It’s easy to get bullish on travel and tourism stocks. In the wake of the pandemic, travel and tourism has emerged as a top growth industry. Who doesn’t need a vacation right now?
U.S. travel spending fell 42% in 2020. But by early 2024, U.S. domestic travel spending will surpass pre-pandemic levels, and business travel is on the rise, even as videoconferencing tools have made remote meetings more favorable in many situations. According to the U.S. Travel Association, U.S. travel spending has historically grown between 2% and 4% annually.
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Traveling overseas is a different story. According to the World Tourism Organization, spending fell by 76% in 2020 and has only just returned to 2019 levels in 2024. Still, there’s a huge pent-up demand to travel again, and it’s safe to say we’ll eventually see an even bigger resurgence in international tourism.
Travel and tourism is a broad sector with a variety of well-known brands. Those planning to invest in a travel company have plenty of options to choose from.
Best Travel Stocks
Best travel stocks to buy in 2024
There is a wide variety of transportation, accommodation and entertainment companies that get you to your destination and make your stay enjoyable. The variety of companies makes it hard to narrow down to one key metric to focus on. For example, some travel companies are asset-heavy transportation companies (like the airline industry and airline stocks, which are currently going through a lot of trouble, especially in the US, with the poor performance of Boeing (BA -5.97%)), while other popular stocks are essentially technology companies.
However, the best travel and tourism stocks have a few things in common, including strong brand recognition, easy-to-use websites and apps, and a loyal customer base. Here are some of the top travel and tourism companies.
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1. Holding a reservation
Booking Holdings (BKNG -0.96%) is one of the largest online travel portals. The company is the parent company of several popular travel booking sites including:
Booking.comPriceline.comKayak.comRentalcars.comAgoda
The company has been hit hard by the pandemic, but Booking has cut jobs around the world to save more than $300 million a year. The company came through the ordeal with billions of dollars in cash on its balance sheet to stabilize the company during the downtime. 2021 saw a rapid recovery in both revenue and profitability, and this trend continued into his 2022. As measured by free cash flow, the company almost fully recovered its pre-pandemic profitability by the first quarter of 2022.
Few companies have the ability to offer travelers the variety of trip planning and comparison tools that Booking has. The travel company’s global online reach should serve it well in the coming years.
2. Marriott International
Marriott International (MAR -0.59%) is one of the world’s largest hotel companies, with over 8,000 properties in approximately 140 countries. The company is a holding company that owns 30 brands, including:
Marriott Sheraton Westin The Ritz-Carlton Courtyard Hotel Residence Inn
The company has an asset-light business model, which is unique compared to other real estate investment options. Marriott earns revenue from licensing its brand to franchisees and property management fees, so there are no costs involved in actually owning the properties. Marriott’s broad geographic reach, world-class brands, and global loyalty program make it a consistent long-term winning stock.
Like many other companies in the travel industry, Marriott’s revenue and profitability rebounded after the pandemic. The new digital travel app and guest perks initiatives have ample potential to propel the company’s financials to all-time highs in the coming years.
3. Airbnb
Airbnb (ABNB 0.11%) has completely taken the travel and vacation world by storm. This online marketplace allows homeowners and property managers to list their homes, condos, and other unique places to stay. It has a huge collection of listings (approximately 8 million as of early 2024) across the globe, many of which are in less-traveled areas or unique locations that hotel chains can’t match.
Remote work has become more common in recent years, and Airbnb has also emerged as one of the biggest beneficiaries of this shift in the global workforce. Millions of people around the world currently travel and work, and long-term stay bookings have been Airbnb’s biggest growth area since 2021.
The company recently upgraded its platform by adding flexible date search tools and making the process of becoming a host faster and easier. There are many countries with very few Airbnb listings. Before the pandemic, Airbnb had been experiencing years of explosive growth, a trend that will continue into 2024. This is more than just a travel and tourism recovery strategy. Airbnb is a top growth stock worth considering, especially now that it boasts favorable profit margins coupled with its expansion rate.
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4. The Walt Disney Company
The Walt Disney Company’s (DIS -1.75%) theme parks and hotels are among the world’s premier vacation destinations. Disney cruise ships are also popular and offer family-themed cruises, making the House of Mouse an ancillary bet for the cruise industry. For Disney, these in-person experiences returned in 2021 and were once again profitable.
While many travel companies rely entirely on travel demand to generate revenue, Disney has a different challenge: In addition to travel, the company also generates revenue from television, movies, streaming content (Disney+, Hulu, ESPN+), and merchandise sales. These multiple revenue streams are one reason why many investors believe Disney is an undervalued stock for 2024.
