Resurgence tourism an opportunity for investors

In view of rising vaccination rates in Europe and the upcoming summer holiday period, the tourism sector offers opportunities for private investors. “The recovery in tourism is being driven by domestic travel in the countries where vaccination coverage is high,” said Ben Laidler, Global Markets Strategist at the eToro trading platform.

“For domestic tourism, we see a recovery with an increase in local flights, hotel bookings and car rentals, among others. Intercontinental travel and cruises are expected to recover the slowest as worldwide vaccination coverage is still low (10%). The recovery in Europe is expected to be larger in percentage terms, but will take longer than in the US because Europe receives more international tourists and therefore saw a larger decline in 2020 (-52% compared to a 41% decline in the US),” said Ben Laidler.

According to the World Travel & Tourism Council, the tourism sector, worth USD 9 trillion, represents 10.4% of global GDP. This share decreased by -52.5% in 2020. The figure below shows the size of the tourism sector as a percentage of GDP in 2019, for the 20 largest economies.

“Southern European countries had a double effect because these countries rely more heavily on tourism. Although this was the cause of the above-average decline in GDP in southern European countries last year, it may also contribute to an accelerated recovery in the future,” explains Ben Laidler.

According to Ben Laidler, market leader, among others, is well-positioned to benefit from the tourism upturn: “With a plus of 4.5%, the stock has lagged behind the average recovery in stock markets (+10%) in the first five months of 2021. Although the number of room reservations by domestic tourists at is back to 2019 levels, the total number of reservations is still 43% lower compared to 2019.”