Travel is about to have a year unlike any other. More people plan purpose-driven trips, place a higher premium on vacation time, and increase their investment in unique experiences.
Keeping this in mind, ten travel stocks are poised to profit from consumers' pent-up desire for the holiday. This list includes stocks in travel-related industries such as hotels, airlines, and entertainment.
Will Travel Stocks Rebound in 2022?
After an estimated $1.3 trillion in lost export revenue by 2020, there are still potential roadblocks to the industry's revival, including the emergence of new virus varieties and conservative governments unwilling to ease lockdown restrictions. However, following positive findings from vaccine testing, many are optimistic that everything will return to normal in 2022. However, according to a UN poll, the industry does not anticipate returning to pre-pandemic levels for at least another two years.
During the last few months, numerous tourism sub-sectors, including hotels, restaurants, and airlines, have borne the brunt of COVID-19 losses. With flights and cruise ships resuming service in numerous regions of the world and hotels reporting an increase in bookings, tourism is undoubtedly on the mend. It might be prudent to invest in travel equities, which are predicted to increase in lockstep with vaccine programs in the United States, the United Kingdom, and other tourist destinations in Central America and East Asia.
Additionally, there is a risk that vaccine tourism will take off. The Maldives, a famous tourist destination, already offers the coronavirus vaccine to visitors. Additionally, activity has resumed at some of the world's finest luxury hotels. Other recovery indicators include a rise in foreign travel, the opening of tourist hotspots such as Seychelles, and a rental vehicle shortage in Florida and Hawaii, two of the most popular holiday destinations in the United States. Indeed, there is evidence that travel-related occupations have been expanding in recent weeks.
According to the US Travel Association, the tourism sector added more than 280,000 jobs in March, lowering the industry's unemployment rate to 13%, which is still higher than the national rate of 6%, but clear evidence of travel's recovery. Hedge fund's attitude toward the travel industry has also improved in recent months, but there is cause to be careful about following the herd blindly. Numerous stock specialists are perplexed by the volatility of the post-pandemic economy.
Why Are Travel Stocks Appropriate?
On the other hand, the economy can have a direct effect on travel stocks. If individuals and corporations are unwilling to spend money on travel, these stocks will suffer. On the other side, travel stocks become some of the most interesting to monitor when the economy is thriving. Expendable income and economic growth are only a few of the causes.
Other asset types may have something in common with travel stocks. If you examine some of the best hospitality stocks to buy, you will notice that they all have exposure to travel. For example, booking holdings is one of these businesses caught in the crossfire of travel and hospitality.
Financial stocks such as American Express might be classified as travel stocks when their booking services are examined. Is it wise to invest in travel stocks? That decision will have a significant impact on the current state of the stock market. Travel, however, continues to be a requirement in today's global economy.
1. American Airlines Group Inc.
First, we have American Airlines, a travel stock that also operates an airline. The airline operates an average of over 6,700 flights daily, in partnership with regional partner American Eagle, to 350 destinations in 50 countries. At an investor update, the company stated today that revenue growth would more than offset the increase in fuel prices.
Additionally, the corporation published the fourth and entire 2021 financial results in January. On a more detailed level, fourth-quarter revenue was $9.4 billion. Additionally, it will transport more than 165 million passengers in 2021, more than any other airline in the United States. Additionally, it completed the year with a total accessible liquidity balance of $15.8 billion, one of the most excellent year-end liquidity levels in company history. Additionally, despite the volatility caused by the epidemic, American Airlines claims it is recovering faster and further than any other airline in the United States to satisfy this unpredictable demand.
2. Marriott International Incorporated
Then there is Marriott International, a multinational corporation that operates, franchises, and licenses accommodation to clients worldwide. Its portfolio spans approximately 8,000 hotels across 139 countries and under 30 top brands. Marriott Bonvoy, the company's well-regarded travel program, is available. The firm announced its fourth-quarter financial results on February 15, 2022.
To begin, the corporation recorded a $635 million operating profit, up from a $128 million deficit a year ago. Net profits totaled $468 million for the quarter, or $1.42 diluted earnings per share. By 2021, the company's global development pipeline would total 2,831 properties and approximately 485,000 rooms, and this includes around 19,000 rooms that have been approved but not yet assigned to contracts.
3. Airbnb
In mid-January, Brian Chesky, CEO of Airbnb (ABNB, $173.07), stated on Twitter that he would be working remotely in Atlanta and other places during 2022 to have a deeper understanding of the global Live Anywhere trend. As a result, he spends each week working in a town other than ABNB's headquarters in San Francisco and staying on Airbnb.
