Global tourism is recovering — ask those lucky enough to spend 90 minutes getting through security at London Heathrow last weekend!
While recession is a risk, there is a very long way to go simply to match pre-Covid levels. In 1Q 2022 global international tourist arrivals were up 180% yoy, but still 60% below the 1Q 2019 level, according to UNWTO.
As school holidays start we scan global emerging markets for high economic exposure to tourism and cheap equity market valuation (relative to history).
Countries with at least 5% direct contribution of tourism to GDP (ie likely at least double this indirectly) are grouped into four, on the basis of equity market valuation (trailing price/book versus 5-year median):
Relatively cheapest: Egypt, Georgia, Mauritius, Philippines, Sri Lanka (off limits for investors because of FX restrictions), Thailand.
Middling (although still cheap relative to their own history): Croatia, Jamaica, Mexico, Morocco, Vietnam.
Relatively expensive (although still close to historic average valuation): Dubai, Greece, Jordan, Tunisia.
Expensive (well above historic valuation, but also the highest economic exposure): Iceland.
