Travel Shares Slide as Omicron Hits Bookings

Written by: Susannah Streeter | Hargreaves Lansdown

The summer horizon may look rosy, with bookings expected to rebound to pre-pandemic levels, but a bit of a chill has descended on TUI’s winter reservations. The update from the FTSE 100 travel company that bookings had slowed sent shares reeling in early trade, before recovering very slightly. The outlook adds another piece to a precarious picture over the next few months for the travel and tourism sector, given uncertainty surrounding the new Covid strain. It’s a particularly disheartening scene given that until worries about the Omicron variant surfaced, bookings had been looking much brighter for the winter season. Losses have been stemmed by hopes for the main holiday season, with 2.2 million bookings for summer 2022, and the company will be clinging onto hopes that these tickets won’t be cancelled.

The feel good factor has evaporated for British Airways owner IAG, easyJet, Ryanair and Wizz Air amid worries that customers will hold off booking new flights until more information is available about the infectiousness of Omicron - due to concerns that tougher travel restrictions may be imposed. Many passengers have become tired of postponing trips and becoming mired in complex refund processes, and are likely to hold off paying hard earned wages for fresh disappointment. News that the UK government is considering implementing a plan B and re-issuing work at home guidance is likely to add to the urge to batten up the hatches and stay put, until the latest Covid storm subsides.

There are fresh glimmers of hope for SSP, the caterer which is highly dependent on the travel network. It relies on travellers to pick up snacks from its Upper Crust kiosks, Ritazza cafes and other franchise outlets in railways and airports, and business was severely hit by lockdowns and restrictions. While it’s still firmly in the recovery phase, investors appear to be encouraged by the return of trade, with the number of units reopening almost back up to almost three quarters of pre-pandemic levels. . It is slow progress though, and there is still a long road back to full health, especially if commuters are advised not to go into the office.’

Related: Covid Woes and Supply Chain Issues Among the Drivers in FTSE Reshuffle