The Revenge Travel Boom

When Covid hit major economies in 2020 a group of companies like the FANNGs got a major boost due to the physical lock down of cities all over the world.  This lead to an exponential growth in these companies and resulted their management to over project their growth trajectory post Covid. 

Many big techs including Google, Meta, Microsoft, Amazon etc started to cut jobs as their business normalise post Covid.  Consumer spending in late 2022 started to shift back towards physical services and experiences, away from the virtual world as life regain its normalcy. 

One of the biggest beneficiaries of this trend is certainly travel.  Even as airline charges high fares due to the highest inflation in decades, consumers are travelling to see the world they yearn so much during the 2 years of confinement.  Hotels, airlines, theme parks are raking in the dough as consumers take every chance to experience and saviour the moments with their love ones and friends.  

I certainly believe the travel sector will continue to strengthen throughout 2023 and into next year as the world opens up.  Investors are certainly to see strong numbers coming out of airlines, cruises, hotels and theme parks.  Concert tickets are selling out like once in a lifetime opportunity which suggest a bubble is already in the making. 

While it is difficult to tell when a bubble will burst at some point this trend will too normalise.  The music is expected to get louder and more will join the party in the mean time.  As for how long will this revenge travel boom continue, one may get a hint through your instagram feed.  For me at least I am already planning for trips in 2024.  So come on and join the party but do keep an eye on the clock while the music continues playing.

The SRS Fund Review

At the halfway stage in 2023 the SRS Fund continues to stay positive and resilience despite the STI benchmark moving in and out of gains and losses. One of the main reason is for this outperformance is the reinvestment of dividend back into the fund.

To further substantiate the thesis of the revenge travel boom I have decided to make a substantial bet by investing in SATS Ltd. The company an affiliate of Singapore Airlines provides ground handling, airline food catering as well as air cargo services. With its recent acquisition of World Flight Services, SATS Ltd has become the world largest player in this domain. With the travel tailwind behind its business, I hope the investment will generate the alpha needed to move ahead of the benchmark.

Dividend in 1H23 hit a record $10k with similar dividend expected in the later half mainly due to higher interest margin from banks. I anticipate the banking sector to raise its dividend as local banks are finding it hard to reallocate their profits to make lucrative loan in the current environment.

Rebalancing of the Fund continues to take shape with the priority to make it less dependance on REITs in a normalise interest rate environment. With this can 2023 be the year where the SRS Fund finally breakout if is trending value of between $300k – $350k range?