April 2021

Buy & Hold: How to Invest in the Tourism Industry After the Pandemic

Many believe that even after the opening of the borders the tourism industry will not return to its previous level. What is actually happening and what is a professional investor's opinion?
The most anticipated event on the travel market last year was the IPO of Airbnb, an online platform for short-term rentals around the world. At the base price of $68 the shares more than doubled in the first hours of trading, reaching a peak price of $187. At the moment Airbnb is worth more than $100 billion. Booking.com giant needed more than $4 billion in support. But now the company has already regained the lost ground in capitalization and is trading at its highest values since its listing, with a valuation of over $98 billion.

Another travel industry giant, Expedia Inc, has also recouped all of its losses from the business' 2020 capitalization decline and continues to grow strongly despite investors' most cautious expectations. Only more than half a billion dollars were received by travel entrepreneurs from private equity funds last year, which suggests that the industry has been supported, and none of the notable online players have left it.

And what about Russia? On one hand, there were no major financial investments in the market, but all the leaders maintained their positions. Already by January 2021, according to analytical company ForwardKeys, the number of tickets sold in Russia reached 77% of last year's level and continues to grow. My forecast for travel companies is "buy and hold, an investment strategy in which an investor buys assets/shares to hold them for a long time in anticipation of rising prices, despite volatility." Now let me explain why.

Russians are easy going, they only dream of peace. According to the Aviasales service statistics, the depth of bookings of air tickets has decreased to a week. This means that the decision to travel is made last minute, although there were no other stop-factors except the quarantine. Since the beginning of the pandemic, the service has maintained its own index of Russian travelers' activity, according to which the first peak in demand after the quarantine came during the May holidays. During this period, Russians "flew" from the capitals to their home regions, top flights going to Makhachkala, Mineralnye Vody, Simferopol, Vladikavkaz, Krasnodar and Sochi, Kazan, Rostov-on-Don.

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