No Pleasure Without Spain: Holiday Confusion Batters Travel Stocks
It goes without saying that 2020 has not been a positive year for the travel sector. With most of the world locked down from March to June, holidays and business trips abroad were well and truly placed on the backburner. And, while this was undoubtedly an essential move so as to minimise the spread of Covid-19, it was a hammer blow to hotel chains, airlines, and economies that rely on tourism.
With lockdown measures having been eased in recent weeks, businesses in the tourism and hospitality sectors were hopeful that, slowly but surely, normality could begin to return.
At first, it seemed this would be the case – flight bookings soared and people tentatively returned to pubs and restaurants – but in recent days, with Spain being removed from the UK’s non-quarantine list, confidence has once again plummeted.
The Second Wave
In recent weeks, newspaper pages have been filled with articles and comment around a potential second wave of Covid-19 around Europe and the likely ramifications, and it would appear that such consequences are already coming to fruition.
In the immediate wake of the UK government’s decision to declare that all visitors coming to the UK from Spain would have to quarantine for two weeks, an estimated £1.5 billion was wiped away from the value of travel companies with a stake in the Spanish tourism market.
To put that figure into some context, TUI saw its stock value drop by a staggering 11.4 per cent in the wake of the government’s decision, Jet2 saw a fall of 8.2 per cent, and International Airlines Group – the company that owns British Airways, Iberia, Aer Lingus and IAG Cargo – was hit by a dip of 5.9 per cent.
With thousands of people having holidays to Spain cancelled and given that there is no clear idea of when the Spanish quarantine rulings will be lifted, it remains unclear when long-term recovery can begin in earnest.
More Quarantine Countries On The Horizon?
While the UK government is keeping its cards well and truly close to its chest at the moment with regard to upcoming or potential travel bans, there are a number of countries where the rate of Covid-19 infections is on the rise, and so could potentially see themselves handed the same restrictions as Spain. Those returning from countries such as France, Belgium and Sweden could very well be forced to quarantine for 14 days if infection rates continue to rise, but this is by no means confirmed at the current time.