It’s easy to be bullish on travel and tourism stocks. In the wake of the pandemic, travel and tourism has emerged as a top growth industry. Who can’t use a vacation right now?
U.S. travel spending fell 42% in 2020. But by early 2024, U.S. domestic travel spending will surpass pre-pandemic levels, and business travel is on the rise, even as videoconferencing tools have made remote meetings more favorable in many situations. According to the U.S. Travel Association, U.S. travel spending has historically grown between 2% and 4% annually.
Image source: Motley Fool.
Traveling overseas is a different story. According to the World Tourism Organization, spending fell by 76% in 2020 and has only just returned to 2019 levels in 2024. Still, there’s a huge pent-up demand to travel again, and it’s safe to say we’ll eventually see an even bigger resurgence in international tourism.
Travel and tourism is a broad category and includes a variety of well-known brands. Those planning to invest in a travel agency have many options.
best travel stocks
The best travel stocks to buy in 2024
There is a wide range of transportation, accommodation and entertainment companies to get you to your destination and ensure you enjoy your stay. Because companies are so diverse, it’s difficult to identify one key metric to focus on. For example, some travel companies have asset-heavy transportation businesses (such as the airline industry and airline stocks, which are currently experiencing a lot of trouble in the US, especially with the troubles of Boeing Co. BA-0.24%). The other top candidates are basically technology companies.
However, the best travel and tourism stocks have several characteristics. That means strong brand awareness, an easy-to-use website or app, and a loyal customer following. Here are some of the top travel and tourism companies.
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1. Holding a reservation
Booking Holdings (BKNG -0.45%) is one of the largest online travel portals. The company is the parent company of several popular travel booking sites including:
Booking.comPriceline.comKayak.comRentalcars.comAgoda
The company has been hit hard by the pandemic, but Booking has cut jobs around the world to save more than $300 million a year. The company came through the ordeal with billions of dollars in cash on its balance sheet to stabilize the company during the downtime. 2021 saw a rapid recovery in both revenue and profitability, and this trend continued into his 2022. As measured by free cash flow, the company almost fully recovered its pre-pandemic profitability by the first quarter of 2022.
Few companies have the ability that Booking has to offer travelers a variety of travel planning and comparison tools. Travel companies’ global online reach should serve them well in the coming years.
2. Marriott International
Marriott International (MAR -0.13%) is one of the world’s largest hotel companies, with more than 8,000 hotels in approximately 140 countries. The company is a holding company for 30 brands including:
Marriott Sheraton Westin The Ritz-Carlton Courtyard Hotel Residence Inn
The company has an asset-light business model, which is unique compared to other real estate investment options. Marriott makes money by licensing its brand and paying property management fees to franchisees, so there are no costs involved in actually owning the properties. Marriott’s broad geographic reach, world-class brands, and global loyalty program make it a consistent long-term winning stock.
Like many other companies in the travel industry, Marriott’s revenue and profitability rebounded after the pandemic. The new digital travel app and guest perks initiatives have ample potential to propel the company’s financials to all-time highs in the coming years.
3. Airbnb
Airbnb (ABNB -3.18%) has completely shaken up the world of travel and vacation. The online marketplace allows homeowners and property managers to list homes, condos, and other unique accommodations. We have accumulated a huge number of properties (approximately 8 million properties as of the beginning of 2024) around the world. Many are located in less-traveled areas or in unique locations not found in hotel chains.
Remote work has become more common in recent years, and Airbnb has also emerged as one of the biggest beneficiaries of this change in the global workforce. Millions of people around the world currently travel and work, and long-term stay bookings will be Airbnb’s fastest growing segment in 2021 and beyond.
The company recently upgraded its platform by adding flexible date search tools and making the process of becoming a host faster and easier. There are also many countries where Airbnb listings are minimal. Before the pandemic, Airbnb had experienced years of explosive growth, and its strong record extends into his 2024. This is more than just a travel and tourism recovery story. Airbnb is a top growth stock worth considering right now, especially as it touts favorable profit margins along with its growth rate.
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4. Walt Disney Company
The Walt Disney Company’s (DIS 0.16%) theme parks and hotels are among the world’s premier vacation destinations. Disney cruise ships are also popular and offer family-themed cruises, making the House of Mouse an ancillary bet for the cruise industry. For Disney, these in-person experiences returned in 2021 and were once again profitable.
While many travel companies rely entirely on travel demand for revenue, Disney faces other challenges. In addition to travel, the company generates revenue from television, movies, streaming content (Disney+, Hulu, ESPN+), and merchandise sales. These multiple revenue streams are one reason why many investors think Disney is an undervalued stock for 2024.
