The best travel stocks on the market is our topic for today. Although recent inflation data suggests distressing headwinds for the consumer economy, Americans still seem eager to travel. For the first time since the start of the pandemic, travel spending reached $100 billion in April 2022. Now, it is about 3% above 2019 levels.
Furthermore, Deloitte’s 2022 Summer Travel Survey highlights that despite rising airfares and hotel rates, 46% of Americans are planning a trip that involves paid lodging. In addition, most Americans plan to travel domestically — only 27% of travelers plan to fly internationally.
Meanwhile, Deloitte’s survey also suggests that financial concerns are affecting travel decisions. Put another way, the increase in cost of living is replacing health concerns. So be cautious — it remains to be seen to what extent the ongoing rebound in summer travel may give way to weaker demand in the coming months.
Against this backdrop, here are seven of the best travel stocks that could take off in Q3:
| ABNB | Airbnb | $102.20 |
| AAL | American Airlines | $15.16 |
| BKNG | Booking Holdings | $1,834.80 |
| MAR | Marriott International | $150.92 |
| TRIP | TripAdvisor | $19.04 |
| UAL | United Airlines | $41.47 |
| WH | Wyndham Hotels & Resorts | $69.21 |
Airbnb (ABNB)
52-week range: $86.71 – $212.58
First on our list of the best travel stocks is Airbnb (NASDAQ:ABNB), the leader in vacation rental industry. It boasts more than 4 million hosts who have welcomed more than 1 billion guests worldwide.
The home-sharing platform announced first-quarter financials on May 3. Revenue stood at $1.5 billion, up 70% year-over-year (YOY) and 80% above pre-pandemic Q1 FY19. Net loss came in at $19 million, reflecting a substantial improvement from the $1.2 billion from the prior-year quarter.
Wall Street was pleased that Nights and Experiences Booked surpassed pre-pandemic levels and exceeded 100 million for the first time, representing 59% YOY growth. Gross booking value grew 67% YOY. Free cash flow of $1.2 billion was an all-time high, driven by revenue growth and margin expansion.
On May 11, ABNB introduced a new version of its application that includes the most significant changes over the past decade. This new interface comes with new features such as Airbnb Categories, Split Stays, and Aircover for guests, to boost bookings for the remainder of 2022.
ABNB stock lost roughly 39% year-to-date (YTD). Shares are trading at 51 times forward earnings and 8.9 times sales. The 12-month median price forecast for Airbnb stock stands at $174.
American Airlines (AAL)
52-week range: $11.93 – $22.35
American Airlines (NASDAQ:AAL) is the largest global airline by a number of metrics. Following a major fleet renewal, it also boasts the youngest fleet of U.S. legacy carriers.
The company released Q1 figures on April 21. Revenue came in at $8.9 billion, an impressive 84% gain from the same quarter of 2019. Adjusted loss per share declined to $2.32, compared to a $4.32 loss per share in the prior-year quarter. The airline ended the quarter with $15.5 billion of liquidity.
Management pointed to solid summer travel demand combined with still-limited capacity. As a result, it has enough pricing power to compensate for rising fuel costs.
Q2 revenue should increase by 6% to 8% compared to the second quarter of 2019. Thus, the airline expects a return to profitability in the second quarter.
AAL stock is down 16% YTD. Shares are trading at 7.4 times forward earnings and 0.27 times sales. Wall Street’s 12-month median price forecast for American Airlines stock stands at $16.75. All this makes it one of the best travel stocks.
Booking (BKNG)
52-week range: $1,669.34 – $2,715.66
Next up is Booking (NASDAQ:BKNG), a global leader in online travel services. The booking platform giant works with local partners globally. Its brands include Booking.com, Priceline, Agoda, Rentalcars.com, KAYAK and OpenTable.
BKNG reported Q1 results in early May. Revenue came in at $2.7 billion, representing an increase of 136% YOY. Non-GAAP net income came in at $3.90 per diluted share, compared with a non-GAAP net loss of $5.26 per diluted share a year ago. Cash and equivalents ended the period at $10.55 billion.
Booking generates the bulk of its revenue from Europe and the Asia Pacific market. Those regions have been slower to emerge from the pandemic due to longer restrictions and lockdowns. Yet, Wall Street is convinced Booking can navigate the current macroeconomic headwinds due to its extensive geographic diversity.
Recently, Priceline, Booking’s travel deal brand, launched the Summer Sale program to attract travelers with better deals even at the last minute. Furthermore, OpenTable formed a strategic partnership with Inline Group, expanding its restaurant services to the East Asia region.
So far in 2022, BKNG stock is down 24%. Shares are changing hands at 18 times forward earnings and 5,6 times sales. The 12-month median price forecast for Booking stock stands at $2,600.
