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The Hardest Hit Companies of the COVID-19 Downturn: The ‘BEACH’ Stocks

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BEACH Stocks: $332B in Value Washed Away

The market’s latest storm has plunged the global travel industry into uncharted territory.

Since the S&P 500 market high on February 19, 2020, market capitalizations across BEACH industries—booking, entertainment, airlines, cruises, and hotels—have tumbled. The global airline industry alone has seen $157B wiped off valuations across 116 publicly traded airlines.

Investor confidence in cruise lines has also dropped. Between Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings, over half of their market value has evaporated—equal to at least $42B in combined market capitalization.

Today’s infographic profiles the steep losses across BEACH companies. It looks at the ripple effects across individual companies and industries from the February 19 peak to date*.

*All numbers as of market close on March 24, 2020

 

Falling Off A Cliff

As the COVID-19 pandemic has spread to over 100 countries, many governments have implemented sweeping travel restrictions.

The impact across BEACH industries is far-reaching, with some valuations declining to nearly a quarter of their previous total.

CompanyTickerCategoryMarket Cap: 02/19/2020Market Cap: 03/24/2020% Change
Booking Holdings
BKNGBooking$80.8B$51B-37%
Expedia GroupEXPEBooking$17.1B$8.1B-53%
Allegiant TravelALGTBooking$2.7B$1.4B-47%
Live Nation LYVEntertainment & Live Events$16.3B$9.1B-44%
Six FlagsSIXEntertainment & Live Events$3.2B$1.1B-66%
Cedar FairFUNEntertainment & Live Events$3.1B$1.3B-58%
The Walt Disney CoDISEntertainment & Live Events$255.1B$177B-31%
Penn National GamingPENNEntertainment & Live Events$4.3B$1.6B-63%
Delta Air LinesDALAirlines$37.5B$17.8B-52%
United Airlines UALAirlines$19.7B$8.4B-57%
American Airlines AALAirlines$12.1B$6.1B-50%
Southwest AirlinesLUVAirlines$29.5B$19.7B-33%
Alaska Air GroupALKAirlines$8B$3.7B-54%
Air Canada (in USD)ACAirlines$8.3B$2.8B-67%
CarnivalCCLCruise & Casino$30.8B$10B-67%
Royal Caribbean CruisesRCLCruise & Casino$23.2B$7.5B-68%
Norwegian Cruise LinesNCLHCruise & Casino$11.1B$3.1B-72%
Las Vegas SandsLVSCruise & Casino$52.8B$35.1B-34%
MGM Resorts InternationalMGMCruise & Casino$16.2B$6.2B-68%
Wynn ResortsWYNNCruise & Casino$14.6B$7.2B-51%
Caesars EntertainmentCZRCruise & Casino$10B$4.2B-58%
Eldorado ResortsERICruise & Casino$5.4B$1.3B-76%
Marriott InternationalMARHotels & Resorts$48.3B$25.7B-48%
HiltonHLTHotels & Resorts$31.3B$19.4B-38%
Hyatt HotelsHHotels & Resorts$9.1B$4.9B-46%
Choice Hotels InternationalCHHHotels & Resorts$6B$3.2B-46%
Wyndham Hotels & ResortsWHHotels & Resorts$5.6B$2.9B-48%
Park HotelsPKHotels & Resorts$5.5B$1.9B-66%
Vail ResortsMTNHotels & Resorts$9.98B$5.8B-41%
Marriott Vacations WorldwideVACHotels & Resorts$5.3B$2.2B-59%

For instance, the consequences on various travel bookings brands have been severe. Booking Holdings, the parent company to Booking.com, Priceline, Kayak and OpenTable, witnessed share price declines of over 35% since the peak.

Empty Stadiums

Across the entertainment industry, ticket sales for concerts, movies, and other events are falling precipitously due to cancellations or postponements.

Upwards of $5B in global film industry losses could result from the COVID-19 pandemic.

Chilling footage of the Las Vegas strip, as well as other tourist epicenters around the world, shows deserted streets as visitors opt to stay home instead.

Bracing For Impact

Meanwhile, worldwide airline revenue is estimated to fall by as much as $113B in 2020.

In under two months, the share price of Delta Airlines has fallen over 50% as the company anticipates a capacity reduction of 40%, the largest in its history.

CompanyTickerFeb 19 2020 Share PriceMar 24 2020 Share Price
Delta Air LinesNYSE:DAL$58.5$26.9
United Airlines NASDAQ:UAL$79.4$33
American Airlines NASDAQ:AAL$28.3$13.9
Southwest AirlinesNYSE:LUV$56.89$37.7
Alaska Air GroupNYSE:ALK$65.2$28.9
Air Canada (in CAD)TSX:AC$45.3$15.1

The global airline industry—which employs over 10M people—supports $2.7T in global economic activity across an average of 12M passengers per day.

Aruba, Jamaica No More

As for the cruise line industry, global operations came to a 30-day standstill in mid-March. Over 800 COVID-19 cases and 10 deaths across three cruise ships have been discovered.

“COVID-19 on cruise ships poses a risk for rapid spread of disease, causing outbreaks in a vulnerable population, and aggressive efforts are required to contain spread.”

CDC

 

Carnival, a Miami-based company, has witnessed its share price fall to around one third of its February 19 value. Similarly, Royal Caribbean Cruises, which has seen its market cap plummet almost 70%, announced that it will suspend trips until mid-May.

