The global travel industry is booming, driven by economic recovery, rising disposable personal income, and growing consumer spending on leisure and travel. Also, with rapid growth of technological advancements, online travel market is opening new avenues and possibilities for the market.
Amid this backdrop, investors could consider investing in fundamentally sound travel stocks Expedia Group, Inc. (EXPE), Norwegian Cruise Line Holdings Ltd. (NCLH), and Travel + Leisure Co. (TNL) expected to deliver strong Q2 earnings.
In May 2024, personal income rose by $114.1 billion, indicating a 0.5% growth on a monthly basis, and disposable personal income increased by $94.0 billion, also indicating a 0.5% rise from previous month. With the rise in disposable incomes, expanding global economies, and trending aesthetics, travel market is significantly growing.
The online travel market is expected to reach $1.10 trillion by the year 2032, growing at a notable CAGR of 7%. The market growth is attributable to factors including supportive government initiatives, expanding technology capabilities, and rising disposable personal income.
In May 2024, a report by World Travel & Tourism Council (WTTC) reflected a 20% hike in global travel expenditure owing to rising global travel expenditure, economic recovery, and surging consumer spending on travel. WTTC projected the travel & tourism market to reach an all-time high of $11.1 trillion in 2024, making it record-breaking year.
Further, the travel & tourism market is poised to expand at a CAGR of 5.3%, resulting in a market volume of $972.50 billion by 2031, driven by affordable commutes, easy accessibility to remote locations, rising prevalence of social media and travel trends, and disposable income growth.
Given the conducive trends, investing in quality travel stocks such as EXPE, NCLH, and TNL could be wise for future gains.
Expedia Group, Inc. (EXPE)
EXPE operates as an online travel company internationally. The company operates through B2C; B2B; and trivago segments. The company includes Brand Expedia, , Hotels.com, Vrbo, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com and CarRentals.com.
On May 14, EXPE announced the travel industry’s most innovative and comprehensive release of 40+ new products and features which makes picking a hotel a seamless experience. The company unveiled Romie, the travel industry’s first AI assistant designed to ‘roam’ the world with, alongside 40+ new features.
The new innovations aligns well with the company’s operations and long-term vision with the leverage of transformative power of AI to create personalized travel experiences.
On May 7, EXPE launched a web experience to the United Arab Emirates market, with a Gen-AI enabled app. EXPE will offer worldwide flights and access to hundreds and thousands of lodging options globally to citizens and residents of the United Arab Emirates and allow them to book staycations in the country and globally.
The expansion widens the company’s global imprint and will help it to grow with the UAE and with the region.
For the first quarter that ended March 31, 2024, EXPE’s total gross bookings were $30.16 billion, up 2.6% year-over-year. Its revenue increased 8.4% year-over-year to $2.89 billion. The company’s adjusted EBITDA rose 37.8% from the year-ago value to $255 million.
Furthermore, the company’s adjusted net income and adjusted EPS were $29 million and $0.21 for the quarter, respectively.
Analysts expect EXPE’s revenue for the second quarter (ended June 2024) to increase 5.2% year-over-year to $3.53 billion and its EPS for the same quarter is expected to grow 9.4% year-over-year to $3.16. Furthermore, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of EXPE have surged 2.8% over the past month and 9.8% over the past year to close the last trading session at $125.50.
EXPE’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Quality and a B grade for Value. Within the B-rated Internet industry, EXPE is ranked #10 out of 53 stocks.
Click here to access additional ratings of EXPE for Momentum, Growth, Stability, and Sentiment.
Norwegian Cruise Line Holdings Ltd. (NCLH)
NCLH operates as a cruise company in internationally. The company operates through the Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises brands.
On July 1, NCLH’s wholly owned subsidiary Oceania Cruises marked a significant milestone in the construction of its new 1,200-guest ship, Allura, at the Fincantieri shipyard in Sestri Ponente. With the ship moving towards its completion, the vessel was floated from the dry-dock and moved to the fitting-out berth to begin outfitting the luxurious, designer-inspired interiors.
