Gulliver’s Travels – Travel & Tourism Review
John O’Shea one of our Senior Research Analysts talks about the key themes impacting the Travel & Tourism sector and how they have evolved materially over the last 6-12 months. In general terms, these themes have enhanced the growth outlook for the sector (hence the large number of Buy ratings). We have analysed each theme and ranked the expected impact on each stock with the key highlights: The shift to Outbound Holiday Travel at the expense of Domestic is continuing despite the fact Outbound has slowed with the weak economy. Notwithstanding the increasing online threat, the shift to Outbound tends to favour Bricks & Mortar travel agents (provided they can value-add) given they account for the majority of Outbound flights sold in Australia and this travel to advice (positive for CVO, FLT, HLO). The cruise segment is the fastest growing component of Outbound Travel and this trend is expected to continue (positive for CVO, FLT, FLT, HLO). Domestic airfares have increased off their capacity war lows and the outlook appears positive (positive for QAN, VAH, CTD, REX). The growth in International Visitors to Australia from China is expected to remain strong (positive for MTR, SLK, VRL, AAD, AHD). The decline in oil prices has driven fuel costs materially lower and this is unlikely to change in the near-term (positive for QAN, SLK, VAH, REX). The lack of investment in new developments has constrained room supply in the accommodation sector and this is expected to support occupancy levels and room rates particularly in CBD markets (positive for MTR and AHD). Click here to view our video:
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