Strategy Note /
Global

Tourism in emerging markets: Cheap holidays for investors

  • Global tourism is recovering and while recession is a risk there is a very long way simply to match pre-Covid levels

  • Many emerging markets have a high contribution to GDP from tourism; directly, at least 5% (likely over 10% indirectly)

  • Tourism exposure in equity markets cheapest in Egypt, Georgia, Philippines, and Thailand; most expensive in Iceland

Tourism in emerging markets: Cheap holidays for investors
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

Follow
Tellimer Research
12 July 2022
Published byTellimer Research

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):

Tourism exposure via EM equities relatively cheapest in Egypt, Georgia, Philippines, Thailand