Travel is forecast to rebound strongly in 2021 and a number of airline, hotel, theme park and restaurant stocks are already benefiting from the expected recovery. However, not all travel stocks are created equal.
Some securities of travel companies continue to underperform and disappoint investors. These are stocks that were among the hardest hit last year during the height of the Covid-19 pandemic and continue to struggle now as vaccine distribution accelerates and the economy reopens.
Here are four travel stocks that are running out of time.
Travel Stocks: Trivago (TRVG)
Yes, Trivago’s share price has nearly doubled and is up 90% year-to-date. But that doesn’t mean much when Trivago is still a penny stock.
The online hotel booking site’s stock had a 52-week low of $1.25 a share. And the company and its shareholders were not doing all that well before the global pandemic devastated the travel industry.
Trivago stock has steadily fallen from its 2017 peak of $23.66 a share. While the stock has rebounded a bit this year, the jump may be more akin to a “dead cat bounce” than a legitimate recovery.
While Trivago continues to report quarterly losses amid declining revenues, the company is bullish on the resumption of travel in the second half of this year. Trivago has said it anticipates that travel will return to normal by June, and expects travel demand to be extremely strong in both local and international markets this summer.
Here’s hoping the uptrend in travel translates into increased hotel reservations made on Trivago’s website. Shareholders of TRVG stock are counting on a sustained recovery.
Airbnb (ABNB)
Given the massive recovery that is forecast for travel this year, one would assume that shares of Airbnb would be performing better. After all, few companies are likely to benefit more from the resumption of leisure and vacation travel than Airbnb, especially when it comes to extended stays by travelers.
The online marketplace that enables people to rent out their homes and other properties for vacation and business stays, and that markets itself as an affordable alternative to hotels, should be primed to benefit from the economic reopening and return to travel. Right?
Yet surprisingly, ABNB stock has been trading more like a technology play lately, rising and falling with the broader Nasdaq stock index. The San Francisco-based company’s share price hit a 52-week high of just under $220 a share in mid-February. Since then, it has slid 6%.
The stock’s volatility and decline have to be disheartening to investors considering that Airbnb has only been publicly traded since last December. Hopefully a spate of new bookings later this year will help lift Airbnb out of its funk.
Travel Stocks: Tripadvisor (TRIP)
Tripadvisor looks to be finally on the mend after an extremely difficult year. The Massachusetts-based company that enables people to book everything related to travel, from hotels to rental cars and even restaurants, saw its business hammered during the Covid-19 outbreak.
Tripadvisor’s fourth-quarter revenue came in at $116 million, down 65% from a year earlier. Earnings were a loss of 41 cents per share, a 208% decrease from the final quarter of 2019. Abysmal results like that were part of the reason TRIP stock was trading under $20 a share last fall.
Fortunately, things are starting to look a whole lot better for TRIP stock, which has risen 200% since last October. Today, the share price is about $55. The stock has been lifted by the broad rotation into travel-related securities, but also got a boost after Citigroup upgraded Tripadvisor to “buy” from “neutral.”
Citigroup and others have singled out Tripadvisor’s new subscription-based service called “TripAdvisor Plus,” which provides people with access to better deals on various hotels. This subscription service should help to strengthen Tripadvisor’s balance sheet going forward.
Choice Hotels (CHH)
Hotel stocks have had a rough go of it during the pandemic, with vacancies skyrocketing. Maryland-based Choice Hotels has been among the hardest hit.
The company, which operates hotels ranging from the high-end Cambria chain to the mid-range Quality Inn and the economy focused Econo Lodge brand, has seen its earnings under perform analyst expectations and its share price underperform the S&P 500 index for much of this year. CHH stock is roughly flat so far this year.
The company’s extended stay hotel brands were a lone bright spot for the company in 2020 as those properties outperformed the broader industry. Now, the company is hoping the rest of its portfolio will catch up throughout this year as Covid-19 recedes and Americans begin travelling in earnest again.
The stock price should follow any rise in Choice Hotels business in coming months.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
