The Best Travel Stocks to Watch
The travel industry was among the worst casualties of the coronavirus pandemic. As borders around the world slammed shut, would-be tourists were forced to stay home and, consequently, tourism stocks plunged.
Nevertheless, after a difficult few years, 2023 saw a boom in the travel industry, with many travel companies reporting pre-pandemic levels of demand. Is this a turning point in the travel industry? Are travel stocks a good buy in 2024? In this article we examine the industry and highlight 3 top travel stocks to watch this year.
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The Outlook for Tourism Stocks
It’s no secret that the travel industry has had a rather torrid time over the last couple of years. However, demand for travel soared in 2023 and many investors are starting to re-evaluate the industry and its prospects.
Many airlines, hotels and other travel companies are reporting demand which is in line with, or even in excess of, pre-pandemic levels. Consequently, many travel stocks enjoyed a positive time in 2023.
Nevertheless, although things are looking positive for travel companies, economic conditions may negatively affect tourism stocks in the months ahead. Whilst inflation appears to have peaked in many economies and is starting to fall, it remains above target levels. Furthermore, interest rates, which have been raised to tackle inflation, are likely to remain elevated for some time.
High inflation and high interest rates both have the effect of squeezing consumers’ discretionary incomes, which could impact demand for travel in the future. Sluggish economic growth in advanced economies could also weigh on demand this year.
However, thus far, these factors did not seem to have dampened consumers’ appetites for travel in 2023. Given the recent boom, which are the best travel companies to invest in?
3 Top Travel Stocks to Watch
In the following sections, we will highlight and examine the following 3 top travel stocks for investors to watch in 2024.
Booking Holdings
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 travel companies 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 over 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.
Booking was one of many tourism stocks which suffered in 2020, with revenue plunging 55% and the travel company reporting a net loss of $631 million, having made an operating profit of $5.3 billion the previous year.
In the two years since, Booking’s financial recovery has gone well. In 2022, revenue jumped 56% to $17 billion, 13% higher than in 2019. However, significantly higher operating expenses meant that, although operating income more than doubled year on year, it remained below 2019 levels. Nevertheless, Booking anticipates operating income in 2023 will be higher than in 2019.
In terms of the stock market, Booking is one of many top travel stocks which performed very well in 2023. After closing 2022 with a loss of 16% for the year, Booking’s share price climbed 34% in the first six months of 2023.
Airbnb
Airbnb, the next on our list of travel stocks to watch, is an online market place for holiday rental properties and tourism activities, which launched in 2008.
Airbnb revolutionised the way people travel, making it significantly easier to find rental properties abroad by connecting property hosts with prospective holidaymakers.
Prior to the pandemic, Airbnb had never recorded an annual profit, but losses deepened as pandemic-era restrictions hit demand. In 2020, Airbnb reported an operating loss of $3.6 billion. Subsequently, Airbnb’s fundamentals have recovered along with the travel industry and, in 2022, the company reported its first annual profit of $1.9 billion.
A post-pandemic trend which Airbnb appear to be benefitting from is an increased number of people working remotely, who are able to travel and work simultaneously. In the last couple of years, this has resulted in significantly more guests using the platform for longer stays of 28 nights or more.
After dropping 49% in 2022, Airbnb has been one of the best travel stocks in terms of share price performance in 2023, soaring 50% in the first six months of the year.
Disney
So much more than just a travel company, the Walt Disney Company is last on our list of top travel stocks and one which finds itself in a different position to the others.
The company also struggled in the stock market in 2022, with share price falling 44%. However, its fortunes in 2023 have been far more muted than those of Booking and Airbnb, with Disney only able to add 3% to its share price in the first six months of the year.
Unfortunately for Disney, whilst the tourism side of its operations – Parks, Experiences and Products – has been performing consistently well post-pandemic, it has been let down recently by a slump in Media and Entertainment Distribution.
In the six months ended 1 April 2023, although Parks, Experiences and Products saw revenue and operating income increase 19% and 24% respectively, total operating income was dragged down 9% by Media and Entertainment Distribution, which saw a 60% fall in operating income.
Disney’s Media and Entertainment division houses both Disney+, the company’s streaming service, and its linear (i.e. traditional) television networks.
The future of television appears to be in streaming, with linear networks in decline, a decline which is evident in recent Disney results. However, as audiences pivot towards streaming services, Disney+ continues recording heavy losses, losing $1.7 billion in the first half of Disney’s fiscal year 2023, after losing $4 billion in 2022. Disney doesn’t expect these losses to stop until the end of fiscal 2024.
Nevertheless, despite things currently looking far from rosy for Disney’s Media and Entertainment division, the long-term could be different.
Disney’s valuable trove of intellectual property is second to none and provides it with a vast number of possibilities for streaming content. It also has a large amount of cash on its books and its Parks, Experiences and Products division is continuing to record impressive growth and is sure to benefit from robust travel demand in 2023.
How to Invest in Travel Stocks
With an investing account from Admirals, you can invest in all the top travel stocks listed in this article. Simply follow these steps to get started:
- Open an Invest.MT5 account and log in to the Dashboard
- Find your account details and click ‘Invest’ to open the MetaTrader Web Terminal
- Search for travel companies to invest in and open the price chart
- Press 'Create Order', enter the number of travel shares you with to purchase and click ‘Buy’ to send your order to the market!
Investing with Admirals
With an Invest.MT5 account from Admirals, you can buy shares in over 4,500 companies and more than 200 Exchange-Traded Funds (ETFs). Click the banner below to get started:
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