Easing deposit rules: tourism equity holdings reward investors
Traveling, that tantalizing desire for sun, sea, and adventure, remains unabated among Germans, even as costs escalate. Despite the tourism sector's struggles in other industries, it is flourishing, and investors are eagerly snagging travel stocks as the summer vacation season approaches.
Covetable getaways are experiencing a resurgence. After the pandemic, travelers are opting for quality over quantity, foregoing multiple short trips for grander escapades. The "revenge travel" phenomenon, a sort of escapist rejoicing for the freedom denied during lockdowns, has ignited a fire in high-end travel destinations like Asia, the Caribbean, and the Middle East. Moreover, the premium sector in business travel is making a comeback. Even in tumultuous times, the wellheeled continue to seek out extraordinary experiences. Statista predicts the global travel market will generate a staggering EUR 871 billion by 2025, with an annual growth rate of 3.9%. The U.S. Travel Association is even more optimistic, estimating a 4% increase to USD 316 billion in business travel and a 3.9% increase to USD 1.35 trillion in leisure travel by 2025. The upcoming 2026 FIFA World Cup, 2028 Olympic Games in Los Angeles, and the 250th anniversary of the USA promise to fuel travel fever further.
Travel Trends and Corporate Profits
The travel industry titan, TUI, has witnessed significant growth at the start of the winter season. In the first quarter of business through December, customer numbers surged to 3.7 million, a 6% increase over the previous year. For the full year, which ends in October, TUI anticipates a 5-10% revenue increase and a 7-10% boost in adjusted EBIT. However, the airline division faces criticism due to high costs, structural issues, and threatened strikes, causing a decline in the stock price. This obstacle may present a chance for risk-savvy investors, but caution is advised, as a stop-loss should be set to limit potential losses. On a positive note, the "Holiday Experiences" division, which includes cruises, experienced a 40% EBIT increase, signaling that the luxury travel boom persists at TUI.
The undisputed market leader in online travel bookings, Booking.com, has demonstrated impressive performance. Its lean business model boasts low fixed costs, making it an attractive investment. Even with a price-to-earnings ratio of around 25, the stock remains appealing, offering opportunities for investors during corrections due to profit-taking.
In addition to TUI and Booking.com, other travel stocks that may attract investors aiming to capitalize on the rising travel enthusiasm are:
- Expedia Group Inc. (EXPE): A leading online travel agency offering a diverse portfolio of travel services, including flight, hotel, and vacation package bookings.
- Booking Holdings Inc. (BKNG): Its Booking.com platform is one of the largest travel e-commerce companies globally, offering extensive accommodation and travel services inventory.
- Carnival Corporation & plc (CCL): As a prominent cruise line operator, it is well-positioned to capitalize on the resurgence in cruises.
- Hilton Worldwide Holdings Inc. (HLT): This global hospitality company possesses a diverse portfolio of hotels and resorts, poised to thrive with increased bookings.
Although specific advice from €uro - The Magazine for Economy and Money concerning additional top travel stocks to invest in is not currently available, keeping an eye on these well-known travel-related stocks could yield promising results. Bear in mind that consulting financial advisors or reviewing current market analyses is always advisable before making investment decisions.
- TUI's finance division reports a steady growth, with a forecasted 5-10% revenue increase and a 7-10% boost in adjusted EBIT, attributed to the surging demand for luxury travel.
- Online travel booking companies like Booking.com, with their lean business models and large service inventories, offer investment potential for those looking to capitalize on the travel enthusiasm, despite having a high price-to-earnings ratio.
- Other companies such as Expedia Group Inc., Booking Holdings Inc., Carnival Corporation & plc, and Hilton Worldwide Holdings Inc., with their diverse travel services portfolios, may also attract investors as the global travel market expands.