On June 4, NCLH successfully migrated its shoreside technology infrastructure, which included its reservation system, mobile apps, among others to Amazon Web Services. This strategic move makes NCLH among the first passenger cruise lines to transition its core technology operations to AWS.
For the first quarter that ended March 31, 2024, NCLH’s total revenue increased 20.3% year-over-year to $2.19 billion. Its operating income grew 1937.6% from the year-ago value to $218.39 million. The company’s net income and EPS came in at $17.35 million and $0.04, against net loss of $159.32 million and $0.38 per share in the previous year’s quarter, respectively.
As per the company’s guidance, NCLH expects adjusted EBITDA of $555 million, adjusted net income of $160 million, and adjusted EPS of $0.32 for the second quarter 2024.
For the full fiscal year 2024, the company adjusted EBITDA of $2.25 billion, adjusted net income of $680 million, and adjusted EPS of $1.32.
Analysts expect NCLH’s revenue and EPS for the second quarter (ended June 2024) to increase 7.8% and 13.3% year-over-year to $2.38 billion and $0.34, respectively. Moreover, the company topped consensus revenue and EPS estimates in three of the trailing four quarters.
Shares of NCLH have gained 2.1% over the past month and 2% over the past six months to close the last trading session at $18.12.
NCLH’s sound fundamentals are reflected in its POWR Ratings. The stock has a B grade for Growth. Within the Travel - Cruises industry, NCLH is ranked #4 among other stocks.
Click here to access additional ratings of NCLH for Value, Momentum, Quality, Sentiment, and Stability.
Travel + Leisure Co. (TNL)
TNL offers hospitality services and travel products internationally. It operates through two segments, Vacation Ownership; and Travel and Membership. The company develops, markets, and sells vacation ownership interests (VOIs) to individual consumers.
On June 10, TNL’s flagship vacation ownership brand, Club Wyndham® partnered with SeaWorld® to introduce a custom designed suite at the Club Wyndham Bonnet Creek resort in Orlando, Florida, near SeaWorld Orlando. Inspired by SeaWorld Orlando’s all-new Antarctica Realm, the Club Wyndham SeaWorld Suite brought the Antarctic to life inside a spacious one-bedroom deluxe suite.
On May 15, TNL’s Board of Directors declared a regular cash dividend on the company's common stock of $0.50 per share, paid on June 28, 2024 to shareholders of record as of June 14, 2024. The Board also approved an increase to the authorized capacity of its share repurchase program by $0.5 billion.
TNL’s net revenues for the first quarter that ended March 31, 2024, increased 4.2% year-over-year to $916 million. Its adjusted EBITDA grew 3.8% from the year-ago quarter to $191 million. The company’s adjusted net income and adjusted EPS came in at $69 million and $0.97, respectively.
According to the company’s guidance, TNL expects its adjusted EBITDA to be between $235 million and $245 million and gross VOI sales is expected to range from $580 million to $610 million for the second quarter 2024.
Also, for the full year, the company expects adjusted EBITDA of $910 million to $930 million and gross VOI sales of $2.25 billion to $2.35 billion.
Street expects TNL’s revenue and EPS for the second quarter (ended June 2024) to grow 4% and 6.4% year-over-year to $987.19 million and $1.42, respectively. Also, the company has topped the consensus EPS estimates in all of the trailing four quarters, which is impressive.
Over the past six months, TNL’s stock has surged 8.2% and 4.1% over the past year to close the last trading session at $43.32.
TNL’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
TNL has a B grade for Value and Sentiment. It is ranked #3 out of 20 stocks in the Travel – Hotels/Resorts industry.
In addition to the POWR Ratings we’ve stated above, we also have TNL’s other ratings for Momentum, Stability, Quality, and Growth. Get all TNL ratings here.
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EXPE shares were trading at $128.85 per share on Tuesday afternoon, up $3.35 (+2.67%). Year-to-date, EXPE has declined -15.11%, versus a 17.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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