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Buy 4 Stocks Set to Fly High on Christmas, New Year Travel

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Millions of Americans are expected to travel during the holiday season, with Christmas weekend travel projected to touch pre-pandemic levels. According to forecasts by the AAA, this year will be one of the busiest holiday travel years in two decades.

Although rising costs have been a major factor compelling consumers to cut down on spending, air traffic and hotel bookings have been impressive as an increasing number of Americans plan to hit the road. Given this scenario, hotel and leisure stocks like Wyndham Hotels & Resorts, Inc. (WH - Free Report) , Hilton Grand Vacations Inc. (HGV - Free Report) , RCI Hospitality Holdings, Inc. (RICK - Free Report) and Hyatt Hotels Corporation (H - Free Report) , are expected to benefit in the near term.

Christmas, New Year Travel Set to Peak

Although rising hotel and airline ticket costs have been a cause of concern, consumers are still willing to pay more after a two-year hiatus during which holiday travel was hampered by the pandemic.

According to Amadeus’ Demand360 report, hotel room occupancy for the last two weeks of the year is 27%, as of Dec 8. This is just 1% below the 2019 levels or during the pre-pandemic era. For the Christmas week, six of this year’s top 10 markets in the United States have surpassed the occupancy level of 2019.

A separate report from the AAA shows an estimated 112.7 million people are projected to travel from their homes and go on holidays between Dec 23 and Jan 2, 2023. This is 3.6 million higher than the 2022 levels, making it the third busiest year for holiday travel since 2000 and touching 94.5% of the volume recorded in 2019.

Given that soaring energy costs have made air travel expensive, 102 million people plan to take the road, up 2 million from 2022, according to the AAA. According to INRIX, a transportation analytics and insights provider, Dec 23, Dec 27, Dec 28 and Jan 2 will be the busiest days for travel.

According to Berg, the week before Christmas will see airports packed, with 3.37 million people per day traveling out of airports in the United States on the Thursday and Friday before Christmas Eve.

The desperation to go on holiday comes after people cut down on travel plans during and in the aftermath of the pandemic. This year, restrictions on travel and mask requirements have been totally relaxed, giving people the confidence to travel.

People who are traveling for leisure this year intend to stay in hotels, according to a nationwide Hotel Booking Index Survey carried out by Morning Consult under contract with the American Hotel & Lodging Association.

Compared to the previous year, 28% more people who plan to travel over Christmas intend to stay in hotels, up from 23% last year.

According to data from Hopper, the travel booking app, 28.8 million passengers will fly from U.S. airports between Dec 18 through Dec 26. With 25.5 million traveling to internal locations and 3.4 million flying to foreign ports of call, this year is expected to witness an 18% increase in flyers during the Christmas week compared to the previous year.   

Our Choices

Given this situation, it would be wise to invest in hotel and leisure stocks.

Wyndham Hotels & Resorts, Inc. is a hotel and resort chain. WH operates primarily in Canada, Mexico, Colombia, Ecuador, Turkey, Germany, the UK, the Caribbean and Margarita Island in Venezuela. Wyndham Hotels and Resorts is headquartered in New Jersey.

Wyndham Hotels & Resorts’ expected earnings growth rate for next year is 3.1%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days. WH currently has a Zacks Rank #2 (Buy).

Hilton Grand Vacations Inc. is engaged in the hospitality business. HGV markets and operates vacation ownership resorts. Hilton Grand Vacationsalso manages and serves club membership programs, which include Hilton Grand Vacations Club and The Hilton Club.

Hilton Grand Vacations’ expected earnings growth rate for next year is 24.6%. The Zacks Consensus Estimate for current-year earnings has improved 19.3% over the past 60 days. HGV currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

RCI Hospitality Holdings, Inc. owns and operates adult nightclubs that offer live adult entertainment, restaurant and bar services. RICK operates adult nightclubs under the name Rick's Cabaret, Club Onyx, XTC Cabaret, Tootsie's Cabaret, Cabaret North, Jaguars and Cabaret East. RCI Hospitality Holdings also owns and operates adult Internet Websites.

RCI Hospitality Holdings’ expected earnings growth rate for next year is 15.8%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. RICK presently carries a Zacks Rank #2.

Hyatt Hotels Corporation is a leading global hospitality company engaged in the development, ownership, operation, management, franchising and licensing of a portfolio of properties, including hotels, resorts and residential and vacation ownership properties around the world. As of Mar 31, 2022, H’s portfolio included more than 1,150 properties in 71 countries across six continents.

Hyatt Hotels Corporation’s expected earnings growth rate for next year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 65.7% over the past 60 days. H presently has a Zacks Rank #2.

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