Visa Inc.’s ( V Quick Quote V - Free Report) business volume is set to grow with a rebound in cross-border travel, which is the slowest sector to witness signs of recovery. However, there are some green shoots that indicate people’s desire to see the world around.
Cross-border is the highest margin business category for Visa. This business line has suffered since the pandemic struck, thus dragging the company’s earnings.
However, with lockdown being lifted in several parts of the globe and successful vaccination drives gaining more momentum each passing day, wanderlust is fast catching up.
Within travel, personal trips will pick up the pace faster than corporate tours owing to significant pent-up demand. Also, corporate meetings now conducted virtually partially dampened the need for corporate travel as of now.
However, per a recent American Express report, corporate travel will be revived soon. It stated that while some meetings are easily done online, others are much more valuable when they take place face to face. Also, the U.S. workforce is yearning for in-person business connections after an extended period of remote working and monotony. 88% of business travelers believes, business travel can contribute to stronger leadership skills.
It seems that business junkets are on the horizon. 83% decision makers are optimistic that business travel will return to the pre-coronavirus levels over the next two years.
While the business travel is yet to resume normalcy, personal travel is already gathering steam. Management confirmed that the decline in travel is temporary and the company is starting to see some early signs of improvement. In the second quarter of 2021, cross-border travel-related spending excluding intra-Europe noticed an uptick from the first-quarter reading, driven by two factors, which are fewer restrictions and higher spend per card.
Visa is also noticing strength in travel from countries with open borders, namely U.S.-Mexico, U.S-Lain America.
Rapid restoration of personal travel is more suitable for Visa, which derives a large chunk of its travel activities from personal rather than business. Also, the company is a global leader in travel co-brands.
A recent report by Tripadvisor, the world's largest travel guidance platform, stated that globally, nearly half (48%) of travelers are planning summer trips with more than a third (38%) staying domestic and less than one in 10 (9%) venturing out, internationally.
Mastercard Inc. ( MA Quick Quote MA - Free Report) , American Express Co. ( AXP Quick Quote AXP - Free Report) and Discover Financial Services ( DFS Quick Quote DFS - Free Report) are also likely to see sunny days ahead with people travelling and spending more on their cards.
Year to date, the stock has gained 3.7% against its
industry’s decline of 0.32%.
Visa carries a Zacks Rank #3 (Hold), presently. You can see
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