Second Coronavirus Wave Concerns Hits Public Hospitality Companies Hard

Travel, hotel, and restaurant stocks have been hard this week.

Reports of rising concerns of coronavirus coming in have rocked the publicly traded hospitality stocks the hardest this week. While positive cases increasing could be a result of more testing, hospitalizing rates in Texas and Arizona are also spiking. AZCentral reports that state officials are “urging hospitality to ‘fully activate’ emergency plans”.

Florida has seen its highest seven-day rise in cases since March and an uptick in positivity rate, one of Governor DeSantis's often cited figures. IHME has updated its projections for total U.S. deaths to 149,970 by September 1st but even with this news, Treasury Secretary Steven Mnuchin said that the economy can't shut down again. 

Looking at public markets, airlines, hotels, and cruise ships were some of the fastest rising stocks over the last few weeks as it appeared the U.S. had turned a corner. However, the last week saw double-digit declines in the following stocks:

  • Marriott: -18.48%
  • Hyatt: -16.6%
  • Southwest: -19.49%
  • American Airlines: -30.25%
  • Norwegian Cruise: -27.85%
  • Carnival Cruise Lines: -19.81%
  • Dave & Buster’s: -34.49%
  • Darden Restaurants: -21.16%

Compare these declines to the Dow Jones and S&P 500 Index which are down less than 5% over the last five days. Some analysts said this is also part of a pullback from an overheated market as investors jumped on stocks that were at rock-bottom prices.

In positive signs, TravelAgentCentral reported that half of travelers still planned to take a vacation in 2020. In addition, Neilsen CGA has reported that 30% of consumers in TX, FL, and CA had been out to eat at a bar or restaurant over the last two weeks.

The urgency to keep employees and guests safe remains a critical task of operations with many areas still requiring staff to wear PPE and take other precautions. Eater Houston reported several restaurants in the Houston area have temporarily closed after employees have tested positive.

It is clear we still do not know much about COVID-19 as experts are split on the reasons why some states are seeing sharp increases while others have not. Georgia, one of the first states to reopen its economy, has been relatively flat over the last fourteen days. Compare that to California which has only just begun to reopen but is seeing a spike in cases. This NYTimes tracker only had five states showing increased cases a fortnight ago and now there are 21 states showing an increase.

Every state in the nation has had protests and demonstrations after the murder of George Floyd and while it may be too soon to see trends of these mass-gatherings, there is not a clear sign of increases from this yet. New York City, the epicenter of COVID-19 and also home to some of the biggest demonstrations, continues to move ahead with its plans to reopen as case counts continue to decline.

With stay-at-home orders and capacity restrictions continue to loosen across the country, the ongoing fight against COVID-19 and balancing it against economic recovery will be a delicate dance for the foreseeable future as travel, leisure, and hospitality looks to rebound.

Disclaimer: This article is for information and education purposes only and not to be taken as financial advice. This article was written while the market was still open and prices and percentages are subject to change.

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