Travel Monthly Report | October

24 October 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 in particular 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 at the earliest. [7]
  • As the travel market recovers, the new, leaner operating models that many companies implemented during the pandemic should pave the way to increased profitability in the future.
  • The travel industry still faces significant challenges on 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] but it is probably more accurate to say it is just evolving. Many travellers will continue to seek speed, comfort, convenience, new experiences and exclusivity in making their travel decisions, but others will take concerns about diversity and inclusion, neo-colonialism, and environmental sustainability increasingly into account.
  • Whatever changes are coming, it should be remembered that travel and tourism stocks have significantly outperformed many other investments over the long term. 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 will be determined in large part by the recovery of leisure travel and overall macroeconomic conditions. These influences have been factored into the revenue outlook summarized above.

Other risk factors include inflation in several major travel markets, particularly the United States and Europe. U.S. inflation recently hit a 40-year high of 9.1% before declining slightly to 8.3% in August 2022.[10] While the U.S. Travel Price Index (TPI) also declined slightly in July, the TPI increased considerably faster (i.e., 10.8%) than the overall consumer price index (CPI) for the entire year between August 2022 and 2021. Hotel rates were up 4.5% in August 2022 compared to August 2021. Airfares were up 33% over the same period. The price of motor fuel increased 26% between August 2022 and August 2021.[11] Inflation increases direct travel costs while shrinking travelers’ budgets, causing them to take shorter trips, stay closer to home, drive rather than fly, or not travel at all, all of which can negatively affect T&T industry revenues.

Only 29% of respondents in a recent McKinsey survey said their travel plans are unlikely to be affected at all by these developments.[12] These survey responses are mirrored in the recent downward trends in bookings for air travel and hotel.[13] (The bookings picture for cruise lines is mixed.) [14]

However, there are signs that the worst may be past. For example, in the US, the travel booking platform Hopper is forecasting round-trip domestic airfare will drop by an estimated -38% from their peak summer levels in September and October.[15] In 2023, the annual rate of inflation in airfares is projected to fall from 48.5% to 8.45%, while the increase in hotel room rates slows from 18.5% to 8.2%. [16]

The European market presents a picture similar to the U.S. In the Euro Zone, inflation hit 9.1% in August 2022,[17] while in the U.K. prices rose by 9.9%.[18] In a Statista survey conducted in June 2022, 30% of Europeans reported that the increase in price levels significantly affected their desire to travel. [19]

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.[20] Europe had more than double the cancellations of U.S. carriers between April and June 2022.[21] 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.[22] In July 2022, the U.S. cancellation rate fell to a more “normal” 1.8%, although other types of service complaints rose 16.5%.[23]

The long-anticipated recovery of business travel is taking place slowly, but it remains 65% of pre-pandemic spend in 2022.[24] 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.[25] Business travel is not is not expected to recover fully until 2026 at the earliest. [26]

An additional wild-card is the February 2022 Russian invasion of Ukraine, the ensuing war, and the punishing sanctions that many countries have placed on Russia. So far, the direct losses to the travel and tourism sectors of the two combatant countries and their immediate neighbours have been limited, i.e., less than $7 billion according to one estimate.[27] The war’s indirect impacts have been more serious, coming as the result of an estimated 1.5% decrease in global GDP, and a 1.3-point increase in the global inflation rate in 2022. [28]



 Travel ETF Performance Table (As of 30.09.2022)








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 30/09/2022. 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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