Travel Monthly Report | August

08 August 2022

Travel ETF Monthly Report: Key Takeaways

  • Airlines, hotels, and cruise lines have been hit hard by COVID-19. In 2021, global airline revenues were only 56% of their 2019 levels[1], while the world’s hotels took in 68% as much revenues as they did in 2019 [2]. The cruise industry fared the worst, with 2021 revenues -76% below 2019. [3]
  • Some smaller operators have gone under, but most larger companies have managed to survive through a combination of cost-cutting, borrowing and government financial assistance. Large cruise operators had large cash cushions to sustain them after their business dried up almost overnight. [4]
  • The post-pandemic recovery of the airline, cruise line and hotel sectors will be gradual, with only the cruise line sector expected to regain and surpass its 2019 level by 2023.[5] The U.S. hotel industry is expected to recover by 2024, while the hotel recovery in other regions may take longer.[6] The airline industry is not expected to recover until 2025.[7] However, this recovery will take longer in some regions.
  • As the travel market recovers, the new, leaner operating models that many companies have implemented during the pandemic should pave the way to increased profitability in the future.
  • The travel industry still faces significant challenge son the way to recovery, as described below under the Macro Outlook. These challenges have led some observers to declare “The Golden Age of Travel is over”.[8] However, it should be remembered that over the long term, travel and tourism stocks have significantly outperformed many other investments. For example, in the ten full years before the pandemic (Dec. 29. 2009-Dec. 31, 2019), the DJUSTT increased 529%, compared with a 286% increase in the S&P 500. [9]

Please note that all performance figures are showing net data. Past performance is no guarantee of future performance.


Macro Outlook

In the short run, the demand for travel services should be driven in large part by the overall downwards trend in COVID-19 cases, the resulting relaxation of government-imposed travel restrictions, the pent-up demand for private trips not taken during the pandemic, the pandemic-related growth of disposable income and savings, the recovery of business travel, and overall macroeconomic conditions.[10] These drivers have been factored into the revenue outlook summarized above.

Other risk factors include inflation in many major markets, especially in the United States; U.S. inflation hit a 40-year high of 8.6% in March 2022.[11] The U.S.Travel Price Index (TPI) increased over twice as fast as the consumer price index (CPI) between May 2022 and 2021. Hotel rates were up 22.2% in May 2022 compared to May 2021. Airfares were up 37.8% over the same period. The price of motor fuel increased 49.1% between May 2022 and May 2021.[12] 

As the direct cost of travel increases and travellers’ budgets are constrained by general increases in the cost of living, travel industry revenues could be significantly affected. According to a June 2022 McKinsey survey, 30% of U.S. respondents said inflation and price increases will cause them to vacation closer to home this year, another 30% will go on a shorter vacation, 22% will stay in less expensive accommodation, and 22% will drive instead of flying. Only 29% say their travel plans are unlikely to be affected.[13] These survey responses are reflected in U.S. domestic bookings for summer air travel, which were down 5% in May 2022 compared with the same point in 2019 (although spend was up 7%, due to higher fares). [14]

The European market presents a similar picture. In the Euro zone, inflation hit 8.6% in June 2022,[15] while in the U.K. prices rose by 9.4%.[16] In a Statista survey conducted in June 2022, 30% of Europeans reported that the increase in price levels significantly affected their desire to travel. [17]

Even with the fare increases, the airline industry has been having trouble keeping up with demand, causing a surge in flight delays and cancellations. In the U.S., the cancellation rate for the first half of 2022 was 2.8%, compared with 1.1% - 1.9% between 2011 and 2019.[18] Europe had more than double the cancellations of U.S. carriers between April and June 2022.[19] These problems, if they continue, could cause long-term changes in the traveling public’s preference for air travel vs. trains and personal cars, to the airlines’ detriment. [20]

The long-anticipated recovery of business travel is taking place slowly, but it remains at less than half of pre-pandemic spend. Increased travel prices, combined with the demonstrated ability of technology to replace many in-person meetings, are acting as a drag on corporate travel, even as COVID-related restrictions decline, and more employees return to the office. [21]

An additional wild-card in the travel and tourism outlook is the February 2022 Russian invasion of Ukraine, the ensuing war, and the punishing sanctions that many countries have placed on Russia. In addition to the war’s impact on energy prices and inflation, the direct travel impact of the war has been rippling outward from the two combatant countries to other international destinations including the Baltics, Central and Eastern Europe. [22]


 Travel ETF Performance Table (As of 31.07.2022)








Airlines, Hotels and Cruise Lines UCITS ETF - Acc







Solactive Airlines, Hotels, Cruise Lines Index







Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/07/2022. Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. 


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