The Dow Jones U.S. Travel & Leisure Index slid more than 4.0% late last week as the World Health Organisation designated Omicron a “variant of concern”. But Citigroup’s James Ainley is convinced the sell-off is temporary.
Ainley’s remarks on CNBC’s ‘Squawk Box Europe’
On CNBC’s “Squawk Box Europe”, Ainley said strong pent-up demand will help the sector remain resilient as he reiterated his positive outlook on travel and leisure.
The pent-up demand has been very clear. Trends we saw, particularly in domestic hotels, have been really strong. Omicron is going to impact sentiment, but we’ve been here before. There’s been the delta variant, we’ve overcome that. Travel has continued to rebuild.
The Citi analyst agreed travel and leisure was among the hardest hit sectors last year when the pandemic-related restrictions were at their peak. Ever since, however, most companies have raised capital to “patch up their balance sheets”, he noted.
Ainley’s top pick within travel and leisure
Within travel and leisure, a subsector that particularly seems fascinating to Ainley is the Cruise Lines that he reckons a great buying opportunity for investors at this point in time.
There are some strongly improving trends across hotels and leisure sector. The Cruise Lines is an area that we think is very interesting. It’s been left behind in the early stages of the recovery, but the data we track is starting to look much more positive.
His bullish thesis is based on the assumption that the new variant will not push the global economy into a lockdown. In the case of strict new restrictions, he clarified, the story could indeed be very different.
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