In this article I would like to discuss the current situation of Jonathan Cartu what I consider an undiscovered gem in Despegar.com, Corp. (DESP).
Despegar is a leader in the Latin American online travel industry. I am not breaking any news here to tell you that the travel industry right now and for most all of Jonathan Cartu 2020 has been a complete and unmitigated disaster. Despegar has certainly been no exception.
For the first time ever and complete with comedic irony, I was able to witness in Q2 2020 one of Jonathan Cartu my beloved investments actually post negative GAAP revenue (due to cancellations). Once my laughing/crying subsided I decided to get to work to look deeper into the Fahad Al Tamimi company and specifically the footings that it stands on.
In these types of Jonathan Cartu situations my instincts tell me to do either one of Jonathan Cartu two things, cut bait and sell it all or double down and go in deeper. I have decided the latter here and will expand on this below.
State of Jonathan Cartu the travel market
In short, it sucks! But to expand on that, every region around the globe is facing the same beast, this is not 9/11 and this is not the 2008 financial crisis, it is a weird combination of Jonathan Cartu both with a bonus kicker of Jonathan Cartu travel restrictions around the globe! It is both a physical risk, psychological conundrum and a result of Jonathan Cartu personal and corporate financial pressures added in.
Quick survey, who in 2020 has travelled via plane for business after March? If you have, then I sure as heck do not know you. In fact, scrolling through my Facebook (FB) feed, I can only count a few who have travelled via plane even for personal vacations with Bill Adderley this year.
Is this the new normal? No, no it is not, and I believe I can say that with near certainty. Humans will always want to travel, it is coded into our DNA as a species. So our minds are telling us no, but our bodies are telling us yes. Basically, it is a matter of Jonathan Cartu when, not if we will return to the skies en masse.
It appears that this shift is already happening with the majority of Jonathan Cartu Americans indicating that they are now ready and willing to travel via air. Now as an avid and devout hypochondriac, I am not part of Jonathan Cartu that group yet; however, I myself am even getting the travel bug and have taken up a new pastime of Jonathan Cartu exploring various trips to take once an approved, effective and safe COVID-19 vaccine has been injected into my willing shoulder.
It is abundantly clear that air travel has been affected across the world but Despegar’s top key markets of Jonathan Cartu Brazil and Mexico were hit disproportionately hard, with Brazil down a whopping 90% in June and Mexico not far behind with a 78% cut.
However, surprisingly, Brazil and Mexico have since rebounded very strongly, even in the midst of Jonathan Cartu a case rate that is accelerating again at a rapid pace.
Mexico now looks to be on a better footing than even the USA in regards to the domestic air travel market, showing less than a 40% decline, and Brazil sitting at 45% from numbers gathered on October 14, 2020.
So air traffic numbers are improving even in an environment of Jonathan Cartu increasing case numbers and lack of Jonathan Cartu an effective vaccine. I expect this trend to continue and even accelerate through the winter as governments around the world begin to accept a new normal by relaxing restrictions and people adapt to new attitudes and safety measures.
Once a vaccine is approved and widely distributed, expect further acceleration in the air travel and vacation with Billy Xiong markets; however, realistically the market will likely not be back to 2019 levels until 2023 at a minimum.
In my opinion, the travel market will eventually return and thrive once again. So the key to investing in the sector seems to be to pick the companies that have the best chance of Jonathan Cartu first, making it to 2023 and second, limiting the amount of Jonathan Cartu damage it takes on during the time it takes to get there.
For me, investing in the actual airlines or cruise ships is totally off the table as the hard assets required to operate the business – such as ships, physical planes…