But Disney has become a controversial company, embroiled in political and social debates that distract from its best-in-class properties and fan-favorite entertainment series. After a brief retirement, Bob Iger will return to the CEO role at the end of 2022 and still has plenty of work left to do to return the company to greatness. But value-seeking investors need to keep an eye on Disney’s earnings for a more meaningful recovery as earnings reach new records in 2024.
5. Uber Technologies
Uber Technologies (UBER -2.94%), the top ride-hailing company, has made a fresh start. After years of bleeding cash as a darling of high-growth technology, the company has grown and is now highly profitable. As a result, Uber stock hit a new all-time high in early 2024.
But why consider this a top travel stock? Uber facilitates tens of millions of short-haul trips every day. Many of them are aimed at tourists and vacationers as well as groups traveling to and from recreational destinations.
Uber isn’t the high-growth business it once was, but that’s okay. The company is still growing at a moderate pace and could be in the early stages of generating strong returns for shareholders. As the world begins to travel again, Uber is ready to offer rides and could be the biggest beneficiary of the travel trend.
Image source: Getty Images.
Travel ETF
Travel/Leisure ETF
If you’re bullish on travel and tourism but don’t want to invest in individual companies, buying shares in exchange-traded funds (ETFs) may be a better option. His travel-focused ETF invests in a large number of travel and tourism companies, providing instant portfolio diversification within the sector.
Three travel ETFs to consider:
ETFMG Travel Tech ETF (NYSEMKT:AWAY) is an ETF focused on travel technology. Approximately half of the company’s holdings in terms of value are in reservations and booking companies, and the rest is divided into ride-sharing, price comparison, and travel advisory businesses. The fund has 33 stocks and an annual expense ratio of 0.75% (or $7.50 per $1,000 invested annually). The U.S. Global Jets ETF (JETS 0.24%) is a niche travel ETF focused on airlines. U.S. airline stocks account for more than half. The fund’s holdings also include stocks in several international airlines, and the fund has an annual expense ratio of 0.60%. For a more diverse travel and leisure portfolio, consider his ETFs such as the Invesco Dynamic Leisure and Entertainment ETF (PEJ 0.23). %) The portfolio includes 31 U.S. stocks spanning the travel, lodging, and entertainment businesses and has an annual expense ratio of 0.55%.
Related investment topics
Alternative options
Investing in alternative travel
Travel-related investments are no longer limited to the globe. Several companies are exploring space, including publicly traded Virgin Galactic Holdings (SPCE -11.74%). Richard Branson’s company currently offers spaceflights for $450,000 per space traveler.
Another option is the Procure Space ETF (NYSEMKT:UFO). This ETF invests in a variety of companies that Virgin Galactic and its competitors are looking to take to the next level.
Don’t forget about ecotourism stocks.
Ecotourism is a rapidly growing niche market, especially among young travelers. The purpose of ecotourism is to learn about and support conservation efforts in exotic and often threatened natural environments and to visit those locations without causing further ecological damage.
Specialized tours, lodging in remote locations, and minimizing your carbon footprint while traveling are all forms of ecotourism. Although most ecotourism companies are not publicly traded, travel booking companies such as Airbnb and Booking.com offer services that allow travelers to discover and book ecotourism experiences.
JetBlue Airways (JBLU 0.0%) stands out for its commitment to achieving net-zero carbon emissions by 2040. The low-cost carrier has also established partnerships with several environmental organizations, including conservation groups and the Ocean Foundation.
Because travel companies tend to be niche companies, you can invest in a variety of travel and tourism stocks depending on your specific interests and investment priorities. Investors interested in ecotourism should look for green credentials when evaluating travel and tourism stocks.
FAQ
Frequently asked questions about travel stocks
Which travel stocks are best?
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The best travel stocks depend on whether investors want to bet on transportation (airlines, cruise lines, etc.), lodging (Booking Holdings, Airbnb, Marriott, etc.), or entertainment (Disney). But the best companies grow both sales and profitability over time.
How can I invest in the travel industry?
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There are many different ways to invest in travel. Travel-related stocks (Booking Holdings, Airbnb, Marriott, and Disney mentioned above) are at the top. You can also use a number of ETFs to gain broader exposure to the growing travel industry.
Why are travel stocks rising?
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Travel stocks are rising in value as the travel industry has emerged as a top trend in the wake of the pandemic. The top companies in the industry are growing at a healthy pace and are highly profitable.
Is Cruise stock a good investment?
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Cruise stocks are notoriously cyclical. Good times are often completely obliterated by recessions and economic shocks. This is because cruise ships cost a lot of money to build and operate, making cruise companies’ profit margins unstable. Other areas of the travel industry have been able to sustain healthier and more profitable growth.
Nicholas Rossolillo has a position at Airbnb. The Motley Fool has positions in and recommends Airbnb, Booking Holdings, Uber Technologies, and Walt Disney. The Motley Fool recommends Marriott International. The Motley Fool has a disclosure policy.
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