miniseries
By Maximiliano Rohm
We believe a growing middle class, hybrid work arrangements and technological advancements likely will keep the travel industry aloft.
In the face of a turbulent global economy, the travel industry continues to enjoy strong demand. In fact, several major airlines, online booking platforms and other important companies across the travel ecosystem appear close to performing at pre-pandemic levels — unimaginable just a few quarters ago. Could the travel sector continue its steady climb, or could a deteriorating macro environment lower the ceiling?
While investors remain understandably cautious, we believe they may be losing sight of the secular shifts transforming the travel industry — and the longer-term investment opportunity supported by these tailwinds.
Demographics have certainly been — and should continue to be — a major driving force. Data from the Brookings Institution suggests that, by 2030, the global middle class will have grown to 5 billion, up from 2.2 billion at the start of the century. While economic cycles or unforeseen global events could temporarily intervene, we believe patient investors should still benefit from an underlying demographic transformation less sensitive to macroeconomic swings.
Meanwhile, technological advances are making travel more affordable and accessible. First, the cost of air travel has fallen by more than half in real dollars since 1980, in great part because the latest jetliners burn nearly half as much fuel as their former counterparts. Second, the ongoing digitization of travel bookings — now close to half of global bookings – gives travelers more options, more transparency and better pricing.
Finally, while too soon to tell, it’s quite possible that the emergence of hybrid work structurally increases demand for travel, as Scott Kirby, CEO of United Airlines, recently observed.
In short, we believe the combination of a growing middle class, evolving working arrangements and technological advancements presents potential opportunity for longer-term investors who can patiently withstand turbulent markets. As COVID-19 reminded us, however, only certain businesses have the potential to emerge stronger from challenging times. For now, we suggest investors remain particularly selective—and keep their seatbelts fastened.
This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice. This material is general in nature and is not directed to any category of investors and should not be regarded as individualized, a recommendation, investment advice or a suggestion to engage in or refrain from any investment-related course of action. Investment decisions and the appropriateness of this material should be made based on an investor’s individual objectives and circumstances and in consultation with his or her advisors. Information is obtained from sources deemed reliable, but there is no representation or warranty as to its accuracy, completeness or reliability. All information is current as of the date of this material and is subject to change without notice. The firm, its employees and advisory accounts may hold positions of any companies discussed. Any views or opinions expressed may not reflect those of the firm as a whole. Neuberger Berman products and services may not be available in all jurisdictions or to all client types. This material may include estimates, outlooks, projections and other “forward-looking statements.” Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed.
This material is not intended as a formal research report and should not be relied upon as a basis for making an investment decision. The firm, its employees and advisory accounts may hold positions of any companies discussed. Specific securities identified and described do not represent all of the securities purchased, sold or recommended for advisory clients. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable.
Investing entails risks, including possible loss of principal. Investments in hedge funds and private equity are speculative and involve a higher degree of risk than more traditional investments. Investments in hedge funds and private equity are intended for sophisticated investors only. Indexes are unmanaged and are not available for direct investment. Past performance is no guarantee of future results.
This material is being issued on a limited basis through various global subsidiaries and affiliates of Neuberger Berman Group LLC. Please visit www.nb.com/disclosure-global-communications for the specific entities and jurisdictional limitations and restrictions.
The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC.
© 2009-2022 Neuberger Berman Group LLC. All rights reserved.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Be the first to comment