Travel Stocks: What To Buy, Hold or Sell as the World Reopens
With much of the U.S. at least partially vaccinated against COVID-19, many Americans are ready to hit the road this summer — and many investors are watching the stock prices of companies in the travel sector.
The U.S. Travel Association forecasts that travel will be an $841 billion industry in 2021 — a 23.6% increase in spending year over year — with the majority of trips focused on stateside leisure. According to a survey from Tripadvisor, more than two-thirds of Americans intend to travel this summer, which is a 17% increase in travelers since springtime.
Is it time to not only plan a trip but attempt to bolster your portfolio by taking a fresh look at the sector? Below, you’ll find the latest recommendations on common travel stocks, as well as a look at exchange-traded funds that offer you a diversified slice of the industry. Be sure to research each potential investment well. Even for stocks that may look like a good buy, investors should approach cautiously and plan to hold any travel industry stocks for a while if the need arises. The industry will no doubt need time to recover.
Individual Travel Stock Picks
From airlines to rental cars, hotels and travel booking services, here are some of the most popular stocks available, along with their “buy, hold or sell” consensus rating as of now.
1. Airline Industry
Domestic airlines, which were hard-hit early in the pandemic, are fighting their way back — but most of them predict that they will need until 2023 or later to get back into pre-pandemic shape. For that reason, even the “buy” ratings here may as well be “buy and hold.” Investors will need to be patient with this sector for a while.
|American Airlines Group (AAL)||Hold|
|Delta Air Lines (DAL)||Buy|
|JetBlue Airways (JBLU)||Buy|
|Southwest Airlines (LUV)||Buy|
|United Airlines Holdings (UAL)||Buy|
2. Cruise Lines
After more than a year on dry land, the cruise ship industry will set sail again this summer. A Celebrity Cruises ship is slated to leave port on June 26 for a seven-night cruise to the Caribbean. Per the Centers for Disease Control and Prevention, 95% of its crew and passengers will need to be vaccinated. Because cruise lines are in uncharted territory right now, investors should board with caution.
|Carnival Corporation (CCL)||Buy|
|Norwegian Cruise Line Holdings (NCLH)||Hold|
|Royal Caribbean Group (RCL)||Hold|
Disney, the company behind what are perhaps the most-watched tourist attractions throughout the COVID-19 pandemic, has handled the pandemic in part by focusing on its digital content offerings. Although the amusement parks have reopened and loosened pandemic restrictions, the properties have seen an increased rate of consumers carrying firearms, showcasing the reality that things aren’t back to normal yet.
|The Walt Disney Co. (DIS)||Buy|
4. Lodging and Accommodations
A report from the American Hotel & Lodging Association reveals that nearly 4 million hospitality jobs and more than 670,000 operations roles fell by the wayside during the COVID-19 pandemic. Investors need to know that ramping back up will be a complex process and recovery in this sector is not expected until 2024.
|Hyatt Hotels Corp. (H)||Hold|
|Hilton Worldwide Holdings (HLT)||Hold|
|Las Vegas Sands Corp. (LVS)||Buy|
|Marriott International (MAR)||Hold|
|MGM Resorts International (MGM)||Hold|
|Wyndham Hotels & Resorts (WH)||Buy|
|Winnebago Industries (WGO)||Buy|
5. Rental Cars
The rental car industry, on the whole, adjusted to the COVID-19 pandemic by selling more than 770,000 vehicles to get leases and planned purchases off of the record books. While this has helped the industry stay afloat, it could backfire as consumers get back out there. More than 1 of every 3 rental cars that were in service before the pandemic are no longer available. Restoring them may not be easy either due to manufacturing shortages. Companies like Avis could face unprecedented complaints in the months ahead, which could potentially affect the stock price.
|Avis Budget Group (CAR)||Hold|
6. Online Travel Agencies
Although online travel agencies were once industry disruptors, they have hit a speed bump or two beyond the pandemic — namely, the free hotel listings now offered by Google. Although business may pick up as the travel sector reemerges, investors will need to keep a critical eye on stock prices. The key will be to evaluate where online travel agencies are going rather than where they’ve been.
|Booking Holdings (BKNG)||Hold|
|Expedia Group (EXPE)||Buy|
Diversified Travel Fund Picks
If individual stocks aren’t your preference or feel too risky for you right now, there are some diversified exchange-traded funds worth looking into:
- U.S. Global Jets ETF (JETS)
Known loosely as the airlines ETF, this passively managed fund includes U.S. and international passenger airlines, aircraft manufacturers, airports and other companies related to the airline industry.
- ETFMG Travel Tech ETF (AWAY)
This fund focuses on companies around the world that specialize in connected, or internet-based, technology for the airline industry.
- SPDR S&P Transportation ETF (XTN)
With this exchange-traded fund, investors get a sample of the U.S. transportation sector.
- Invesco Dynamic Leisure and Entertainment ETF (PEJ)
This is an opportunity to bet on companies that support the U.S. leisure and entertainment industry with their products and services.
An Industry Trying To Rebound Against Unprecedented Unknowns
While it’s exciting to watch the travel industry start to stand back up, investors may want to watch travel stocks with both their optimism and cautiousness intact. Much is unknown about how this summer will unfold, let alone the upcoming fall and winter.
Good To Know
If you’re among the two-thirds of Americans planning to travel this summer:
- Be sure to follow the current guidance from the CDC.
- Check with your travel booking service, airline, car rental agency, lodging, and planned events and destinations to understand any travel restrictions in advance.
- Carry a mask with you and understand that it may still be required in certain places.
- If you’re vaccinated, carry your CDC vaccination card or take a picture of it and keep it accessible on your phone so you can produce proof of vaccination if necessary.
Methodology: Information on consensus ratings was sourced from CNN Business. Data is accurate as of June 17, 2021, and subject to change.
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- American Hotel & Lodging Association. "AHLA’S State of the Hotel Industry 2021."
- Tripadvisor. 2021. "Travel is Heating Up: Two-Thirds of Americans Planning Summer Vacations."
- NPR. 2021. "The Buffet Can Stay: What The Future Of The Cruise Line Industry Looks Like."
- U.S. Travel Association. 2021. "Travel Forecast."
- The Washington Post. 2021. "How the pandemic led to a rental car crisis just as Americans are ready to bust loose."
- CNBC. 2020. "Disney says its ‘primary focus’ for entertainment is streaming — announces a major reorg."
- Forbes. 2021. "Disney World Sees Spike In Concealed Firearms During Pandemic."
- TechCrunch. 2021. "After similar moves for Shopping and Flights, Google makes hotel listings free."