Three of the Best Travel Stocks to Watch
The travel industry was among the worst casualties of the coronavirus pandemic in 2020. As borders around the world slammed shut, would-be tourists were forced to stay home and, as a consequence, travel stocks plunged. However, recent relaxations around travel restrictions have begun to make people feel bullish about the sector again.
In this article, we will highlight three travel stocks to watch over the coming months!
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The Outlook For Travel Stocks
Despite ongoing concerns surrounding the delta variant, due to the progress of vaccination campaigns in developed nations, many countries have recently announced the relaxation of travel restrictions for tourists who have been fully inoculated.
The most significant of these countries was the US, who recently announced that, starting early November 2021, their borders would finally be reopened to fully vaccinated UK and EU citizens, having been closed since the outbreak of the pandemic in 2020.
This announcement - and other similar ones, combined with pent up demand - is likely to lead to an increase in travel – which, in turn, could be to the benefit various travel stocks.
But which travel stocks are set to benefit from the relaxation? Which are the best travel stocks to keep an eye on in the coming months? In the following section we have highlighted three travel stocks to watch for those feeling confident about tourism.
The first on our list of travel stocks to watch is Booking Holdings who, as well as operating their namesake Booking.com, are also responsible for popular brands such as KAYAK, Rentalcars.com, OpenTable and Agoda.
All these brands complement each other in allowing travellers to plan most aspects of their holiday; book hotels, compare flights, rent cars, make restaurant reservations and much more. The scope of Booking Holdings’ business, coupled with the fact they operate in 200 countries, ensure they are excellently positioned to benefit from an increase in demand for travel – not just in the short-term but possibly for years to come.
Naturally, Booking was one of many travel stocks which suffered greatly during 2020. However, they were ruthless and in August 2020, they announced they would axe more than 17,000 jobs worldwide – around 25% of their global workforce. This reduction in costs has contributed to the company emerging from the pandemic with over $11 billion USD in cash and cash equivalents, which should help weather any further coronavirus-related difficulties ahead.
The renewed optimism surrounding the travel industry has been reflected in the Booking Holdings’ share price. Between the 23 August 2021 and 22 September 2021, share price increased almost 16%.
In their Q2 results for 2021, Booking reported revenue of $2.2 billion, representing Year on Year (YOY) growth of 243.2%. Despite the increase in revenue, they reported a quarterly net loss of $167 million. However, this loss includes $137 million which, during this quarter, Booking returned to various government aid programs, following their assistance last year.
Airbnb, the next on our list of travel stocks to watch, is an online market place for holiday rental properties and tourism activities. The website operates by connecting property hosts and activity providers with prospective holidaymakers.
In their Q2 results for 2021, Airbnb reported total revenue of more than $1.3 billion, representing YOY growth of 299%. This still resulted in a net loss of almost $70 million for the quarter, but this is a significant improvement from the net loss of $576 million for the same quarter in 2020 and things could improve further for Airbnb in the coming months.
The pandemic has made many of us more conscious about hygiene and prolonged social interactions with other groups of people. These two factors are bound to play into peoples’ considerations when booking holidays. Meaning that prospective holidaymakers may be more inclined than normal to book private accommodation, as opposed to hotels with hundreds of other guests. This change in consumer behaviour would be very favourable to Airbnb’s business model.
Airbnb only made its debut on the Nasdaq in December 2020 and initially performed well amidst widespread optimism after the approval of several Covid-19 vaccinations around the world. However, in March 2021, share price fell, dropping almost 38% in just over two months.
Since July, the share price has been gradually climbing and recent relaxations around travel restrictions, and the improved outlook that comes with it, could see this travel stock push higher still in search of its previous annual highs.
Although so much more than just a travel stock, the Walt Disney Company is poised to benefit significantly from the reopening of US borders to European holidaymakers. In addition to operating many theme parks, hotels and cruise lines around the world, Disney also has its film studio division, online streaming platform, consumer products, publishing and television services.
Thanks to its diverse range of products and services, despite losing revenue through park and resort closures and the cessation of their cruise line business, Disney performed well during the pandemic, managing to make up much of the lost revenue in other areas of their business.
This was in no small part thanks to the well-timed launch of digital streaming platform Disney+ at the end of 2019, which thrived during the pandemic. In their Annual Report for 2020, Disney reported that, as of 3 October 2020, Disney+ had approximately 74 million subscribers.
Their strong performance during the pandemic was reflected in share price, which soared to all-time highs in March 2021. The recent relaxation of travel restrictions is likely to benefit Disney, which is why it is on our list of travel stocks to watch.
In the year ended 28 September 2019, before the pandemic, Disney generated $21.7 billion of revenue from its theme parks, resorts and cruise lines – which made up for about 31% of total revenue that year. In contrast, for the year ended 3 October 2020, the same areas of their business only generated $12.3 billion – a fall of more than 40% - but total revenue only fell 6%, thanks to gains made elsewhere.
Although still not at pre-pandemic levels, revenue generated from its Parks & Experiences improved drastically in their Q3 results for 2021, increasing 867% YOY to $3.2 billion. Total revenue also increased by 45% YOY to $17 billion, whilst net income was positive at $923 million – in contrast to a loss of $4.7 billion in the same quarter of 2020.
Further relaxation of travel restrictions is likely to translate to more increases in revenue for Disney’s Parks & Experiences throughout the remainder of 2021 - which could lead its share price to push towards new all-time highs.
How to Invest in Travel Stocks with Admirals
You will be pleased to hear that, with an Invest.MT5 account from Admirals, you can invest in all the travel stocks listed in this article. In order to start buying travel stocks, follow these steps:
- Register for an Invest.MT5 account
- Download and open the MetaTrader 5 trading platform
- Press Control + U to bring up the Symbols window, where you can search for the travel stocks to buy. Once located, press ‘Show Symbol’ and ‘OK’
- Find your travel stock in the Market Watch window on the left hand side of the screen, right-click and select ‘Chart Window’ to open a price chart
- Select ‘New Order’ from the top of the screen to open the order window. Fill out the amount of travel stocks you wish to buy, a stop loss and take profit if required and click ‘Buy’ to send your order to the market!
Why Invest with Admirals?
Customers who choose the Invest.MT5 account from Admirals can invest in over 4,300 different stocks and over 200 Exchange-Traded Funds (ETFs) from 15 of the largest stock exchanges in the world! Further benefits include:
- Access to a range of educational articles, as well as regular market analysis at no additional cost
- Opening an investing account with a minimum balance of just €1
- Low transaction commissions and no account management fee
- Use of the world renowned multi-asset trading platform, MetaTrader 5 on your computer and mobile phone
- Exclusive access to our Premium Analytics portal, where you will find the latest market news, sentiment and technical insight
In order to open an account and begin enjoying all these benefits and more, click the banner below!
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