Asked to guess what has been the best-performing sector in global equity markets so far this year, many people might say technology, especially given the pervasive coverage of artificial intelligence (AI) in the media. While this is a logical answer, it’s wrong. The real success story has been the travel sector. Shares in booking sites, entertainment, airlines, cruises and hotels, in both the US and Europe, have easily eclipsed the technology-led Nasdaq index in 2023, notes Ben Laidler, global markets strategist at eToro.
Of course, just because travel shares have done well doesn’t mean they will keep soaring. However, Laidler thinks that the sector still has ample scope for growth. The industry is certainly doing much better than it was during the Covid pandemic, when most travel ground to a halt. But it still “hasn’t quite recovered from Covid”, especially in Asia, where the volume of passengers is still 40% below its 2019 level owing to the region’s relatively late reopening. As a result, he believes that “there is still a decent amount of pent-up demand... set to work its way through the industry”, providing a further boost.
An incomplete recovery
Increasing demand isn’t the only reason to be positive about the travel sector. During
