Tourists on a ferry in Croatia in June. Tourism in Europe is expected to resume as Covid restrictions ease.
Elisabetta Zavoli / Getty Images
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European tourism is expected to resume as countries relax restrictions due to successful Covid-19 vaccination programs and falling infection rates.
While Covid variants and declining consumer confidence mean nothing is safe – the quaint coastal village of Kokkari on the Greek island of Samos is unusually calm for this time of year – the opportunities in Europe for investors are with Hotels, Car rental companies and airport operators that had strong pre-pandemic business models and survived Covid in good financial shape.
The recovery will be critical to the economic health of some countries. Tourism accounts for almost 15% of GDP in Spain and over 20% in Greece. Although tourism in southern Europe is expected to be higher this year than it was in 2020, it will still be 50 to 60% below 2019 levels, says Chris Hare, an economist at HSBC who estimates tourism will be this year one to two percent could contribute refers to the GDP in southern European countries.
Read more about Europe’s comeback
A better recovery story is in Northern Europe. The Nordic countries are not as popular as southern France and Italy, but have suffered less from a slump in tourism. Latest data from Eurostat show that the total number of overnight stays in tourist accommodation fell by only 36% in Denmark from April 2020 to March 2021 and by around 40% in Norway and Sweden.
It is a hidden gem
Scandic Hotels Group
(Ticker: SHOT.Sweden), which operates a network of 280 hotels in Scandinavia, Germany and Great Britain
Deutsche Bank predicts that the Scandic share could rise from the last 35.38 kroner to 40 Swedish kronor (4.70 US dollars) if the rent is lowered permanently and the hotel demand picks up again.
Morgan Stanley analyst Jamie Rollo estimates that Scandic’s stock will achieve multiple times 15.3 times expected earnings for 2023.
Scandic said in a June statement that “hotel demand has increased since April due to the gradual easing of restrictions related to the Covid-19 pandemic in all markets. Domestic leisure travel is increasing in all markets. “
Another promising European Travel recreation game is based in Frankfurt
Fraport
(FRA, Germany). It is active at 31 airports around the world, but the majority of annual sales come from Europe. The core business is Frankfurt Airport, which accounted for 51.8% of consolidated sales in 2019. In 2020, 73% of Fraport’s business was in Germany.
Frankfurt flown 70.6 million passengers in 2019 – which dropped to 18.8 million in 2020 – and is a hub for 100 airlines. In an income statement in May, Fraport announced that in the first three months of 2021 the number of passengers in Frankfurt fell by 77.6% compared to the previous year to just under 2.5 million. Compared to Q1 2019, that’s an even bigger drop of 83.2%, so it’s well-positioned to benefit from the recovery in travel.
There are other catalysts. Frankfurt Airport has consulted with the airlines about the increase in airport charges at Frankfurt Airport and will set itself the goal of reducing the typically long queues for the security pandemic with a new hall and additional aisles at Terminal 1.
CEO Stefan Schulte said in a speech in June that Fraport had “used the crisis to become significantly leaner, more efficient and therefore more competitive”.
Chu has a buy recommendation and a price target of 74 euros ($ 88.25). The Fraport share rose by 19.1% this year to last € 58.80 and is ahead of the competition
Paris airports
(ADP. France), which grew by 4%.
In the May announcement, Fraport said that group sales are expected to reach around 2 billion
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