17th Feb 2022
As travel stocks start to revive after the disaster of COVID-19, rail companies are benefiting from a number of new travel trends. As 81% of travelers say they’ll consider rail travel for their next trip, and 32% say they’ll take the train instead of flying1, rail companies around the world are adding lines and upgrading their service.
Rail lines are expanding
In the US, Amtrak shifted focus from business travel, always slow to recover after a crisis, to leisure travelers. It says that travel over July 4th weekend 2021 was busier than in 2019; it’s adding around 300,000 new customers every month; and previous customers are returning2. Amtrak even proposed a new map showing plans for expansion across the US, which has been met with great consumer interest3.
In Europe, sleeper trains which were destined for the scrapheap just a few years ago are getting a new lease of life. A Paris-based startup called Midnight Trains launched recently, with plans for 12 routes for its “hotels on rails.4” Another new sleeper train company, European Sleeper, sold all its shares within 15 minutes5 and aims to start running between Brussels and Prague in April 20226. When a low-cost night train opened up between Prague and Croatian coast, it sold over 30,000 tickets in a few weeks and was forced to add more services, even though this was in the travel trough of summer 20207.
December 2020 saw 4 national rail companies commit $605 million (€697 million) to launch new night train services between 13 of Europe’s largest cities, as a first step towards reviving the old Trans-Europe Express (TEE) Network89. Nightjet plans to introduce five new cross-continental routes by 202410, and Sweden intends to add a new international night service to Hamburg and Brussels11. Meanwhile, Polish startup Nevomo is working on superfast magrail trains for faster intercity journeys that can rival planes12.
Governments are backing train initiatives
Many governments see rail travel as an important part of their commitments to sustainability and carbon neutral targets. Trains produce approximately 6g of carbon emissions and other greenhouse gases per kilometer, compared with around 156g for a short-haul flight13.
The European Commission’s Sustainable and Smart Mobility Strategy calls for efforts to shift passengers to rail14, and the Croatian Minister for the Sea, Transport and Infrastructure, Oleg Butković, said “environmentally-friendly and energy-efficient, rail will play a crucial role in helping the EU become climate neutral by 2050.15” France has actually voted to ban flights under 2 hours in duration16.
President Biden’s recently-passed Bilateral Infrastructure Framework gives $66 billion to the national railway network17. Germany lowered VAT on long-distance rail tickets from 19% to 7% last year, and the EC is looking to lower the cost of train travel by exempting tickets from sales taxes. It’s also trying to simplify the process of booking cross-border train journeys so travelers don’t have to book each leg with a different provider, and coordinate international train journeys18.
For travelers, train travel ticks all the right boxes
Travelers have a whole slew of reasons for favoring train travel at the moment, as a number of post-pandemic travel trends converge.
The stress of COVID-19 left everyone with rose-tinted images of the past, and train travel brings back a time that’s seen as simpler and less stressful. “The nostalgic allure of the sleeper train is making a monumental comeback. 2022 will propel this revival, and see more travelers than ever rediscovering the night-time glamour of the sleeper train,” observes Cat Jones, Founder of Byway travel company19.
Travel isn’t just about sun, sea, and sand anymore; it’s part of self-care. One survey found that 94% of travelers consider that travel is important for their health, and 53% use vacation time to switch off from social media20.
As part of that movement, people want to travel more meaningfully, immersing themselves in new communities and connecting with people in different cultures. David Prior, founder of the Prior travel club, says the future of travel will be about “connection and curiosity,” adding that people want “that experiential kind of travel, where they take it a little slower, go to fewer places on a trip, or really go to one place and become completely immersed.21”
People want to enjoy the journey as well as their vacation destination. As a result, RV and caravan vacations, walking holidays, road, and rail trips have all surged22. Rail journeys allow people to experience a range of scenery and locations on the way to their holiday site, with a minimum of stress and hassle.
As Expedia discovered, people are ready to live their travel dreams. 40% want to feel they’ve made the most of their trip and the same percentage say they are ready to splurge on travel.23
A number of tour companies report a surge in demand for five-star rail journeys. Luxury trains offer some of the delights that are missing from air travel today, like personalized service, gourmet dining, hassle-free boarding, and comfortable seats and beds.24
83% of travelers are making sustainability a priority for their next trip25 and 55% are seeking carbon negative travel options26, while the sustainable travel market is predicted to expand by $338.06 billion, or 10% CAGR, between 2019 and 202327. Rail travel meets their demands for sustainable, planet-friendly travel options, offering environmentally-conscious travelers a luxurious vacation without compromising on their values.
Rail travel is benefiting from the post-COVID return to travel
Despite intermittent changes to travel regulations, people are returning to travel in 2022. “There is a lot of pent-up demand,” says Orkun Altintas, director for aerospace and defence at Frost and Sullivan. “Once there is more clarity about the vaccines and also about rules and restrictions, travel will pick up,28” he adds.
The rise in rail travel is just one example of the “revenge travel” bug that’s bringing positive movement to hotel stocks, airline stocks, and cruise stocks. Many investors are seeking bargain travel stocks or travel ETFs to buy while the price is low, in the hope that they’ll soon appreciate in value.
Instead of trying to guess at which travel stocks will be the most profitable, some people are choosing an ETF like Defiance’s CRUZ, which allows you to spread a single investment across a number of promising travel stocks.