Chesky's tweet highlighted numerous figures underlying the Live Anywhere phenomenon, including that 20% of gross nights booked between July and September of last year were for stays of 28 days or longer. Additionally, almost 100,000 persons reserved stays of at least three months during the 12 months ending in September.
People are not just congregating in significant cities and vacation towns; they are also congregating in rural locations. According to Airbnb, domestic nights booked by United States guests for rural stays climbed by 85 percent in Q3 2021 compared to Q3 2019.
Additionally, the digital nomad visa has become a thing. It is OK if you wish to work in Croatia, and around 41 nations now provide this new form of visa.
Naturally, Chesky is bullish on the future of his company — and with cause. ABNB earned $47 billion in gross bookings volume (GBV) in 2021, about double what it earned in 2020 and 23% more than in 2019. Additionally, the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin was 27 percent in the prior fiscal year, compared to a -5 percent adjusted EBITDA margin in 2019.
Additionally, ABNB completed the year with $8.3 billion in revenue, cash equivalents, marketable securities, restricted cash, and $3.7 billion in money held on behalf of guests.
In its fourth-quarter shareholder report, the company acknowledged that it is "difficult" to provide forecasts too far in advance due to COVID-19-related uncertainty. Nonetheless, Airbnb is "encouraged" by the travel trends for 2022, including lead times for first-quarter bookings in the United States and Europe exceeding those experienced in Q1 2019.
4. Royal Caribbean Cruises Ltd
Royal Caribbean is a cruise line that operates on a global scale. Indeed, it is one of the world's major cruise line operators. It operates a fleet of more than 60 ships that can travel to more than 800 places worldwide. Royal Caribbean International, Celebrity Cruises, and Silversea Cruises are the company's three award-winning cruise brands. The business reported in early March that their much-anticipated ship, Wonder of the Seas, had departed from Port Everglades in Fort Lauderdale, Florida, bound for the Caribbean.
Additionally, the corporation delivered a business update and disclosed its fiscal year 2021 results last month. By 2021, the Group would have reactivated 50 of its 61 ships, accounting for more than 85 percent of its global capacity. Additionally, the firm transported approximately 1.3 million visitors across its brands, setting new records for guest satisfaction and onboard spending per passenger. The company had roughly $3.2 billion in customer deposits as of December 31, 2021.
5. Vail Resorts Inc.
After that, we will look at Vail Resorts or Vail for short. In a nutshell, it is currently one of the most recognizable names in the ski resort industry. To illustrate its size, it operates 37 destination mountain resorts and regional ski regions, such as those seen throughout the United States and Canada. Additionally, the corporation operates a collection of "casually elegant hotels" under the RockResorts brand.
More importantly, MTN stock appears to be gaining traction following the company's most recent quarterly earnings report. The company reported $5.47 per piece on revenue of $906.5 million following yesterday's closing bell. In year-over-year comparisons, this equates to approximately 51% and 32%, respectively. Vail appears to be recovering in general as pandemic circumstances improve.
6. Hertz Global Holdings
Barron's stated in the new year that it expects rental car firms to be among the strongest travel stocks in 2022, owing to continued vehicle shortages that have resulted in a more expensive environment. Hertz Global Holdings (HTZ, $21.12) was named a top stock selection by the financial journal.
Numerous Wall Street executives share a similar outlook. Three experts believe the stock is a Strong Buy, three believe it is a Buy, and three believe it is a Hold. In the fourth quarter, HTZ was a favorite stock of billionaire investors.
7. Ryman Hospitality Properties
Ryman Hospitality Properties (RHP, $94.35) is another travel stock that many investors overlook. This is because the company is split between a hotel owner and operator and a hospitality business. However, perhaps most significantly, it is a Nashville-based investment option (REIT).
While the Grand Ole Opry and Ryman Auditorium are the company's most well-known assets, it also owns a slew of additional revenue-generating properties throughout its two main segments: hospitality and entertainment.
Along with the two businesses mentioned above, the entertainment category features an increasing number of country brands, such as Ole Red, a bar, restaurant, and performing arts facility supported by singer Blake Shelton. Gaylor resorts are located in Tennessee, Florida, Texas, Maryland, and Colorado.
The REIT's total sales increased by 79.1 percent to $939.4 million in fiscal 2021. Revenue in the company's more significant hospitality business increased 68.8% year over year to $786.6 million.
Analysts anticipate robust revenue growth in fiscal 2022, with the consensus forecasting $1.6 billion — a 65.7 percent year-over-year increase. Additionally, the corporation is expected to earn $1.58 per share, significantly improving the $3.21 loss per share recorded in 2021.
