By Lawrence Musekiwa
There is no doubt that Coronavirus disrupted the hospitality and tourism industry. But for investment managers looking for modest return on investment over at least the next 2 to 5 years, hot pick stocks should be around the tourism sector. One from my school of thought would consider a relatively higher percentage of funds to be invested around these stocks.
Especially on the Zimbabwe Stock Exchange, these counters have been overlooked because of their relative high exposure to the pandemic. Over the course of 2020 and the first quarter of 2021 counters in the hospitality sector such as Rainbow Towers Hotel and African Sun were overlooked.
Rationally no one wanted to buy them because of the Covid-19 risk which clearly reflected in their prices and occupancy rates. We believe the status quo is changing or rather it has changed, with more and more people beginning to travel, which wasn’t the case in 2020.
With the vaccines being developed around the world it is high time one considers looking at the prospects of the hospitality sectors especially with the European countries struggling with never ending lockdowns.
Rainbow Towers Hotel (RTG) and African Sun which are listed counters on the Zimbabwe Stock have a YTD of 4.30% and 19.99% respectively against the All Share index which is has already hovered up to 69.53% as well as the Medium Cap Index which has amassed a 93.18% gain in the year. These figures surely point to the fact that the hospitality industry is being avoided by all market participants, but should you also?
It’s a matter of time before the hospitality industry gets to somewhat full throttle operations. With restrictions being loosened across the world, it’s a matter of time before we see more tourists as well as more room occupancy around our local hotels.
Last week, the UK has allowed all non-essential shops to reopen, meaning to say that what used to be a big elephant in the room is slowly getting to its end although there are risks of variants as well as some Covid-19 waves.
Either way the outlook of this sector isn’t as bleak as it seems (reflected in the price). With some countries advocating for Covid-19 passports and impressive vaccinations underway, the next thing will be people especially from Europe and American flocking in hotels. According to Bloomberg experts, America hopes to have vaccinated almost all of its citizens before August with the safe vaccines rolled out.
What’s now left for the hospitality and tourism sector is a hope for a fast response vaccine uptake and implementation of safe environment for tourists to feel safe to avoid quarantine when they decide to go back to their countries.
With the country on top of the vaccine situation, despite citizen concern, companies will help drive the vaccination programme, but in all this, the country needs to remain closed and promote local tourism and tap into the potential, in the short term – Harare