting the best bang for your holiday buck or how to take a break without breaking the budget. This year - yet again - and for the foreseeable future, at least, foreign travel is off the agenda and if you haven’t yet booked your staycation, good luck.
In ‘holiday mood’ the travel industry most certainly is not. Certainly not any of the companies reliant on overseas excursions. The travel industry’s “darkest hour” is what ABTA chief Mark Tanzer has called it, opening a conference of industry bosses by saying: “At our hour of greatest need the Government seems intent on looking away. The danger we face is here and now – the wolves are at the door.”
Today, ahead of a meeting tomorrow between Ministers to consider which countries could be added to the green list and whether quarantine rules for double-jabbed holidaymakers arriving from medium-risk amber countries should be dropped, hundreds of travel industry bosses and employees are set to descend on Parliament Square to protest at the Government’s handling of the re-opening of international travel. Or rather lack of re-opening.
They want more countries to be added to the quarantine-free travel green list and for onerous testing and quarantine restrictions to be relaxed for fully vaccinated people.
Separately, the UK’s largest tour operator TUI has added its support to legal action taken against the Government by Virgin Atlantic and British Airways’ parent company IAG. The group wants ministers to be more transparent about how countries are ranked green, amber and red under the traffic light system which came into effect last month.
There is no doubt that the travel industry is facing a seismic shift and the ‘do or die’ rhetoric coming from these beleaguered businesses is long overdue. Not only has the pandemic grounded all travel for long periods of time, but the longer it goes on the double-whammy of on-going costs gnawing away at companies, coupled with a potentially permanent shift in would-be travellers’ expectations could mean this past 15 months is something the travel sector never recovers from; at least not in its current form.
On the face of it TUI’s package holiday model is untenable if holidaymakers are not allowed to travel. The budget airlines’ no frills model that makes air travel cheaper than train travel is again as dead as a dodo if free-wheeling leisure travellers, time-strapped business people and rat-race commuters are not free to travel - or no longer need that once all-important face time and so don’t bother to fly.
Is the travel sector one to invest in right now? Will this pandemic be over one day? The answer to both has to be yes, but the wait is likely to be long and turbulent.
And let’s not forget that there are a whole host of other companies whose fortunes also hang on the fate of the travel industry. From hotels to airport operators and the shops, restaurants and pubs that operate in them, to insurers, taxi firms and rail and coach operators that take travellers to and fro - all in “carnage” by Covid.
As Toby Sims reports in his latest Sector Watch on investing in travel companies, struggles have been many but there have been some bright spots, as companies have adapted to the changing times. For now, when you look at the travel industry, it is clear that there is a whole world of largely dormant activity and potential opportunity out there, that will come good, one day.
Important information: Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.
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