The share price recovery in many travel stocks has been wiped out by the UK Government’s decision to impose a two-week quarantine on everyone arriving from Spain.

Tour operator TUI (TUI) and airlines EasyJet (EZJ) and International Consolidated Airlines (IAG) are now trading around, or lower than, the level in mid-to-late March when global markets bottomed out.

They had all previously seen a sharp rebound in April and May as investors took the view that leisure demand would recover quickly.

Ryanair (RYA), Wizz Air (WIZZ), On The Beach (OTB) and Dart (DTG:AIM) are still trading well above their March lows.

The UK/Spain quarantine decision stands to knock consumer confidence over taking holidays abroad in the near-term, particularly for people who cannot work from home and so do not want to risk being stuck indoors for a fortnight when they return from their travels.

Analysis of web traffic data by investment bank Jefferies implies that any bounce for foreign package holiday firms after the Government eased travel restrictions was already losing momentum before the UK/Spain quarantine news. That might explain why many travel stocks have been drifting downwards since June.

Its research showed that web traffic for the listed tour operators TUI, Jet2 and On The Beach in mid-July was down 40% to 50% year-on-year, while UK staycation Google searches in contrast remained high. For example, over twice the number of people searched for ‘Cornwall holiday’ than ‘Spain holiday’, according to the data.

A preference for staycations this summer appears to be backed up by media reports of cottages, resorts and campsites reporting record sales and bookings for this year and next year.

Premier Inn owner Whitbread (WTB) plans to have reopened most of its hotels and pub restaurants by the end of July in anticipation of a staycation summer.

In a trading update earlier this month, the company said it had seen good demand for the summer months in traditional regional tourist destinations, though in big cities like London demand remained subdued. Analysts at HSBC point out the firm could be in line to benefit from the troubles affecting rival hotel chain Travelodge.

As well as hotels, pub operators could also benefit from a staycation boom. City Pub Group (CPC:AIM) has seen its shares rise 10% since revealing (27 July) that it had been trading profitably since reopening half its pubs on 4 July.

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