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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.

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 biggest hospitality franchise (that’s not a hotel) in the world.1 It’s worth more than the top three hotel chains, with over 7 million properties under its purview.2

In its 2020 Q4 final financial results, Airbnb showed a decrease of just 22% in its year-on-year revenues – a world away from traditional hotel chains’ losses due to Covid-19 lockdowns.3 In 2021, the company decided to compare results to 2019 standards owing to the exceptional year that 2020 was, and in its latest Q2 results exceeded 2019 Q2 by 10% and 2020 by over 300%.4 This makes Airbnb one of the few hospitality industry businesses to have actually grown during the Covid-19 pandemic period.

With the easing of travel bans and mass vaccination efforts worldwide, Airbnb seems confident to face and embody the new normal of travel and tourism. ‘Travel is different than before and, because of our adaptable business model and continued product innovation to meet the changing needs of our guests, Airbnb is leading the travel rebound,’ CEO Brian Chesky said recently.4

Trade Airbnb stocks

Southwest Airlines

Southwest Airlines is the biggest low-cost airline on the planet, focusing mostly on domestic flights within the US.

The US airline industry is dominated by four ‘majors’: Southwest, Delta, United Airlines and American Airlines. Southwest Airlines had a challenging year in 2020, declaring its first year of net loss since opening its doors in 1972.5 However, annual operating revenues declined by a comparatively mild 60% and it was the first airline to boast a quarterly profit post-2020. This was largely down to reportedly having the US airline industry’s strongest balance sheet pre-Covid-19 pandemic, which investors believe could help the business come out of the current crisis ahead of its competitors.5

Trade Southwest Airlines stock

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.

While Air China made a revenue of just ¥69.5 million in 2020,6 its first quarter results for 2021 already showed an improvement of over ¥145 million.7 This represents a relatively robust performance for an airline in current times. In Air China’s case, the company’s status as the official airline for China may have helped dampen the effect of global travel bans on its share price. After all, the Chinese government could be unwilling to let its flag carrier fail.

Air China has a dual listing on both the London Stock Exchange (LSE) and Hong Kong Stock Exchange (SEHK).

Trade Air China stocks

Ryanair

Ryanair is Europe’s leading budget airline. It certainly had a bumpy 2020, declaring a full year loss of €815 million compared to the €1 million profit of 2019. This was unsurprising, considering its traffic for FY21 decreased by a full 81%.8

However, 2021 so far has seen a restoration of cabin pressure for Ryanair, with its stock trading at pre-pandemic levels within the first half of the year. In fact, first quarter traffic for the year rallied to over 8 million, compared to Q1 FY21’s half a million.9 In comparison, at a similar time, competitor easyJet announced a loss of £730 million.10

Also of interest is the fact that, in June and just in time for the summer reignition of many European’s travel plans, the company took possession of its first Boeing 737-8200 plane. 9 As one of the first airlines in Europe to do so, Ryanair is surely hoping for imminent takeoff in more travel traffic going forward.

Unlike many other airlines, Ryanair doesn’t pay a dividend to shareholders. It does, however, pay occasional special payouts when it has the cash to do so.

Trade Ryanair stocks

Marriott International

The top pure-play hotel company, meanwhile, is Marriott International, with a market capitalisation of £44.29 billion. The company was trading at a record high of $150 per share at the beginning of 2020, but slumped below $60 by April, wiping out four years of growth.
Like many travel companies, Marriott is essentially waiting for the world to return to some form of normality so that people can holiday more and more internationally again.

Marriot has been rebounding from the effects of Covid-19, announcing a 2021 Q2 net income totaled $422 million, compared to 2020 second quarter reported net loss of $234 million. ‘We are optimistic that the upward trajectory of the global recovery will continue… Our recovery to date has shown us that there is tremendous pent-up demand for the travel experiences we consistently provide,’ the hotel chain said at the time.11

Trade Marriott International stocks

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.

IHG shares fared slightly better than Marriott’s in 2020, losing around half of their value. The hoteling titan pivoted quickly and showed agility in 2020’s Covid-19 pandemic distress, announcing a swathe of measures to save capital in late March, boosting its share price 15% on the announcement. Results in 2021 have boosted confidence even further, with IHG reporting that operating profit had more than tripled from $52 million in 2020 to $188 million by June 2021, while revenue was up 16% in the same period.12

Trade InterContinental Hotels stocks

Booking Holdings

One of the biggest travel companies in the world is Booking Holdings, which owns and operates Booking.com, Priceline.com, Kayak.com and Cheapflights.com – plus several other metasearch sites.