Occupancy Dilemma

As the hotel industry is impacted by the global outbreak, share prices have also realized a significant slump. In the U.S., an estimated $1.4B in revenue is vanishing each week. If occupancy levels fall by just 30% this year, the U.S. hotel industry could see approximately 4 million jobs wiped out.

The Baird/STR Hotel Stock Index, which serves as a benchmark for the sector’s overall health, has declined over 47% year-to-date.

baird hotel stock index

Global Stimulus Response

A number of travel industries around the world are calling for stimulus packages.

On March 25, the U.S. Congress finalized a historic $2T deal, which includes $25B in grants for the airline industry. In the UK, officials are providing small businesses in hospitality and leisure grants that are worth up to $30,000 as part of its $400B bailout plan.

China, Germany, Italy, and Spain have outlined multibillion dollar proposals in response to COVID-19. Overall, at least eleven countries have announced stimulus plans along with the European Commission and the IMF.

When Will the Travel Wave Hit Again?

Amid the COVID-19 pandemic one thing is clear: the impact on the travel industry will have a marked effect on the broader economy.

Travel is closely linked with oil, as transportation accounts for over 60% of global demand. In Q2 2020, global oil consumption is projected to fall by 25M barrels per day.

Along with this, discretionary consumer spending makes up over one third of America’s GDP. The impact of the pandemic across this sector is expected to contribute to a 10% decline or more in U.S. GDP for the second quarter.

As conditions materially improve around the world—with China beginning to open up flights—positive signs are emerging from under the surface. Will BEACH industries quickly bounce back as infection rates drop, or will a slow and painful recovery unfold in the months ahead?

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Economy

Economic Growth Forecasts for G7 and BRICS Countries in 2024

The IMF has released its economic growth forecasts for 2024. How do the G7 and BRICS countries compare?

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Faded horizontal bar chart visualization of G7 and BRICS countries' real GDP growth forecasts for 2024.

G7 & BRICS Real GDP Growth Forecasts for 2024

The International Monetary Fund’s (IMF) has released its real gross domestic product (GDP) growth forecasts for 2024, and while global growth is projected to stay steady at 3.2%, various major nations are seeing declining forecasts.

This chart visualizes the 2024 real GDP growth forecasts using data from the IMF’s 2024 World Economic Outlook for G7 and BRICS member nations along with Saudi Arabia, which is still considering an invitation to join the bloc.

Get the Key Insights of the IMF’s World Economic Outlook

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This visual is part of a special dispatch of the key takeaways exclusively for VC+ members.

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Mixed Economic Growth Prospects for Major Nations in 2024

Economic growth projections by the IMF for major nations are mixed, with the majority of G7 and BRICS countries forecasted to have slower growth in 2024 compared to 2023.

Only three BRICS-invited or member countries, Saudi Arabia, the UAE, and South Africa, have higher projected real GDP growth rates in 2024 than last year.

GroupCountryReal GDP Growth (2023)Real GDP Growth (2024P)
G7🇺🇸 U.S.2.5%2.7%
G7🇨🇦 Canada1.1%1.2%
G7🇯🇵 Japan1.9%0.9%
G7🇫🇷 France0.9%0.7%
G7🇮🇹 Italy0.9%0.7%
G7🇬🇧 UK0.1%0.5%
G7🇩🇪 Germany-0.3%0.2%
BRICS🇮🇳 India7.8%6.8%
BRICS🇨🇳 China5.2%4.6%
BRICS🇦🇪 UAE3.4%3.5%
BRICS🇮🇷 Iran4.7%3.3%
BRICS🇷🇺 Russia3.6%3.2%
BRICS🇪🇬 Egypt3.8%3.0%
BRICS-invited🇸🇦 Saudi Arabia-0.8%2.6%
BRICS🇧🇷 Brazil2.9%2.2%
BRICS🇿🇦 South Africa0.6%0.9%
BRICS🇪🇹 Ethiopia7.2%6.2%
🌍 World3.2%3.2%

China and India are forecasted to maintain relatively high growth rates in 2024 at 4.6% and 6.8% respectively, but compared to the previous year, China is growing 0.6 percentage points slower while India is an entire percentage point slower.

On the other hand, four G7 nations are set to grow faster than last year, which includes Germany making its comeback from its negative real GDP growth of -0.3% in 2023.

Faster Growth for BRICS than G7 Nations

Despite mostly lower growth forecasts in 2024 compared to 2023, BRICS nations still have a significantly higher average growth forecast at 3.6% compared to the G7 average of 1%.

While the G7 countries’ combined GDP is around $15 trillion greater than the BRICS nations, with continued higher growth rates and the potential to add more members, BRICS looks likely to overtake the G7 in economic size within two decades.

BRICS Expansion Stutters Before October 2024 Summit

BRICS’ recent expansion has stuttered slightly, as Argentina’s newly-elected president Javier Milei declined its invitation and Saudi Arabia clarified that the country is still considering its invitation and has not joined BRICS yet.

Even with these initial growing pains, South Africa’s Foreign Minister Naledi Pandor told reporters in February that 34 different countries have submitted applications to join the growing BRICS bloc.

Any changes to the group are likely to be announced leading up to or at the 2024 BRICS summit which takes place October 22-24 in Kazan, Russia.

Get the Full Analysis of the IMF’s Outlook on VC+

This visual is part of an exclusive special dispatch for VC+ members which breaks down the key takeaways from the IMF’s 2024 World Economic Outlook.

For the full set of charts and analysis, sign up for VC+.

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