For investors in the Asia Travel theme, what is heartening to note is that all the growth we are seeing represents just the tip of the iceberg, as only ~10% of Indian and Chinese citizens today own a passport. A combination of aging demography and a rising middle class in Asia will create a long term tailwind for experiential consumption.
As people get wealthier, they travel more than previous generations, as experiential consumption – holidays, medical tourism, events/concerts, and overseas study – gain share over goods accumulation. South Asia, in particular, is set to experience one of the largest increases in the population with wealth exceeding US$250,000. Covid interrupted this long term trend, however as airline capacity improved, travel has bounced back in most countries.
TAIF’s preferred way to invest in the secular growth of travel is via gateway airports, which are rare and possess valuable infrastructure assets with secure moats. Gateway airports are typically monopolistic, supported by both local and national governments, and generate returns on capital in excess of the cost of capital. Other plays on Travel theme such as airlines and hospitality are more sensitive to cyclical and demand-supply factors.
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Susanta Mazumdar is the Portfolio Manager for the Tribeca Asia Infrastructure Strategy, which aims to earn superior, risk adjusted total returns through a mix of long-term capital appreciation and cash yield by investing in infrastructure companies across the Asia-Pacific universe using an index-unconstrained concentrated portfolio approach.