By Dave Sebastian
Shares of travel-reliant businesses rose Tuesday amid optimism in the potential development of a coronavirus vaccine and economies reopening after a monthslong pause in operations due to the Covid-19 pandemic.
The Dow Jones U.S. Travel and Leisure Index rose about 3.6%.
Though spending on hotels, restaurants, airlines and other industries hurt by social distancing remain low, it appears to be picking up. Hotel occupancy rates in the U.S. have risen for five straight weeks, according to data tracker STR, offering a glimmer of hope that the start of the summer will foster a recovery. Shares of Marriott International Inc. rose about 4.9%, Hilton Worldwide Holdings Inc. about 5.8% and Hyatt Hotels Corp. about 7%.
Six Flags Entertainment Corp., whose shares were up about 9.2%, on Tuesday said it is reopening its Frontier City park in Oklahoma City starting June 5. Shares of other theme parks followed, with SeaWorld Entertainment Inc. up around 7.8% and Cedar Fair LP about 7.2%.
Airlines have taken off, too. The German government and Deutsche Lufthansa AG on Monday said they agreed on a EUR9 billion euro ($9.81 billion) bailout deal, one of the largest aid packages by a single country hatched so far in the air-travel sector. American depositary shares of Lufthansa rose 7.6%. Shares of United Airlines Holdings Inc., American Airlines Group Inc. and Delta Air Lines Inc. were up 13.5%, 11.9% and 9.9%, respectively.
UBS analysts raised the price target of Southwest Airlines Co. to $41 from $37 on hopes for domestic travel recovery. Shares rose 10%.
"We view LUV as the best way to play a recovery in the U.S. airlines given the absence of a bloated balance sheet coupled with network that lends itself to where the recovery will happen first (domestic and then leisure) and more flexibility in its fleet than almost any player given the 737MAX contractual claims with Boeing," the analysts said in a note to clients.
Shares of Carnival Corp., the world's largest cruise operator, rose 12%. It plans to resume eight cruises beginning Aug. 1. Norwegian Cruise Line Holdings Ltd., which suspended voyages through July 31 and is internally planning for third-quarter sailings, was up 13.8%, while Royal Caribbean Cruises Ltd. was up 12.8%.
Write to Dave Sebastian at firstname.lastname@example.org