Travel Stocks Drop As New Variant Shakes The Industry

Travel Stocks Drop As New Variant Shakes The Industry

Airbnb, Expedia as well as airline stocks slumped after South Africa raised the alarm over Omicron, a new fast-spreading strain of the coronavirus.

The new variant has triggered concern that travel restrictions and other restrictions could undermine the international economic recovery as the world closes its doors to travelers from South Africa, Mozambique, Namibia, Lesotho, Eswatini, Zimbabwe, Malawi, and Botswana.

Expedia, which was already having one of the worst performances in the Standard and Poor’s 500S, fell as much as 11% on Friday. Shares closed 9% lower at $159.80 each. 

Airbnb’s stock closed the day down more than 3% at $173.86. Booking also dropped more than 7%.

Hotels, cruise operators, and airlines also had a bad Thanksgiving day. Hotel giant Hilton dropped 6.3% to $136.21, while Marriott fell by 6.5% at $147.44.

Being the only two American flight carriers serving South Africa, Delta Air Lines and United Airlines are expected to be the most heavily impacted. 

United lost 9.6% to close at $42.26, while Delta fell 8.3% to $36.38. The company plans to resume in December 87 non-stop flights to Cape Town from Newark, New Jersey. A spokeswoman said no decisions about these flights have been done yet.

Delta has 35 scheduled flights between the U.S. and South Africa in December.

“Delta will continue to work closely with our government partners to evaluate any changes to U.S. policy,” the airline said in a statement.

For its part, American Airlines with 122 flights scheduled for December dropped 8.8% to $17.75

British Airways has 214 flights scheduled between London and South Africa for December, while Virgin Atlantic has 75.

“Following the latest announcement from the Health Secretary we’re working through plans for our customers and colleagues currently in South Africa and those due to travel from the UK in the coming days,” British Airways said in a statement on Friday.

Shares of Carnival Corporation, Royal Caribbean, and Norwegian Cruise Line Holdings fell 10%, 10.2%, and 10.3%, respectively.