U.S. travel stocks fell last Friday and Monday before
rebounding slightly on Tuesday, suggesting that institutional investors believe that the U.K.’s withdrawal
from the European Union
will hurt hotels, airlines and OTAs more than other sectors.
Marriott International, Hilton Worldwide and Expedia Inc.
fell more than 10% for the two trading days ended Monday. Delta Air Lines
shares dropped more than 13%, while shares of American Airlines Group and
United Continental Holdings each plunged more than 17% for the two trading
days.
Priceline Group fell more than 11% last Friday, and
dropped another 3.7% Monday before stabilizing in Tuesday trading.
By comparison, the Dow Jones Industrial Average and the
Nasdaq Composite fell 4.8% and 6.4%, respectively, for the two trading days.
Investors appear to be wary of the impact the decision
will have on the travel habits of the British. The value of the British pound dropped
to a 31-year low after the referendum, making international travel more
expensive for Brits. Some analysts say the value of the British pound may fall
enough by the end of the year to equal the U.S. dollar, which would be a
historic first.
Priceline's 2017 revenue is expected to fall about 1.5% because
of Brexit, according to UBS analyst Eric Sheridan. That’s because 22% of
Priceline’s revenue is from the U.K. and 56% is from Europe, where the value of
the euro also fell after the Brexit vote.
Comparatively, the U.K. accounts for 9% of Expedia’s revenue
and Europe accounts for 24%, according to UBS.
As for the lodging sector, British travelers generally
book trips further in advance than those from continental Europe and other
nations, suggesting that the impact of the vote won’t soon be felt.
“The U.K. market books so far out in advance, but it’s
something we have to pay attention to closely,” said John Long, vice president
of sales and marketing at Iberostar Hotels & Resorts.
“We are not facing a problem of cancellations,” said
Ricardo Luque, senior vice president of Riu Hotels & Resorts.