Travel & Leisure companies
The economic uncertainty caused by Brexit combined with a possible increase in travel costs to Europe could benefit UK-based leisure firms while airlines and travel agents suffer.
Legoland and Alton Towers owner Merlin Entertainments looks like a clear winner in the event of a surge in ‘staycations’. It could also get a foreign exchange boost from the fall in sterling, which could in turn increase the number of tourists visiting Britain. The stock fell just 1.5% to 429p on 24 June, so while it isn’t one for investors wanting to grab a bargain its quality and relative resilience give it merit.
Pub group Enterprise Inns’ share price decline over the past week seems overdone. The company could profit from consumers choosing to stay in the UK rather than holiday abroad.
As a relatively low-cost going out option, it could get a lift if economic uncertainty causes consumers to turn their backs on expensive nights out and simply park themselves in the pub for a pie and a pint.
The same applies to pub group Marston’s, which slipped 9% to 140p on 24 June. A key challenge for pubs will be finding enough staff if Brexit results in reduced immigration.
Whitbread should be treated with caution because although its ‘value’ hotel chain Premier Inn is less correlated to the economy than higher-end chains, its revenues still track GDP, which is expected to fall after Brexit. According to Deutsche Bank, the market value of Whitbread’s properties in London could drop if there are substantial outflows in foreign capital, leading to a weaker balance sheet.
Multiplying travel search engines and airline comparison sites have given the average traveler the illusion that they can beat the market. They cannot. There is no fare or routing you will find that a good travel agent cannot also get, but the opposite is far from true. Good travel agents routinely perform airfare “miracles,” and can even redeem your award miles when you can’t. And now that many airlines won’t let non-frequent customers book aisle or window seats in advance, or charge extra for them, this is another “upgrade” travel agents can offer. I just did this when flying a carrier I don’t usually use domestically and have no status on, so I had my agent assign me aisle seats on every leg. I’ve written at length here at Forbes.com about the myriad reasons why luxury travelers need to use a travel agent, from hotel room upgrades to “impossible” reservations to unique access to otherwise off limit activities. But travelers of any budget can benefit from using a quality travel agent for plane tickets – especially when something goes wrong, which it often does. If your flight is cancelled, I absolutely assure you that you will do better calling your travel agent for help than waiting on hold at the airline’s 800 number – along with everyone else.