How might COVID-19 impact the travel industry, according to social mentions and sentiment?
In recent news, the novel coronavirus was officially declared a pandemic. Even if you’re social distancing, it’s impossible to miss the deluge of reports about the coronavirus flooding news feeds one after another.
By listening to consumer mentions of the coronavirus on social media, we, at LikeFolio, can monitor relative fear levels among the public in near real time. The consumer mentions data seeks to measure how news of the virus’s spread is impacting consumer spending behavior, and how it may potentially then impact company revenues.
To give scale to the volume on figure 1, out of the more than 270,000 keyword phrases we track at LikeFolio, “coronavirus” is currently the most mentioned phrase.
The surge in coronavirus mentions is also palpable in the financial world. Compare how different indices have fared since the red close on Friday, February 21 (through research completion on March 24):
We are closely monitoring the investor fears that are a major driving force behind this period of volatility. LikeFolio’s proprietary Fear Index analyzes and measures the velocity of tweets indicating negative investor sentiment over time.
The only event in LikeFolio’s Fear Index history that resulted in a larger daily spike was related to the Dow’s single largest one-day point drop up to that point.
The LikeFolio Fear Index is an essential tool we use to identify tipping points in investor sentiment so that we can see signals around when investor fears begin to subside.
So, what industries are most impacted by consumer and investor fears tied to the coronavirus?
The first sector that comes to mind is travel.
The estimated market size of the U.S. tourism industry (measured by revenue) was estimated to be $1.0 trillion in 2020.
Recent travel restrictions and fears related to the coronavirus can be expected to severely impact this sector.
Impacts to the travel industry include:
LikeFolio data confirms travel discussions are increasingly prevalent in coronavirus mentions. Figure 3 shows that the percentage of coronavirus mentions related to travel is increasing at a steep rate.
FIGURE 3: CORONAVIRUS SOCIAL MENTIONS OF TRAVEL. The percentage of coronavirus mentions related to travel increases significantly in early to mid-March 2020. Source: LikeFolio.
What action are consumers taking? Cancelation.
Figure 4 below shows mentions of consumers canceling travel plans. From Tuesday, March 10, to Thursday, March 12 (a period when travel restrictions were announced), travel cancelation mentions increased by 347%. This number has since leveled off as many consumers in the U.S. heed government warnings to reduce social exposure.
FIGURE 4: CONSUMER SOCIAL MENTIONS OF CANCELED TRAVEL PLANS. Mentions of consumers canceling travel plans because of coronavirus fears spiked significantly in early to mid-March. Source: LikeFolio.
In the meantime, the market has absolutely demolished the stock value of travel companies. However, it is notable that as of March 24, consumer sentiment for each airline has not been significantly impacted by the coronavirus outbreak.
FIGURE 5. AIRLINE SENTIMENT COMPARISON. Consumer sentiment around major airlines remains relatively positive despite coronavirus fears. Source: LikeFolio.
The virus crisis, while certainly producing negative short-term effects on booking and revenue results, does not appear to be shifting the overall sentiment of the consumer toward the airline industry.
Figure 6 below displays mentions of consumers indicating “I will never take a cruise.”
The only comparable spike to coronavirus fears was short-term and occurred when the Viking Sky cruise ship was stranded off the coast of Norway.
We’ve also noticed a rapid drop in consumer sentiment for two big cruise names: Carnival Corporation (CCL) and Royal Caribbean Crusies (RCL).
FIGURE 7: SOCIAL SENTIMENT COMPARISON OF RCL AND CCL. Cruise sentiment weakens during January 2020 as news reports are circulated about outbreaks of the virus on cruise lines. Source: LikeFolio.
It’s important to note that the early winter months are typically the season when we expect an uptick of happy customers in the cruise lines as people generally comment on their positive travel experiences. In fact, January to March is what is known as “wave season” in the cruise industry because a large percentage of cruisers book trips in the early months of the year.
LikeFolio will continue to monitor consumer behavior in the travel industry, alongside consumer and investor fears related to the coronavirus.
Andy Swan is not a representative of TD Ameritrade. TD Ameritrade and LikeFolio are separate and unaffiliated companies. The views and opinions expressed in this article are are solely those of the author.
Social and consumer sentiment data should not be used alone when making investment decisions. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision.
Tailored content recommendations from The Ticker Tape® are waiting for you in the Education Center. Plus, get additional TD Ameritrade exclusive resources like videos, webcasts, and more.
What will you learn today?
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2021 Charles Schwab & Co. Inc. All rights reserved.