Zika virus worries weigh on the travel industry

Tourism and travel-related stocks have taken a hit from worries surrounding the Zika virus, and though many were moving higher Monday, most are still trading below their levels from a week ago.

The Centers for Disease Control and Prevention said it has confirmed that 31 Americans have become infected, all after traveling to one of the 24 countries or territories with the outbreaks. The region hardest hit by the mosquito-borne virus is the Caribbean, Central and South America, where several major U.S.-based cruise line, airline and hotel chains operate.

Shares in travel-related companies regained some lost ground on Friday, and were mixed Monday, but are still mostly below their levels from before the virus began gaining attention. They're also underperforming the wider market.

"Cruise line stocks have underperformed the market by quite a bit — and so have travel group stocks in general because of concerns about Zika," Wells Fargo Securities analyst Tim Conder said late last week.

Among cruise operator stocks, Norwegian Cruise Line dropped more than 5 percent last week, Royal Caribbean fell 4 percent, and Carnival declined nearly 3 percent. Even Walt Disney, operator of the Disney Cruise Line, slipped more 1 percent for the week.

"The Caribbean is the top market for all of these companies, especially Norwegian Cruises," said C. Patrick Scholes, a lodging and leisure equity analyst at SunTrust Robinson Humphey. He added that the exposure for Disney shouldn't be as significant because "Disney Cruise Line is a small part of a giant corporation."

Shares of Norwegian were nearly 3 percent higher Monday, but that company and most other travel shares still had not reclaimed the losses they experienced last week.

Within the airline sector, Delta Air Lines lost about 6 percent last week, American Airlines Group dipped nearly 3 percent and JetBlue Airways gave back about 1 percent. Hotel stocks weren't spared: Hilton Worldwide lost nearly 3 percent, Marriott International fell about 2 percent and Starwood Hotels and Choice Hotels International each declined about 1 percent.

Zika virus: What you need to know
Zika virus: What you need to know   

In Brazil alone, an estimated 1.5 million people have been infected, according to the World Health Organization.

"There is a concern that the Olympics in Rio de Janeiro, Brazil will result in wider spread of the disease globally," Cowen & Co. analyst Helane Becker said in a research note Thursday.

The WHO forecasts up to 4 million people in the Americas are at risk of getting infected, and the CDC is warning pregnant women to consider postponing travel to the areas where the virus transmission is ongoing. The virus has been linked to microcephaly, a serious birth defect.

Industry analysts said it is too early to gauge the impact for travel-related companies but noted many of the airline and cruise lines are offering credits or refunds to expectant mothers.

"As of yet we haven't see a material change in bookings," American Airlines Group President Scott Kirby said Friday during the carrier's fourth-quarter earnings conference call. JetBlue's executive vice president of commercial and planning, Marty St. George, told analysts Thursday that "we've really seen no measurable impact either to advance bookings or customer refunds."

According to Conder, the worst-case scenario for the cruise segment is that booking demand gets cut by about 6 percent, or 1.4 million travelers out of about 24 million. He said major cruise operators generally prohibit women who are 24 or more weeks pregnant to board, so "that would cut the estimate by a third."

Added the analyst, "We're not diminishing the seriousness of Zika or how it's spreading, but if you compare it to Ebola the primary risk appears to be women who are pregnant. Ebola is a much more dire situation for anyone. Even if it does spread — and probably will — efforts being marshaled will help contain it."