1 “The Travel Trend Report 2022: The Experts Have Their Say, Part One” November 16, 2021 https://www.forbes.com/sites/angelinavillaclarke/2021/11/16/the-travel-trend-report-2022-the-experts-have-their-say-pt1/?sh=4e1369e51142
2 “Train travel collapsed early in the pandemic, but a summer resurgence is offering a boost for Amtrak” August 20, 2021 https://www.washingtonpost.com/transportation/2021/08/20/amtrak-summer-train-travel-ridership/
3 “As Biden Pushes Major Rail Investments, Amtrak’s 2035 Map Has People Talking” April 6, 2021 https://www.npr.org/2021/04/06/984464351/as-biden-pushes-major-rail-investments-rail-amtraks-2035-map-has-people-talking
5 “Super-fast, sustainable and accessible: Are trains the future of travel?” September 13, 2021 https://www.euronews.com/travel/2021/09/13/hyperloops-and-sleeper-trains-the-tech-making-rail-travel-in-europe-more-accessible-than-e
7 “A new sleeper train will connect these European cities in time for summer travel” January 4, 2021 https://www.lonelyplanet.com/articles/new-night-train-routes-europe
8 “New Night Trains in Europe from 2021” December 9, 2020 https://railway-news.com/new-night-trains-in-europe-from-2021/ “Revival of Trans Europe Express ‘key to EU’s carbon neutrality'” January 21, 2021 https://www.theguardian.com/world/2021/jan/20/revival-of-trans-europe-express-key-to-eu-carbon-neutrality
9 “A new sleeper train will connect these European cities in time for summer travel” January 4, 2021 https://www.lonelyplanet.com/articles/new-night-train-routes-europe
10 “Five brand-new train routes that could revolutionise European rail travel” November 22,2 021 https://www.timeout.com/travel/five-new-railway-train-routes-journeys-in-europe
11 “Sweden is planning to launch night trains to Germany and Belgium” August 4, 2020 https://www.lonelyplanet.com/articles/sweden-night-trains-germany-belgium
12 “Super-fast, sustainable and accessible: Are trains the future of travel?” September 13, 2021 https://www.euronews.com/travel/2021/09/13/hyperloops-and-sleeper-trains-the-tech-making-rail-travel-in-europe-more-accessible-than-e
13 “Which form of transport has the smallest carbon footprint?” Last updated September 24, 2021 https://ourworldindata.org/travel-carbon-footprint
14 European Commission’s Mobility and transport report https://ec.europa.eu/transport/themes/mobilitystrategy_en
15 Welcoming the European Year of Rail” January 2021 https://rail.nridigital.com/future_rail_jan21/european_year_of_rail
17 “US Congress approves Biden’s infrastructure plan, $66 billion to railwaysW November 8, 2021 https://www.railtech.com/policy/2021/11/08/us-congress-approves-biden-infrastructure-plan-66-billion-to-railways/?gdpr=accept
18 “New Action Plan: boosting long-distance and cross-border passenger rail” December 14, 2021 https://transport.ec.europa.eu/news/action-plan-boost-passenger-rail-2021-12-14_en “Europe’s high speed rail network is about to get bigger, faster and cheaper, under new EU plans” December 15, 2021 https://www.euronews.com/next/2021/12/15/europe-s-high-speed-rail-network-is-about-to-get-bigger-faster-and-cheaper-under-new-eu-pl
20 “Travel in 2022: what trends are the experts seeing?” November 29, 2021 https://www.thetimes.co.uk/travel/holiday-types/advice/travel-in-2022-what-trends-are-the-experts-seeing
21 “Slow travel, high-tech hotels and bucket-list adventures: this is what travel in 2022 will look like” October 14, 2021 https://www.standard.co.uk/escapist/travel-trends-2022-train-travel-hotels-adventure-b960456.html
22 “The Travel Trend Report 2022: The Experts Have Their Say, Part One” November 16, 2021 https://www.forbes.com/sites/angelinavillaclarke/2021/11/16/the-travel-trend-report-2022-the-experts-have-their-say-pt1/?sh=4e1369e51142
23 “The GOAT mindset: Expedia reveals 2022’s biggest travel trend” November 30, 2021 https://www.prnewswire.com/news-releases/the-goat-mindset-expedia-reveals-2022s-biggest-travel-trend-301433866.html
24 “Experts Predict the 6 Biggest Travel Trends for 2022” December 29, 2021 https://www.veranda.com/travel/g38628219/travel-trends-2022/ “Travel trends for 2022 from Audley Travel” October 28, 2021 https://www.audleytravel.com/media-centre/travel-trends-for-2022-from-audley-travel
25 “Rise in international travel spending forecast for 2022” December 1, 2021 https://www.itij.com/latest/news/rise-international-travel-spending-forecast-2022
26 “Spend more, stay longer: The consumer trends driving travel in 2021” March 9, 2021 https://www.phocuswire.com/the-consumer-trends-driving-travel-in-2021
27 “Research Report: Sustainable Tourism Market (2019-2023)” September 7, 2020 https://www.businesswire.com/news/home/20200907005022/en/Research-Report-Sustainable-Tourism-Market-2019-2023-Need-Of-Organic-Sustainable-Tourism-to-Boost-the-Market-Growth-Technavio