But Disney has become a controversial company, embroiled in political and social debate that has diverted attention from its premier assets and fan-favorite entertainment franchises. Bob Iger returns to his CEO role in late 2022 after a brief retirement, but there is still a lot of work to do to make the company great again. Value investors should, however, expect Disney’s earnings to make a more meaningful recovery as revenue hits a new record in 2024.
5. Uber Technologies
Uber Technologies (UBER -1.98%), the top ride-hailing company, has made a fresh start. After years of bleeding cash as a darling of high-growth technology, the company has grown and is now highly profitable. As a result, Uber stock hit a new all-time high in early 2024.
But why consider this a top travel stock? Uber facilitates tens of millions of short-haul trips every day. Many are aimed at tourists and vacationers as well as groups traveling to and from recreational destinations.
Uber isn’t the high-growth business it once was, but that’s OK. The company is still growing at a moderate pace and could be in the early stages of generating strong profits for shareholders. As the world starts traveling again, Uber is poised to provide rides and could be one of the biggest beneficiaries of the travel trend.
Image source: Getty Images.
travel ETF
Travel/Leisure ETF
If you’re excited about the travel and tourism industry but don’t want to invest in individual companies, buying shares in an exchange-traded fund (ETF) may be a good option. Travel-specific ETFs invest in a large number of travel and tourism companies, providing instant portfolio diversification within the sector.
Three travel ETFs to consider:
ETFMG Travel Tech ETF (NYSEMKT:AWAY) is an ETF focused on travel technology. About half of its holdings are in reservations, with the rest split between ride-sharing, price comparison and travel advice businesses. The fund contains 33 stocks and has an annual expense ratio of 0.75% ($7.50 per $1,000 invested annually). US Global Jets ETF (JETS -1.51%) is a niche travel ETF focused on airlines. U.S. airline stocks make up more than half of the fund’s holdings, which also include stocks of several international airlines. This fund has an annual expense ratio of 0.60%. For a more diversified travel and leisure portfolio, consider an ETF like Invesco Dynamic Leisure and Entertainment ETF (PEJ -1.25%). The portfolio includes 31 U.S. stocks across the travel, lodging, and entertainment businesses. This fund has an annual expense ratio of 0.55%.
Related investment topics
Alternative options
alternative travel investments
Travel-related investments are no longer limited to the globe. Several companies are exploring space, including publicly traded Virgin Galactic Holdings (SPCE 0.9%). Richard Branson’s company currently offers spaceflights for $450,000 per space traveler.
Another option is the Procure Space ETF (NYSEMKT:UFO). This ETF invests in a variety of companies that serve the needs of Virgin Galactic and its competitors as they aim to take flight to the next level.
Don’t forget about ecotourism stocks.
Ecotourism is a rapidly growing niche market, especially among young travelers. The purpose of ecotourism is to learn about and support conservation efforts in exotic and often threatened natural environments and to visit those locations without causing further ecological damage.
Specialized tours, overnight stays in remote locations, and minimizing your carbon footprint while traveling are all forms of ecotourism. Although most ecotourism companies are privately held, travel booking companies such as Airbnb and Booking.com offer services that allow travelers to discover and book ecotourism experiences.
JetBlue Airways (JBLU -2.17%) stands out for its commitment to achieving net-zero carbon emissions by 2040. The low-cost carrier has also established partnerships with several environmental organizations, including conservation groups and the Ocean Foundation.
Travel companies are often a niche sector, so you can invest in a variety of travel and tourism stocks that fit your specific interests and investment priorities. Investors interested in ecotourism should look for eco credentials when evaluating travel and tourism stocks.
FAQ
Frequently Asked Questions About Travel Stocks
What is the best stock for traveling?
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The best travel stocks depend on whether investors want to bet on transportation (airlines, cruise lines, etc.), lodging (Booking Holdings, Airbnb, Marriott, etc.), or entertainment (Disney). But the best companies grow both sales and profitability over time.
How can I invest in the travel industry?
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There are many different ways to invest in travel. Travel-related stocks (Booking Holdings, Airbnb, Marriott, and Disney mentioned above) are among the top stocks. You can also use a number of ETFs to gain broader exposure to the growing travel industry.
Why are travel stocks rising?
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Travel stocks are rising in value as the travel industry has emerged as a top trend in the wake of the pandemic. The top companies in the industry are growing at a healthy pace and are highly profitable.
Is Cruise stock a good investment?
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Cruise stocks are notoriously cyclical. Economic booms are often completely ruined by recessions and economic shocks. This is because cruise ships are expensive to build and operate, making the cruise line business’ profit margins volatile. Other areas of the travel industry have been able to sustain healthier and more profitable growth.
Nicholas Rossolillo has invested in Airbnb. The Motley Fool has invested in and recommends Airbnb, Booking Holdings, Uber Technologies, and Walt Disney. The Motley Fool recommends Marriott International. The Motley Fool has a disclosure policy.
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