03 Jul 2020
Posted in Travel & Tourism
Volatile MCap changes illustrate tourism sector uncertainty amid COVID-19, says GlobalData
Rapid changes in market cap (MCap) in the tourism sector illustrates that the current external business environment has created mass uncertainty for companies, consumers and investors, all fueled by the COVID-19 pandemic. Collective volatility in MCap also denotes the interdependency of tourism sub sectors faced with the same challenges says GlobalData, a leading data and analytics company.
Ralph Hollister, Travel & Tourism Analyst at GlobalData, comments: “TUI has experienced some of the most volatile changes in MCap since the pandemic spread across the globe. On March 16, its MCap dropped by -56% due to the company withdrawing its financial guidance for the current year and suspending the vast majority of all travel operations. Fast forward to May 29 and the tour operator’s MCap rocketed by 70.1% as early progress in lifting COVID-19 lockdown restrictions was made. More recently, TUI’s MCap dipped by -17.9% on June 30.
“Uncertainty around the lifting of travel restrictions and the likelihood of a second wave of infections across European markets means that future changes in MCap could be positive or negative. Recently, TUI has had to cancel all UK trips to Greece until July 15 as the Greek Government deems UK travelers too high a risk. TUI has warned that more countries may follow suit due to Britain’s COVID-19 record and this could cause the company’s MCap to slump even further in the near future given the UK’s importance as a key market for TUI.”
Two companies that have experienced similar changes in MCap during the pandemic are Ryanair and Booking Holdings. Both companies often cater for budget travelers and are regularly assembled together in self-packaged trips within Europe. From March 16 to March 31, Ryanair’s percentage change in MCap jumped from -24.3% to -1.2% and Booking Holding’s increased from -23.90% to 4.30%, illustrating a similar pattern in growth.