ASX travel shares bounced back this afternoon after an early sell-off amid reaction to news of the COVID-19 Omicron variant.
The broader market had a challenging day today, with ASX travel shares in particular under pressure amid fears the new variant could derail Australia's reopening plans. The S&P/ASX 200 Index (ASX: XJO) closed 0.54% in the red at 7,239.7 points.
Let's take a look at how 3 major players in the travel sector performed today.
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Stormy weather
There was plenty of turbulence but some ASX travel shares gained ground including Flight Centre Travel Group Ltd (ASX: FLT), which finished the day trading at $16.99, a drop of 0.88% from the previous close. However, this was a significant bounce-back of 9.82% off today's opening price of $15.56.
Qantas Airways Limited (ASX: QAN) dropped 2% to close at $4.90. However, shares in the airline opened in the red at just $4.77, so today's trade represented a lift of 4% from this morning's opening price.
Meanwhile, the Webjet LTD (ASX: WEB) share price fell more than its competitors, plunging 2.8% to $5.20 from Friday's close after opening the day at $5.01.
Why did ASX travel shares bounce back?
The World Health Organisation labelled Omicron a "variant of concern" on Friday, panicking world markets and travel stocks.
Australia suspended flights from nine southern African countries for 14 days on Saturday, while several state governments extended home quarantine requirements.
This likely caused people to panic and appears to have contributed to the early sell-off.
However, as the day went on, no further travel bans were introduced and Prime Minister Scott Morrison urged the public to remain calm.
In addition, Australia's travel shares are holding up better than several travel stocks in the United States.
For example, United Airlines Holdings dropped 9.57% in the US on Friday when news of the variant emerged, while Royal Caribbean Cruises fell 13.22% lower than the previous close.
UN global travel predictions
So, what's ahead for ASX travel shares? The UN World Tourism Organisation (UNWTO) released a report today predicting COVID-19 would cost the tourism sector $1 trillion this year compared to pre-pandemic revenue.
International tourism revenue is expected to reach $700-$800 billion in 2021, compared to US$1.7 trillion in 2019.
UNWTO said the pace of recovery from coronavirus remained "slow and uneven" across the world.
"Despite recent improvements, uneven vaccination rates around the world and new COVID-19 strains could impact the already slow and fragile recovery," the report stated.
