The leisure and hospitality sector has had a crazy ride since the beginning of 2020. Revenues went to zero for many companies during the pandemic lockdown, but subsequently bounced back. Then Russia’s invasion of Ukraine saw energy prices spike, as well as wider inflation pressures. This has been a huge headwind over the sector with many businesses forced to close due to rising costs and falling revenues.
Many of these businesses have high operating leverage due to fixed costs. Once these costs are covered, profits can rise substantially. However, if revenues fall below the costs required to keep the lights on, they are forced to stop trading.
I’m a firm believer that in every sector there are always winners and losers. Every crisis can throw up a new opportunity. So is there is any value on offer yet?
An easy place to cut back
was an obvious stock to short in 2022. When consumers’ spending power falls and people look to cut back wherever they can, there is increased
