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Australia closed its borders almost 18 months ago in a bid to contain COVID-19. With more than half of Australia’s population in coronavirus lockdown, many have missed the holiday to an exotic location. But there is light at the end of the tunnel.

Travel is going to recover- suggests the recent sinusoidal trends on the ASX. Last week, travel and tourism stocks rose after restrictions were eased in various parts of the country and states passed their vaccination milestone. Market sentiments have been positive as experts believe that reopening Australia despite high numbers of new infections will be safe when the vaccine targets of 70 to 80 per cent are met.

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ASX travel stocks’ recent performance

As the travel sector weathers the ongoing impacts of COVID-19, hope is on the horizon for an end to lockdowns. In the August 2021 reporting season, many major travel players reported substantial losses as border closures and lockdowns wreaked havoc on the industry.

Sydney Airport reported a loss before income tax expense of AUD 97.4 million for the half-year to 30 June. Webjet revealed a loss of AUD 156 million for the nine months to March 2021. Qantas reported the largest loss of the ASX travel shares this earnings season, with an underlying loss before tax of AUD 1.83 billion.

However, airlines anticipate a recovery in the travel market as vaccination targets are reached later this year. A surge in domestic travel demand and leisure travel is also likely.

Against this backdrop, let us skim through two ASX-listed stocks with structural advantages. What’s interesting is the fact that these travel shares, though they are lesser- known, aren’t just relying on recovery in tourism to boost their fortunes. Read on!

Copyright © 2021 Kalkine Media

Experience Co Ltd (ASX: EXP) & Apollo Tourism & Leisure Ltd (ASX: ATL)

Successful investments do not just require insight. What they truly require is “unique” insight.

Adventure tourism provider Experience Co Ltd (ASX:EXP) is one such player. With new leadership in charge, net debt has been slashed from a whopping AUD 30 million to merely AUD 2 million. Subsequently, the business was able to endure bushfires and COVID-19 without raising new cash.

Moreover, Experience Co seems to be surviving off domestic tourism alone. Like the cherry on the cake, its share price, too, has recovered to the levels of early 2020.

The lean, restructured business could prove to be significantly profitable than ever before once international tourists return en masse in the next couple of years.

Copyright © 2021 Kalkine Media

Another company not just relying on recovery in tourism to boost their fortune is Apollo Tourism & Leisure Ltd (ASX: ATL).

The Company’s Australian market activity has increased in all regions. Despite the absence of international guests, in periods where domestic borders were open, the Company demonstrated its ability to generate strong domestic demand with domestic revenues significantly exceeding pre-COVID-19 levels.

Revenue from RV sales and associated servicing and part sales, helped to partly mitigate the loss in rental income during the year, as record levels of RV sales demand were experienced in all regions.

Besides, COVID-related restrictions have begun to ease in its key international markets of Canada and Europe.

Way forward

Although things have been improving since the vaccine roll-out, the industry still faces a long uphill battle after share prices plummeted to the lowest levels not seen in half a decade. With the New Zealand travel bubble now closed, new initiatives to get travelers flying again need to be discussed- for instance the vaccine passport.

Notably, the Federal Government recently announced that it would begin a trial of vaccine passports with some countries soon — the latest step in Australia’s reopening to the world.

Besides, domestic travel has largely been the saving grace for the aviation industry, with the latest figures showing 2.63 million passengers were carried on Australian domestic commercial aviation compared to just 0.63 million in June 2020.

All in all, COVID-19 has continued to disrupt tourism markets around the world, however, the light at the end of the tunnel seems faintly visible as vaccination rates rise.

SOURCE: KALKINE MEDIA