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US Travelers Defy New COVID Fears: Airlines & Hotels Perk Up

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An increasing number of Americans are traveling or making plans to travel in the coming months. Air travel is finally picking up as are hotel bookings across the United States despite the recent rise in new COVID-19 cases.

The surge in air travel comes as more people get vaccinated and feel confident about traveling. Also, restrictions are being eased, allowing people to make travel plans after staying in home confinement for over a year.

Air Travel on the Rise

Air traffic has been on the rise lately, with Americans finally making travel plans after months. According to the recent TSA data, nearly 2 two million people are transiting through U.S. airports daily. This is three times more than the traffic witnessed around the same time last year.

Air travel had come almost to a standstill last year after the coronavirus outbreak. However, even then, traffic is almost 80% of the travelers around this time in 2019. According to a Travel of Path article, airlines have been not seen a decline in bookings despite a surge in the Delta variant cases lately.

Also, according to a survey by theInternational Air Transport Association (IATA), people are once again confident about traveling via air, with 86% feeling safe on board and 89% happy with the safety and protective measures implemented.

Airlines Report Higher Q2 Revenues

The airline industry was almost at the brink of collapse last year as the pandemic rattled the travel and tourism industry. However, things have finally started changing although the road to recovery will be long.

With travel and bookings picking up, airline companies have started reporting higher revenues. Last week, United Airlines Holdings Inc. (UAL - Free Report) despite reporting the sixth consecutive quarter of loss, said that its revenues increased in the second quarter. The airlines reported revenues of $5.47 billion for the quarter ended June 2021, surpassing the Zacks Consensus Estimate by 3.09%. United Airlines carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Also, American Airlines Group Inc. (AAL - Free Report) and Delta Air Lines Inc. (DAL - Free Report) reported a surge in booking that helped both companies to generate higher revenues. American Airlines, which belongs to the Zacks Transportation - Airline industry, reported revenues of $7.48 billion in second-quarter 2021, surpassing the Zacks Consensus Estimate by 0.71%. This compares to year-ago revenues of $1.62 billion. 

Delta posted revenues of $7.13 billion for the quarter ended June 2021, surpassing the Zacks Consensus Estimate by 12.38%. Similarly, Southwest Airlines Co (LUV - Free Report) recorded operating revenues of $4,008 million, outpacing the Zacks Consensus Estimate of $3,942.5 million and increasing more than200% year over year. This once again shows that the airline industry is on the path to recovery.

Hotel Bookings Surge

As more Americans plan holidays, the hotel industry too is getting busy. According to a Hospitality Net report, one in every five U.S. hotels sold more than 90% of their rooms in the week ending Jul 17. This is the highest level since the summer of 2019.

According to the latest data from STR, the average daily rates of hotels in the United States are still the highest in history. Moreover, according to the June 2021 data from STR, hotels in the United States, which are on their path to recovery, registered their highest monthly occupancy and revenue per available room (RevPAR) since October 2019.

Also, hotel occupancy in the United States in June was 66.1%. Of the 25 markets, Tampa recorded the highest occupancy of 76.2%, marking an increase of 3.2%over June 2019. Other markets like Denver, Los Angeles, Miami, Nashville, Norfolk/Virginia Beach, Oahu and San Diego also registered more than70% occupancy.

The travel and leisure industry along with the transportation industry is finally breathing easy. It needs to be seen now how the Delta variant impacts these spaces. Per the U.S. Centers for Disease Control and Prevention data, new cases of COVID-19 have jumped 171% in the past two weeks and deaths are up 19%.

However, the CDC hasn’t yet revised its mask mandate nor has announced plans to re-impose restriction. This may be because the vaccination drive is in full swing and people are largely confident about traveling. As of now, more than 160 million Americans are vaccinated, and this is helping the airline, and travel and leisure industries.