Tag: pandemics

After the Pandemic’s Travel Collapse, Biden Should Build Tourism Back Better

U.S. President-elect Joe Biden’s ambitious goals include strengthening the country’s middle class, making the environment a top priority across the government, and building the economy back better after so many livelihoods have been shattered by the coronavirus pandemic.

A revitalized national tourism policy could be a big part of the solution for all three issues. To get an idea how that could work, take a look at Key West, an island off the southern tip of Florida.

On Nov. 3, when the world’s eyes were fixed on the U.S. presidential election, the voters of Key West passed three landmark measures to dramatically reduce cruise ship traffic docking in their small, historic town. A citizen-led movement successfully argued that years of unregulated big-cruise tourism had taken too great a toll on the environment, public health, local businesses, and the town’s very way of life. By margins as large as 81 percent, the island city voted to reduce the number of ships allowed to dock, ban the largest cruise ships outright, and require clean environmental records of the smaller vessels that will still be allowed to visit the island. Voters were opting for an end to frenzied crowds and polluted water, and in favor of something closer to sustainable or ecotourism. Both the locals and their visitors will be better off this way.

But this vote was about far more than one town’s battle against cruise ships. It’s part of a backlash following many years of government neglect during a phase of relentless growth of tourism. It’s become a truism that modern overtourism has not only overrun, disfigured, and polluted places such as Key West, Barcelona, and Venice, but also spoiled destinations and ruined vacations for many travelers as well.

In the era before the pandemic, the $8 trillion global tourism industry was celebrated for underpinning economies around the world, including that of the United States, where the money spent by foreign visitors accounts for 11 percent of export earnings. (Because the money technically comes in from abroad, spending by visitors is booked as exports.) Those numbers mask the furor at the unacknowledged damage tourism was doing to local life, the environment, and visitors’ ability to appreciate the places they were visiting.

It took the pandemic to bring the issue to a head. The tsunami-like spread of the coronavirus brought the global travel industry to an abrupt halt. The world went from too much tourism to no tourism at all. Lockdowns meant that no one moved, neither across international borders nor even across town. Overnight, we all discovered the contradictory powers of the travel and tourism industry.

In real time, Americans saw how travel and tourism is the $1.6-trillion glue holding much of the U.S. economy together. Yet they also saw how it is a formidable environmental threat that pollutes their air and water and contributes to the climate crisis.

Without tourism, seemingly solid industries such as airlines, hotels, restaurants, and department stores tanked—the list is almost endless. Every U.S. state suffered,

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Airbnb’s IPO filing shows pandemic’s effect on travel industry

Airbnb Inc. after years of speculation revealed its plans for an initial public offering, disclosing increased losses this year and other details of its finances and operations.

The San Francisco home rental platform in its filing Monday listed the size of the offering as $1 billion, a placeholder that will change as its bankers test demand for the shares. The number of shares to be sold and their proposed price range will be disclosed in a later filing. People familiar with the company’s plans have said it will seek to raise as much as $3 billion in an IPO in December.

The listing is set to be one of the biggest this year, capping an IPO surge that has largely defied the economic devastation inflicted by the COVID-19 pandemic.

The company’s filing confirms the damage it suffered as the pandemic wreaked havoc on the travel industry. Airbnb said it had a net loss of $697 million on revenue of $2.5 billion for the nine months that ended Sept. 30. That compared with a net loss of $323 million on revenue of $3.7 billion for the same period last year.

The company’s potential valuation in an IPO can’t be precisely calculated until the proposed terms and other details are revealed in the later filing. Earlier calculations have fluctuated with the rise, fall and rebound of its business, as well as the reasons for the valuation.

Although Airbnb’s valuation reached $31 billion in a funding round in 2017, warrants in an April round of debt and equity securities that included Silver Lake and Sixth Street Partners valued it at only $18 billion, Bloomberg reported.

A calculation related to employee compensation and tax reporting put the value at about $22 billion as of Sept. 30, people familiar with the matter said. That valuation reflected the estimated value of common shares held by employees at the time. It’s a different metric than the often higher valuation that venture capitalists pay for preferred stock that would come into play in the IPO.

Airbnb’s offering will be led by Morgan Stanley and Goldman Sachs Group Inc. The company plans for its shares to trade on the Nasdaq Global Select Market under the symbol ABNB.

The listing venue was a victory for Nasdaq Inc. over the New York Stock Exchange. Airbnb’s listing is expected to be the biggest on Nasdaq since Facebook Inc.’s 2012 IPO.

Airbnb is set to join food delivery company DoorDash Inc., which filed Friday to go public, in a finale to what is already a record year for IPOs. Driven mostly by the proliferation of special purpose acquisition companies and to a lesser extent by software companies, an all-time record of more than $141 billion has been raised on U.S. exchanges in 2020, according to data compiled by Bloomberg.

Along with Airbnb and DoorDash, online discount retailer Wish Inc. and installment loans provider Affirm Inc. are expected to complete IPOs by the end of the year, people familiar with their plans have said.

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Expedia posts smaller losses as pandemic’s travel shutdown continues; stock gains

EARNINGS RESULTS

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Expedia (EXPE) reported fiscal third-quarter losses of $221 million, or $1.56 a share, down from net income of $2.71 a share a year ago. After adjusting for stock-based compensation, restructuring charges and other costs, the company reported losses of 22 cents a share, down from earnings of $3.38 a share a year ago. Sales totaled $1.5 billion, down from $3.56 billion a year ago.

While the declines remain stark, they were better than expected and improved from the previous quarter, when Expedia posted a loss of more than half a billion dollars over three months. Analysts on average projected adjusted losses of 79 cents a share on sales of $1.39 billion, according to FactSet.

“Travel demand continued to be significantly impacted by the virus in the third quarter, but the increased travel in the quarter, along with continued progress on our cost initiatives, led to improved financial results,” Chief Executive Peter Kern said in a statement Wednesday. “As the last several weeks have demonstrated, the travel industry and the world still face a prolonged and bumpy path to recovery, with increasing COVID-19 cases and uncertainty around vaccine and therapeutic timelines.”

Collectively, Expedia has lost almost $950 million so far this year, as the COVID-19 pandemic has decimated the travel industry, after collecting profit of more than $750 million in the first nine months of last year. Analysts expect Expedia to post a loss in the fourth quarter as well, as Americans skip holiday travel amid continuing spread of the coronavirus; Expedia did not provide a forecast.

Shares gained more than 4% in after-hours trading Wednesday, following a 0.3% decline to $98.50 in the regular trading session. The stock has declined 8.9% so far this year, as the S&P 500 index (SPX) has gained 4.3%.

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