Travel stocks: how to invest and the best companies to watch
Learn how to get started with travel stocks – and which airline, hotel, booking and cruise travel companies to keep an eye on – with this comprehensive guide.
About the travel sector
Travel and tourism is a broad sector with huge variation in the products and services offered – and the businesses offering them. A boutique travel agency, for example, is an entirely different proposition to an international airline.
However, when investors talk about travel stocks they’re usually referring to companies in any of the following four main sectors:
Airlines
Due to the pandemic, the past couple of years have seen global commercial airlines fail to break even. 2023, however, is set to be the first year since 2020 where they are on track to make a profit. But with high inflation and an unstable geo-political environment, whether this is achievable remains to be seen.
Hotels
A handful of players dominate the global hotel market, most of them located in the US. Whilst the sector seems to be recovering from the pandemic, concerns regarding high inflation and the need to raise prices to cover the increased cost may inhibit growth in 2023.
Bookings
The time when this industry was dominated by travel agencies is well over. Now it’s the domain of online booking providers such as Booking.com and Expedia in the US, and Trip.com in China.
Cruises
The cruise sector is dominated by just three operators: Carnival, Royal Caribbean and Norwegian.
Of all the sectors, the cruise industry was hit particularly hard by the pandemic, but with passenger numbers expected to surpass those of 20191, signs of recovery are beginning to show.
The top 10 travel shares to watch
| Company | Market capitalisation (approximate) |
| Airbnb | $62.93 billion |
| Booking Holdings | $79.96 billion |
| Air China | $18.21 billion |
| Marriott International | $51.64 billion |
| Southwest Airlines | $23.36 billion |
| Expedia | $15.87 billion |
| Carnival | $12.77 billion |
| Ryanair | $17.61 billion |
| InterContinental Hotels Group | $10.45 billion |
| Trip.com | $20.96 billion |
The 10 stocks listed here are not necessarily the ‘best’ by size standards, but are chosen by virtue of revenues, market capitalisation, dividends, future growth prospects and other factors.
Airbnb
The company that launched a thousand couch surfs and small hospitality businesses alike, Airbnb is technically the world's biggest hospitality franchise that’s not a hotel.2
The company’s most recent earnings report revealed an EPS of 0.48, exceeding analyst expectations of 0.47. What’s more, their quarterly revenue of 1.9 billion was up 24.2% compared to this time last year.
Since the beginning of the year, Airbnb has already seen an increase in share price which is anticipated to continue in the coming months, reaching $141.27. The share is currently viewed as a hold position.
Southwest Airlines
Southwest Airlines is the biggest low-cost airline on the planet, focusing mostly on domestic flights within the US.
For the most recent quarter, the company reported an EPS of 0.38, exceeding analyst expectations of 0.35. Their quarterly revenue of $6.17 billion also exceeded expectations of $6.14 billion and was up 22.2% compared to this quarter last year.
The stock is currently in a buy position as it is anticipated to increase another 48.8% over the next 12-month period reaching $47.07.
Air China
Air China is the flag carrier for the People’s Republic of China. The company also owns Air Macau and Shenzhen China airlines. It wasn’t China’s largest airline at the beginning of 2020 – China Southern was bigger – but Air China has fared better in the global turndown.
The stock has recently reported an EPS of -0.13, up from -0.65 for the same quarter last year. Although the EPS remains negative, it is anticipated to continue to rise reaching 0.48 by the next quarter. As a result, the stock is currently in a strong buy position.
Ryanair
Ryanair is Europe’s leading budget airline, with over 500 planes operating across the continent. On top of their passenger plane service, they also offer a range of other holiday related services including the ability to book a hotel, hire a car and sign-up for travel insurance through their website or app.
The airline’s most recent earnings report revealed an EPS of $0.95 exceeding analyst expectations of $0.91. Although their quarterly revenue of $2.36 billion failed to meet analyst expectations of $2.61 billion, market sentiment remains positive as the stock’s value is predicted to increase, reaching $115 in the coming months. As a result, it is viewed as a buy position.
Unlike many other airlines, Ryanair doesn’t pay a dividend to shareholders. It does, however, make occasional special payouts when it has the cash to do so.
Marriott International
Marriott International is the largest hotel brand in the world and covers over 100 countries.
The company’s most recent earnings report announced an EPS of $1.96 which surpassed analyst expectations of $1.84. Their revenue for the past quarter was also up by $32.2% compared to the same month last year.
The stock is currently viewed as a hold position and is expected to increase by 8.41% over the next 12-month period.