Those sites have been hit just as much by coronavirus as hotels and airlines, with total bookings down for the foreseeable future. By the end of Q1 2021, Booking Holdings was still being disrupted by the Covid-19 pandemic, with revenues 50% lower than Q1 2021.13

However, this has rallied dramatically in the year so far, with latest results showing a 852% gross travel bookings increase and a 243% revenue increase compared to Q2 2020.14

Trade Booking Holdings stocks

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.

Its share price has performed roughly in line with Booking Holdings, falling more than 40% in 2020. Revenues nosedived from ¥35.6 million in 2019 to ¥18.3 million in 2020 and gross profits near halved, from ¥28.2 in 2019 to ¥14.2 in 2020.15 Since then, however, both domestic hotel and air ticketing reservations have fully recovered from early March 2021 and achieved double-digit growth for the month. Revenues from corporate travel management also grew 101% and 6% compared with 2019’s same period. 16

Trip.com is listed on the NASDAQ and is a constituent of the NASDAQ 100.

Trade Trip.com stocks

Expedia

American online travel booking company Expedia is Trip.com’s rival in the West. It has under its brand Expedia.com, Trivago, Carbookings.com, Orbitz, Travelocity and Hotels.com.

Expedia has been recovering from the Covid-19 pandemic, with its Q2 2021 results showing revenue nearly quadruple from Q2 2020 – from $566 million to $2,111 million. Even more encouragingly, stayed room night growth, particularly in North America, has more than doubled from 81% in Q2 2020 to 196% in Q2021.17

Adjusted earnings per share (EPS) also went from a loss of $4.09 to a lesser loss of $1.13 and is expected to improve further going forward.17

Trade Expedia stocks

Carnival

Carnival is the world’s leading cruise company, with over 80 vessels split across nine brands.

Cruise operators were among the worst-performing global stocks in 2020. Carnival has been no different, dropping over 80% so far this year thanks to tumbling bookings and unwanted headlines for several of its ships. Carnival was no exception, reporting a loss of $2.2. billion for the financial year and removing 19 ships from its stable.18

The business announced a $6 billion recapitalisation at the end of March 2020. It also suspended its dividend.

Trade Carnival stocks

Open an IG account today to buy and sell the world’s top travel stocks.

How to trade and invest in travel stocks

  1. Learn everything you need to know about shares in IG Academy
  2. Open a live IG account to buy and sell thousands of global stocks, including the world’s biggest travel companies
  3. Use fundamental or technical analysis to identify your first opportunity
  4. Open your position

You can use your IG 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.

Alternatively, open an IG 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.

Travel sector investing: what you need to know

When it comes to travel stocks in 2021, including airline carriers, booking companies, hotel chains and cruises, it’s all about weathering the storm. Certain companies have sunk in the aftermath of the pandemic while others have swum. Typically, those with healthier bank sheets at the onset of 2020 have made with journey with ease compared to their peers. Those who were the biggest did not necessarily fare better in the turbulence of 2020 and 2021 thus far.

The travel and tourism industry contributed over $9 trillion to global gross domestic product (GDP) in 2019, making it one of the largest sectors on the planet.

That’s perhaps unsurprising, though, given how broad the industry is. There’s a 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:

  1. Airlines
  2. Hotels
  3. Bookings
  4. Cruises

Airlines

Global commercial airlines generated a record $838 billion in revenue in 2019. This, predictably, fell sharply in 2020, recording a $126.4 billion loss, which seems on track to improve to a loss of $47.7 billion for the 2021 year.19

On the stock market, the industry is usually broken down between US and European carriers – with European companies expected to see significant consolidation in the coming years. The pandemic has made this an even more pressing concern.

Hotels

A handful of players dominate the global hotels market, most of them located in the US. Traditional hotels have been challenged by upstart tech firms such as Airbnb in recent years, which preliminary paperwork for an IPO listing in the United States in 2020.

Casino hotels are some of the key players in the resort market, particularly in the US and China.

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. In the UK, this came to a head with the 2019 collapse of Thomas Cook.

Cruises

Cruise companies have had a torrid 2020 and 2021 so far, and recovery from the disastrous headlines brought about by coronavirus is likely to be slow. The cruise sector is already dominated by just three operators: Carnival, Royal Caribbean and Norwegian.

Sources

1 HospitalityNet, 2021
2 AllTheRooms.Analytics, 2021
3 Airbnb, 2021
4 Airbnb, 2021
5 PR Newswire, 2021
6 Air China, 2021
7 Air China, 2021
8 Ryanair Holdings, 2021
9 Ryanair Holdings, 2021
10 easyJet, 2021
11 Mariott International, 2021
12 InterContinental Hotels Group, 2021
13 Nasdaq, 2021
14 Booking Holdings, 2021
15 Trip.com, 2021
16 Trip.com, 2021
17 Business Wire, 2021
18 Cruise Industry News, 2021
19 The Print, 2021

Last updated : 2021-09-23T12:04:31+0100


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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