ASX 200 travel shares have been hit hard in 2020, but could they be back in the buy zone today?
Why Aussie travel stocks have slumped lower
The biggest factor hitting Aussie travel shares has been the coronavirus pandemic. Countries have been shutting their borders since late February and still many domestic borders remain shut.
The S&P/ASX 200 Index (ASX: XJO) is down 18.31% in 2020 but many of the Aussie travel shares have fallen much further than that.
The extraordinary measures taken both in Australia and abroad are designed to reduce the spread of the global pandemic. However, it's also reduced the value of ASX 200 travel shares and left shareholders blindsided by the sudden turn of events but some of the biggest travel names might have been oversold in 2020…
Can ASX 200 travel shares bounce back in 2020?
There does appear to be light at the end of the tunnel for travel companies. The Federal Government is looking to ease COVID-19 restrictions and that could soon see domestic border restrictions loosened. There's even talk of creating a "bubble" with New Zealand to boost tourism and ease the economic burden.
That means travel shares like Flight Centre Travel Group Ltd (ASX: FLT) could be in the buy zone. The Flight Centre share price has slumped 74.05% in 2020 while Corporate Travel Management Ltd (ASX: CTD) shares are down 45.51%.
Now, I don't think anyone believes that these travel groups should be valued what they were before. The International Air Transport Association (IATA) has said we may not see travel normalise until 2023 which means things have changed. Earnings have changed, dividends have changed and that means that share prices have changed.
One bit of good news for ASX 200 travel shares is in Aussie business and the government sector. If businesses and the government are returning to work, that could mean more bookings for companies like Corporate Travel.
Foolish takeaway
ASX 200 travel shares have been hammered lower in 2020, but I think they could be oversold. Flight Centre and Corporate Travel seem like speculative buys right now, but there could be big upside for investors willing to roll the dice and add travel exposure to a diversified portfolio.