Marriott International (MAR)
52-week range: $127.58 – $195.90
Marriott International (NASDAQ:MAR) is the next of our best travel stocks. It’s one of the leading hospitality operators worldwide. The lodging giant operates and licenses many hotels and timeshare properties. According to the “American customer satisfaction index scores for hotel companies,” Marriott holds the second spot stateside.
Management put out Q1 results on May 4. Total revenue came in at $4.2 billion, up 81% YOY. Adjusted diluted earnings per share (EPS) totaled $1.25, compared to 10 cents in the year-ago quarter.
Comparable systemwide revenue per available room in the first quarter increased 96.5% YOY worldwide in constant dollars. The company added roughly 11,800 rooms globally during the first quarter. In addition, Marriott’s worldwide development pipeline totaled nearly 2,900 properties and more than 489,000 rooms at the end of the period.
Recently, Marriott signed an agreement with Vinpearl, Vietnam’s largest hospitality and leisure chain, to add eight Vietnamese hotels. The hospitality behemoth also expects to add 50 more hotels in China in the current year.
MAR stock is down 9% YTD. Forward P/E and P/S metrics currently stand at 23.92x and 3.01x, respectively. Analysts’ 12-month median price forecast for Marriott International stock is $172.50.
TripAdvisor (TRIP)
52-week range: $17.71 – $41.30
TripAdvisor (NASDAQ:TRIP) offers a wide range of travel planning resources. The platform provides online hotel reservations along with other travel-related bookings such as restaurants and transportation.
Management announced Q1 results on May 4. Revenue jumped 113% YOY to $262 million, reaching 70% of the same quarter in 2019. Adjusted net loss narrowed to 9 cents per diluted share, down from 39 cents in the prior-year quarter. Cash and equivalents ended the period at $781 million.
The travel company also generated $72 million in free cash flow. The experiences & dining segment soared by 229% YOY to $92 million. Meanwhile, the hotels, media & platform segment delivered an 82% increase.
So far in 2022, despite being one of the best travel stocks, TRIP stock is down 30%. Shares are trading at 21.3 times forward earnings and 2.3 times sales. The 12-month median price forecast for Tripadvisor stock stands at $28.
United Airlines (UAL)
52-week range: $30.54 – $54.52
United Airlines (NASDAQ:UAL) operates a hub-and-spoke system more focused on international travel than its peers. In the U.S., its market share is around 10%.
The airline released Q1 financials on April 20. Revenue surged 135% YOY to $7.57 billion, yet still remained 21% below Q1 FY19. As a result, the adjusted loss narrowed to $4.24 per diluted share, down from $7.50 in the prior-year period. Cash and equivalents ended the quarter at $18.5 billion.
Recently, United Airlines has resumed 19 international routes and relaunched service to six cities not served since the start of the pandemic. In addition, in early June, the company announced the expansion of a massive pilot training center to prepare for an increase in pilot hiring. UAL also became the first domestic airline to add new Transpacific destinations after the pandemic.
Management anticipates generating an all-time high Q2 revenue. Despite cost headwinds driven by increasing fuel prices, it should become profitable in the second-quarters. Operating margin should be roughly at 10%, just 2.9 points less than the 2019 operating margin.
UAL stock is down 6% YTD. Shares are trading at 27.7 times forward earnings and 0.4 times sales. Wall Street’s 12-month median price forecast stands at $54.
Wyndham Hotels & Resorts (WH)
52-week range: $62.89 – $93.86
The last of today’s best travel stocks is Wyndham Hotels & Resorts (NYSE:WH), one of the largest hotel franchise companies worldwide. The lodging powerhouse operates through 22 brands.
On April 26, Wyndham released Q1 metrics. Revenue increased 22% YOY to $371 million. Adjusted diluted EPS jumped to 95 cents, compared with 36 cents for the year-ago quarter. In addition, the company generated $125 million in free cash flow, up from $59 million a year ago. Cash and equivalents ended the period at $416 million.
Global revenue per available room in the first quarter grew 39% YOY in constant currency. Systemwide rooms increased 2% YOY, including 1.2% growth in the U.S. and 3.3% growth internationally. Management maintained its full-year 2022 outlook of global revenue per available room growth at 12% to 16% YOY.
In early June, the company announced the opening of the first La Quinta and Hawthorn Suites dual-branded hotel concept in Texas. It is the first of 48 dual-brand venues in Wyndham’s pipeline of 1,500 new hotels.
So far in 2022, WH stock is down 23%. The dividend yield currently stands at 1.9%. Shares are changing hands at 19.8 times forward earnings and 3.8 times sales. Lastly, the 12-month median price forecast is $96.
On the date of publication, Tezcan Gecgil,Ph.D., did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