Ryman's expansion plans are assisting him, with the REIT planning to establish a 5,000 to 6,000 square foot Ole Red store at Nashville International Airport in the coming year. Then, in 2023, it aims to open a facility in Las Vegas, the first in the Western United States. This one will be substantial, standing four floors tall and covering approximately 27,000 square feet. Ryman is to invest $30 million in constructing the building and the Ole Red site.
Additionally, it intends to expand the Block 21 mixed-use entertainment complex, which it acquired for $260 million in October. The Block 21 complex contains a 251-room W Hotel and the Austin City Limits concert venue in Austin, Texas.
8. Carnival Corporation
For the most part, Carnival is a goliath in the cruise line sector today. The firm has a large fleet of over 100 ships representing ten different cruise lines to put things in perspective. All of which serve to continue providing travelers with global voyage possibilities. Carnival ships call at approximately 700 locations worldwide, according to the company. As a significant player in the travel sector at the moment, CCL may be a top travel stock to consider.
For starters, Carnival is not standing by quietly on the operational front. The company issued two favorable operating reports today. First, the company's luxury cruise line, Princess Cruises, announced new deployment plans in the United States and Australia. Second, Carnival Corporation's P&O cruise line will resume operations in Australia by May 2022. Combine all of this with the relaxation of cruise ban limitations, and CCL stock could be a top buy for some.
9. Delta Air Lines
There is no disputing that Delta Air Lines (DAL, $39.31) has had a difficult couple of years.
While the spread of COVID-19 prevented customers from flying early in the pandemic, the airline was unable to field sufficient workers in late 2021 and early 2022 due to the omicron version. According to The New York Times, Delta employees phoned in ill over 8,000 times in the final weeks of 2021, prompting the airline to cancel thousands of flights.
The good news for Delta shareholders is that the omicron effect was just temporary.
Furthermore, indeed, the airline's financial performance in 2021 was dismal. Adjusted revenue decreased 43% year over year to $26.7 billion. The company recorded an adjusted loss of $2.6 billion, a considerable decrease from the $4.8 billion profit posted two years ago.
Delta generated $1.3 billion in free cash flow in 2021 — the money left over after spending, interest on debt, taxes, and long-term investments required to grow the firm – While that is less than the $4.2 billion it reported in 2019. It was positive that such a challenging business environment speaks much about Bastian and his team's efforts last year to keep the business afloat.
Moreover, analysts predict DAL will earn $1.49 per share in 2022 on revenue of $43.4 billion, which are considerable improvements above the company's results in 2021.
10. Walt Disney
Long-time, The shareholders of Walt Disney (DIS, $137.00) have taken a beating in recent years. According to Morningstar, the company's annualized total return (10.31 percent) is higher than the entire US market's (10.31 percent) (10.28 percent ). Disney underperforms in every other period.
Indeed, the epidemic did not help. Disney's fiscal year concluded October 2, 2021, with revenues up 3% over 2020 to $67.4 billion, but segment operating income declining 4% year over year to $7.8 billion. It generated $2.0 billion in free cash flow, 45 percent less than a year before.
Therefore, why is DIS ranked among the most significant travel stocks?
First, its Disney Parks, Experiences, and Products segment fared brilliantly in the first half, despite the impact of COVID-19. It earned $16.6 billion, 3% less than a year before on the revenue front. However, its operating income was $471 million, a 4% increase over the previous year.
Disney+ is another critical piece of the jigsaw for DIS. It increased its direct-to-consumer (DTC) video streaming income by 55% to $16.3 billion in 2021, which accounted for 32% of Disney's media and entertainment distribution revenue, a 10% increase over 2020.
Disney ended the fiscal year with 179 million direct-to-consumer subscribers, including Disney+, Hulu, and ESPN+. Disney+ gained the lion's share of subscribers, increasing by 60% year over year to 118.1 million. Disney will expand its streaming service into more than 50 new markets worldwide over the next two years, including South Africa and Croatia.
Rick Stuchberry, portfolio manager at Wellington-Altus Private Wealth, feels the Dow Jones stock is far from dead, and he has designated it as one of his top picks for 2022.
Final Thoughts
The travel and tourism industries have begun the year optimistically in 2022. Though the end of 2021 was marked by widespread panic over the advent of the omicron Covid-19 variation, the announcement that the new strain is significantly weaker than its predecessors has significantly improved the industry's outlook for travel in the new year. With this in mind, is this an appropriate time to reinvest in travel stocks?
We are already seeing signs of life across the stock market, as travel stock recoveries are assisting in driving markets higher, despite the impact of global record-breaking inflation rates on stocks.
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