We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The travel industry has been undergoing a steady turnaround, as consumers the world over continue to return to travel after the pandemic. In fact, the three big card providers Mastercard, Visa and American Express highlighted travel as a bright spot in their recent quarterly earnings announcements. But the big question is, how will this market do in 2023?
According to the U.S. Travel Federation (as quoted by Forbes), travel spending will be higher than in 2022 and also higher than 2019 (pre-pandemic) levels. Overall, certain conditions and trends that existed in 2022 are changing this year while others are continuing.
Leisure travel for example is going to remain strong, and the distinction between business and pleasure will continue to blur, with business travelers extending their trips or remote workers taking a trip while adjusting their workloads, as Tony Capuano, CEO of Marriott International revealed to Chip Rogers, President and CEO of the American Hotel and Lodging Association.
A Forbes article also says that “hush” trips by remote workers could be a new trend in 2023, where employees pick a vacation rental service that could help them set up their work stations for a week or two in addition to providing leisure services. Even larger hotels are jumping into the space and trying to accommodate these blended trips. They’re offering better Internet connectivity; discounts for extended stay; pools, bars and fitness centers; and even more thoughtful meal plans.
Other than these blended trips, business travel remains the slowest to recover, according to Marriot’s Capuano. But it has the potential to be a big comeback story in 2023.
There are several challenges as well, as pointed out In Deloitte’s 2023 outlook for the travel industry, which looks like a rather pessimistic take on the whole situation. Deloitte points out that travel demand had already started to soften in September last year, which could be temporary but could also be a lasting situation, as consumers reign in expenses because of inflation, high interest rates and the whole range of macro concerns.
But as we have seen in the latest inflation and jobs reports, the economy is holding up much better than many of us expected, which seems to indicate that we won’t have a recession after all. Moreover, with inflation coming down and the jobs market strong, there should be no need to tighten purse strings.
Some consumer surveys by market watchers and analysts in fact show a strong desire to spend on travel, especially in the 18–34 age bracket. The trend of advance planning and booking is also coming back. As a recent American Express Travel survey found, 50% of respondents were already planning their summer 2023 back in December.
This shows a whole lot more optimism and confidence in consumers than we have seen in recent times. Even in 2022, when travel demand was so strong, booking windows were relatively short, as consumers fretted about committing themselves too far ahead of time.
Deloitte is also not optimistic about business travel in 2023, although it sees event-driven travel as a big driver.
The report also talks about the staffing challenges that hotels have been seeing for a while now. Labor remains tight and will be an issue that hotels have to contend with this year. And if the economy softens materially from the current level, of course business travel will remain weak, which could help in this respect.
It is optimistic about international travel, despite the rising airfares. And China’s opening up should certainly be a growth factor for 2023.
Another factor that will be in play this year is the dollar. The stronger dollar helped international travelers last year and although there’s no consensus, most analysts are betting on the chances that it will slide a bit this year. Therefore, international travelers may be expected to take exchange rates into consideration when booking their stay. Cruise ships may be a choice for many, as there is pent up demand in that segment.
With that as the backdrop, let’s take a look at a few travel companies that are looking good right now. All of them belong to the Zacks Leisure and Recreation Services industry, which is currently in the top 32% of Zacks-classified industries:
Headquartered in Shanghai, China, Atour Lifestyle Holdings operates a chain of themed hotels in China, including music hotels, basketball hotels and literary hotels catering to the various lifestyles of consumers across different age groups, with varied interests. The company also provides hotel management services, including day-to-day management services of the hotels for the franchisees; and sells hotel supplies and other products. As of June 30, 2022, its hotel network covered 834 hotels spanning 151 cities in China.
The reopening in China should be the biggest driver of results this year, and the analyst covering the stock has raised the 2023 earnings estimate by $1.16 (27.6%) in the last 60 days. This represents a 208.1% increase from 2022 earnings.
Nassau, Bahamas-based OneSpaWorld Holdings Limited operates health and wellness centers onboard cruise ships and at destination resorts worldwide. Its health and wellness centers offer traditional body, salon and skin care services and products; self-service fitness facilities, specialized fitness classes, and personal fitness training; pain management, detoxifying programs and body composition analyses; weight management programs and products; and medi-spa services.
The company also provides its guests access to beauty and wellness brands, including ELEMIS, Kérastase, and Dysport, with some of these brands being exclusively for the cruise market. As of December 31, 2021, it offered health, wellness, fitness, beauty services, treatments, and products onboard 170 cruise ships and at 52 destination resorts.
Analysts are looking for 277.4% revenue growth in 2022 as well as 155.6% earnings growth when the company reports on March 1. For 2023, revenue growth is expected to be 24.2% and earnings growth 91.0%. The 2023 estimate has increased 3 cents (about 7%) in the last 30 days.
Headquartered in South Brisbane, Australia, Flight Centre Travel Group Limited provides travel retailing services for leisure and business travelers in Australia, New Zealand, Americas, Europe, the Middle East, Africa and Asia. In addition to this, it supplies products to its national and international network of travel retail outlets, tours, foreign currency exchange, employee benefit services, etc. Some of its brands are Flight Centre, Student Flights, Travel Associates, Liberty Travel, Infinity Holidays and GOGO Vacations.
Flight Centre is expected to see revenue and earnings growth of a respective 20.1% and 148.0% in 2023. The estimate for 2023 (ending June) has increased 108.3% in the last 7 days while the 2024 estimate increased a couple of cents.
The shares carry a Zacks Rank #2 (Buy).
One-Year Price Performance
Image Source: Zacks Investment Research
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 International Travel Companies on Our Radar Now
The travel industry has been undergoing a steady turnaround, as consumers the world over continue to return to travel after the pandemic. In fact, the three big card providers Mastercard, Visa and American Express highlighted travel as a bright spot in their recent quarterly earnings announcements. But the big question is, how will this market do in 2023?
