Is the Consumer Discretionary Sector sailing toward recovery?

Recently, Consumer Discretionary (CD) has been an interesting sector to analyze. Due to its non-essential nature, COVID’s impact on the sector cannot be denied. However, as it looks like we are turning a corner on the pandemic, CD seems to be undergoing shifts that make it worth taking a closer look.

We can see from the S&P 500 index that Consumer Discretionary took a significant hit right after the onset of COVID, as one might expect. But since then CD has had a strong recovery.

Specifically, job listings within the hospitality industry tell an interesting story here.

Within the hospitality industry, the most interesting story appears to be cruise lines. First let’s take a high level look at the industry to see who the dominant players are.

We can see that the dominant players in this space appear to be CCL, NCLH and RCL, with NCLH being the smallest by far. All three of these companies have traded, unsurprisingly in a relatively similar fashion.

What is surprising, though, is the vastly different hiring strategies each of these companies has taken.

We see that CCL and RCL appear to have been slower in reacting to the pandemic, not reducing jobs until very recently, at the start of 2021. On the other hand, we see that NCLH took a different approach; sharply reducing roles early and building them back up over the course of the pandemic, likely as demand started to return. NCLH’s approach appears to have prioritized sales throughout the course, likely in an attempt to create demand during a time when there was none.

It’s also noteworthy that when it comes to the total number of job listings, NCLH is still hiring fewer roles than both of its peers. That being said, relative to previous hiring patterns it appears that NCLH is in a better position than its peers to accommodate increased demand as cruises return to the sea.

Consumer Discretionary will be an interesting sector to watch as COVID concerns continue to lessen and spending patterns shift in response. We will monitor changes in hiring for Consumer Discretionary on an ongoing basis and share what we uncover.