ABN Amro: travel recovery in 2021

Resilient companies find faster path to recovery after corona, ABN Amro reports in its sector forecast. The (business) travel industry will not fully recover yet but will find its way up again. This is true for most industries.

The corona crisis is creating large differences between sectors that are succeeding or failing in adapting their revenue models to conditions in a timely manner, ABN AMRO concludes today in its 2021 and 2022 Sector Forecasts. For example, in 2020 the crisis has left deep marks in the leisure (-50 percent) and retail (-8 percent) sectors, and several industries will not have fully recovered even next year. Until there is group immunity, it is likely that cinemas, eateries, museums, theme parks and the travel industry will not be able to fully utilize capacity. Nevertheless, revenues are showing recovery, in part due to resilience in the hospitality industry. For example, restaurants quickly switched to meal delivery, resulting in explosive increases in delivery sales in April (+97 percent) and November (+76 percent). Retail has also been hit hard, although the impact has been uneven. For example, sales of cars, clothing and shoes fell sharply, while online sales in supermarkets (+195 percent) and electronics (+66 percent) in particular accelerated in November compared to 2019. ABN AMRO expects both sectors to eventually recover. For leisure in particular, a substantial recovery is in prospect in both 2021 (+70 percent) and 2022 (+15 percent), but nevertheless remains below the pre-coronal level. To a lesser extent, the same is true for retail with 5 percent growth in 2021 and 2 percent in 2022. There was also a mixed picture in transport and logistics. As sectors came to a standstill, there was much less cargo, while some companies had to pull out all the stops to restock supermarkets and ensure the supply of mouthguards and other medical products. It is expected that 2021 (+2.5 percent) and 2022 (+3.5 percent) will be quieter.

Damage crisis can be limited by new business models

Industry and business services are showing the resilience to find a way out of the crisis. For example, industrial production in the Netherlands (-6.5 percent) declined less sharply than in other countries, as companies responded well to the crisis, according to ABN AMRO. “Chemical factories and plastic packers produced millions of vials of hand soap or disinfectant gels. The plastics industry produced ‘cough screens’ and the electrical appliance industry provided additional respirators. The industry is therefore in a much better position than last year, with growth of 3.5 percent in 2021 and 4 percent in 2022,” says Franka Rolvink Couzy, Head of Sector Research at ABN AMRO. Business services also managed to limit the damage – despite a contraction of 6 percent. This is especially true for staffing agencies that responded well to shifts by deploying temporary workers in places where labor demand did increase, such as test lines, distribution centers and supermarkets. Rolvink Couzy: “Companies that are better prepared for new events can limit the damage of a crisis by tapping into other sources of income. Those who wait will stand still for two years – only to discover that the world has changed after the crisis. It is precisely in a crisis that new needs emerge and companies that manage to respond to them will emerge stronger. A low cost base, financial and operational buffers and a good view of what is to come make for resilience. This not only ensures a faster recovery after corona, but also more flexibility in the future.”

• After strong contraction, positive outlook for leisure, retail and transport and logistics in 2021 and 2022
• Industrial sector and business services tap into new revenues during crisis
• Companies with low cost bases and good financial buffers have best assets
• The entire report can be downloaded here.