According to the U.S. Travel Federation (as quoted by Forbes), travel spending will be higher than in 2022 and also higher than 2019 (pre-pandemic) levels. Overall, certain conditions and trends that existed in 2022 are changing this year while others are continuing.
Leisure travel for example is going to remain strong, and the distinction between business and pleasure will continue to blur, with business travelers extending their trips or remote workers taking a trip while adjusting their workloads, as Tony Capuano, CEO of Marriott International revealed to Chip Rogers, President and CEO of the American Hotel and Lodging Association.
A Forbes article also says that “hush” trips by remote workers could be a new trend in 2023, where employees pick a vacation rental service that could help them set up their work stations for a week or two in addition to providing leisure services. Even larger hotels are jumping into the space and trying to accommodate these blended trips. They’re offering better Internet connectivity; discounts for extended stay; pools, bars and fitness centers; and even more thoughtful meal plans.
Other than these blended trips, business travel remains the slowest to recover, according to Marriot’s Capuano. But it has the potential to be a big comeback story in 2023.
There are several challenges as well, as pointed out In Deloitte’s 2023 outlook for the travel industry, which looks like a rather pessimistic take on the whole situation. Deloitte points out that travel demand had already started to soften in September last year, which could be temporary but could also be a lasting situation, as consumers reign in expenses because of inflation, high interest rates and the whole range of macro concerns.
But as we have seen in the latest inflation and jobs reports, the economy is holding up much better than many of us expected, which seems to indicate that we won’t have a recession after all. Moreover, with inflation coming down and the jobs market strong, there should be no need to tighten purse strings.
Some consumer surveys by market watchers and analysts in fact show a strong desire to spend on travel, especially in the 18–34 age bracket. The trend of advance planning and booking is also coming back. As a recent American Express Travel survey found, 50% of respondents were already planning their summer 2023 back in December.
This shows a whole lot more optimism and confidence in consumers than we have seen in recent times. Even in 2022, when travel demand was so strong, booking windows were relatively short, as consumers fretted about committing themselves too far ahead of time.
Deloitte is also not optimistic about business travel in 2023, although it sees event-driven travel as a big driver.
The report also talks about the staffing challenges that hotels have been seeing for a while now. Labor remains tight and will be an issue that hotels have to contend with this year. And if the economy softens materially from the current level, of course business travel will remain weak, which could help in this respect.
It is optimistic about international travel, despite the rising airfares. And China’s opening up should certainly be a growth factor for 2023.
Another factor that will be in play this year is the dollar. The stronger dollar helped international travelers last year and although there’s no consensus, most analysts are betting on the chances that it will slide a bit this year. Therefore, international travelers may be expected to take exchange rates into consideration when booking their stay. Cruise ships may be a choice for many, as there is pent up demand in that segment.
With that as the backdrop, let’s take a look at a few travel companies that are looking good right now. All of them belong to the Zacks Leisure and Recreation Services industry, which is currently in the top 32% of Zacks-classified industries:
Atour Lifestyle Holdings Ltd. (ATAT - Free Report)
Headquartered in Shanghai, China, Atour Lifestyle Holdings operates a chain of themed hotels in China, including music hotels, basketball hotels and literary hotels catering to the various lifestyles of consumers across different age groups, with varied interests. The company also provides hotel management services, including day-to-day management services of the hotels for the franchisees; and sells hotel supplies and other products. As of June 30, 2022, its hotel network covered 834 hotels spanning 151 cities in China.
The reopening in China should be the biggest driver of results this year, and the analyst covering the stock has raised the 2023 earnings estimate by $1.16 (27.6%) in the last 60 days. This represents a 208.1% increase from 2022 earnings.
The shares carry a Zacks Rank #1 (Strong Buy).
OneSpaWorld Holdings Ltd. (OSW - Free Report)
Nassau, Bahamas-based OneSpaWorld Holdings Limited operates health and wellness centers onboard cruise ships and at destination resorts worldwide. Its health and wellness centers offer traditional body, salon and skin care services and products; self-service fitness facilities, specialized fitness classes, and personal fitness training; pain management, detoxifying programs and body composition analyses; weight management programs and products; and medi-spa services.
The company also provides its guests access to beauty and wellness brands, including ELEMIS, Kérastase, and Dysport, with some of these brands being exclusively for the cruise market. As of December 31, 2021, it offered health, wellness, fitness, beauty services, treatments, and products onboard 170 cruise ships and at 52 destination resorts.
Analysts are looking for 277.4% revenue growth in 2022 as well as 155.6% earnings growth when the company reports on March 1. For 2023, revenue growth is expected to be 24.2% and earnings growth 91.0%. The 2023 estimate has increased 3 cents (about 7%) in the last 30 days.
The shares carry a Zacks Rank #1.
Flight Centre Travel Group Ltd. (FGETF - Free Report)
Headquartered in South Brisbane, Australia, Flight Centre Travel Group Limited provides travel retailing services for leisure and business travelers in Australia, New Zealand, Americas, Europe, the Middle East, Africa and Asia. In addition to this, it supplies products to its national and international network of travel retail outlets, tours, foreign currency exchange, employee benefit services, etc. Some of its brands are Flight Centre, Student Flights, Travel Associates, Liberty Travel, Infinity Holidays and GOGO Vacations.
Flight Centre is expected to see revenue and earnings growth of a respective 20.1% and 148.0% in 2023. The estimate for 2023 (ending June) has increased 108.3% in the last 7 days while the 2024 estimate increased a couple of cents.
The shares carry a Zacks Rank #2 (Buy).
One-Year Price Performance
Image Source: Zacks Investment Research