InterContinental Hotels Group
InterContinental Hotels Group (IHG) is one of Britain’s most-known hotel companies. It runs several different hotel brands, including Holiday Inn, Crowne Plaza and Regent Hotels.
The company’s most recent earnings report revealed an EPS of $3.27, this is expected to increase 14.98% in the next 12-month period, reaching $3.76.
Since the beginning of the year, the company has already seen an uptick of 20.8% and analysts believe this will continue, rising another 10.86% in the coming year. The stock is currently in a hold position.
Booking Holdings
Booking Holdings is a world leader in the online travel sector. Owning many companies including Priceline.com, Booking.com, Kayak.com, Agoda.com and Cheapflights.com the company specialises in connecting customers with travel providers around the world.
Their earnings report from Q1 revealed an EPS of $24.74, beating analyst expectations of $20.97. Their quarterly revenue of $4.5 billion also did better than expected with analyst predictions averaging 3.90 billion, showing a 35.8% increase on a year over year basis. The stock is currently on a hold position and expected to rise over the next 12-month period.
Trip.com
Booking Holdings’ main stock market rival is currently Trip.com, a Chinese company that runs its namesake website as well as Skyscanner, Ctrip and more. Trip.com is the largest online bookings company in China.
The company's most recent earnings report revealed an EPS of $0.81 for the last quarter, almost equal to analyst expectations of $0.80.
Since China lifted all travel restrictions at the end of 2022, the company’s share price has seen an uptick of 6.3%. This is anticipated to continue over the next 12-month period with analysts predicting the share price to reach $44.70. As a result, the stock is currently viewed as a buy position.
Expedia
Another large player within the online travel sector, Expedia Group owns and operates many large companies within the sector including Expedia.com, Trivago, Carbookings.com, Orbitz, Travelocity and Hotels.com.
The travel company's most recent Q1 revealed an EPS of $1.26, failing to meet analyst expectations of $1.85. Despite this, their quarterly revenue saw an uptick of 14.9% on a year over year basis and the stock is anticipated to increase, reaching $137.61 in the next 12 months. The stock is currently viewed in a hold position.
Carnival
Carnival is the world’s leading cruise company, with over 90 vessels split across nine brands.
The company's most recent earnings report revealed an EPS of $0.55 slightly below analyst expectations of $0.60. Despite this, the firm’s revenue saw an increase of 173.1% compared to the same quarter last year.
Since the beginning of the year, their stock has risen 20.1% and is expected to increase another 19.6% over the next 12-month period reaching $11.58. The stock is currently viewed as a hold position.
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Travel sector investing: what you need to know
Since 2021 travel stocks have all been about Covid-19 recovery, and for the most part, 2023 is no different. Despite the removal of all restrictions, the industry is yet to return to pre-pandemic levels and there is some speculation amongst analysts as to when/if this will happen.
Recent findings from the travel association ABTA3 suggest that for many, 'foreign holidays remain a top priority despite the rising cost of living’. This view is also reflected in the research conducted by the European Travel Commission4 (ETC) which found a significant increase in the number of holiday makers intending to travel in the first 6 months of the year.
What's more, most travel stocks have increased since the beginning of the year. Whilst this information appears hopeful, it is worth remembering the rates of decline these stocks have undergone since the beginning of the pandemic.
It's also worth noting that whilst leisure transportation has seen an uptick in the past few months, business travel remains significantly below pre-pandemic levels. With many businesses adapting and utilising online video platforms to facilitate remote working, there is some speculation as to whether levels will ever return to what they once were.
On a final note, the travel sector is vulnerable to macro-economic events such as the war in Ukraine, which whilst currently appearing stable, further escalation could impact the travel industry.
There is also a concern that due to the increased cost, the number of holiday makers may level out once people have fulfilled their pent-up travel needs.
How to trade and invest in travel stocks
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You can use your account to invest in tourism businesses with share dealing, and trade on their share prices using CFDs and spread bets. With these derivatives, you can choose whether to open a long or a short position on travel stocks – by opening a short position, you can make a profit when the industry is in a bear market.
It's worth noting that CFDs and spread bets are leveraged products meaning you can open a position much larger than your initial margin. You can therefore gain or lose money faster than expected.
You can also, open a demo account if you’re not quite ready to commit real capital. You’ll get £10,000 in virtual funds to try out trading shares, indices, forex and more.
Sources:
1 TIME, 2023
2 HospitalityNet, 2021
3ABTA, 2023
4 ETC, 2023
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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