Pandemic Effects Expected to Linger for US Travel Industry

The travel recovery will be multi-year and hard to time

The travel industry has been one of the hardest-hit groups as a result of the coronavirus pandemic. Investors have been jumping in and out of travel-related stocks as the prospects improve or plummet based on infection growth or vaccination rates. We'll take a deeper look at where the travel industry is and how long it may take before stocks tied to this sector claw back to their 2019 levels.

Key Takeaways

  • The travel industry saw a total decline of 42% in 2020.
  • Although a bounce back can be reasonably expected as the pandemic is brought under control, there is considerable uncertainty as to when that will be.
  • The U.S. Travel Association forecasts that business and leisure travel will take years to return to pre-COVID levels.

Going to the Source

As investors, we generally have a good view of a company's earnings and balance sheet while sometimes only having a shallow knowledge of the overall industry dynamics. This is why it is useful to follow the publications and research of industry trade groups. For the travel industry, the U.S. Travel Association represents companies in the travel sector, spanning transportation, lodging, retail, recreation, entertainment, and food service.

The association reports on the state of the industry and makes forecasts combining data from government sources with its own model. The association also provides a weekly travel data report that contains analysis. For investors looking to jump into a post-pandemic travel industry rebound, both the forecasting and the commentary are essential reading.

The Toll of 2020

In a January update, the U.S. Travel Association put an updated figure on the losses the travel sector suffered due to the pandemic. According to the association, the sector lost $492 billion compared to 2019, meaning an annual decline of 42%. The losses were led by the two sub-sectors of business travel (70% decline) and international travel (76% decline). The lion's share of the decline occurred in spring, with some sub-sectors like domestic travel picking up slowly throughout the year. That said, every subsector ended 2020 well into the red.

The Long Road Ahead

Although it is no doubt a small comfort, the 2020 numbers were slightly shy of the 45.2% total decline the association projected in its Fall 2020 Travel Forecast. So it is possible that the fall projections forward to 2024 will see more positive surprises as the pandemic (hopefully) subsides. As it stands now, however, the U.S. Travel Association currently forecasts that leisure travel will not return to its 2019 levels until after 2023. Worse yet, higher-margin business travel will not return to 2019 levels within the current forecast period ending in 2024, although the 2024 projection is down only 8.6% from that baseline. International visitors are still projected to be down 14.8% at the end of 2024.

While it is easy to sneer at forecasts attempting to look four years down the road, these projections are coming from people in the business. Whether the situation is as dire a year from now or not, the best-case scenario is still a long, likely multi-year, climb back to 2019 levels. This means that investors looking to ride the rebound need to be prepared to hold positions for a long time while other pandemic bounce-back plays start paying out on shorter timelines.

Bottom Line: A Long Play in an Uncertain Market

The market does seem to be running on the cautious side for the travel bounce back. One industry proxy, the U.S. Global Jets ETF (JETS), is up over 70% from spring lows, but it is still down 30% from where it was in February 2020 prior to the bottom falling out. So, back of the napkin, the airlines are down 30% in an industry that has seen a 42% drop over the same time period.

With travel as a whole forecast to bounce back 23.2% in 2021, some of the recovery is already being priced in. There is, however, still some room to run if the forecasts survive new coronavirus variants and ongoing struggles to stomp down the original one. Simply put, investors looking to time the travel industry bounce back need to approach this as a speculative play with modest upside and an uncertain time horizon.

Do you have a news tip for Investopedia reporters? Please email us at
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. US Travel Association | Weekly Coronavirus Impact on Travel Expenditures in the U.S. January 22, 2021 Update

  2. US Travel Association | Travel Forecast Fall 2020.

Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.