There’s set to be plenty of interest in travel stocks over the course of 2022. The emergence of the omicron variant rocked stocks across the industry in Q4 of 2021, threatening to bring far-reaching travel restrictions as the strain spread around the world. However, now optimism is growing that 2022 may be the year that we’ll see a meaningful return to holidaying over the coming months.
In the U.S., travel spending plummeted 42% year-over-year in 2020 according to the U.S. Travel Association. International travel was impacted even harder, tumbling 76% year-over-year. With consumers struggling to take flights and travel across borders over recent years, it’s reasonable to expect a resurgence over the course of the year.
In the UK, the London Stock Exchange received boosts throughout January due to growing investor confidence over the future of travel stocks. Both the FTSE 100 and FTSE 250 indexes closed higher following the announcement that the UK government had planned to scrap testing for fully-vaccinated travelers arriving in England from the 11th of February. Holiday bookings in the UK have reportedly rocketed in recent days, and stocks like British Airways owner IAG have reaped the benefits – gaining 7.39% and topping the index. Likewise, in hospitality, Premier Inn owner Whitbread added 2.36%.
Likewise, InterContinental Hotels Group was among the better performers following the relaxing of travel restrictions – growing 2.8%. Elsewhere on the FTSE 250 index, airlines experienced extensive growth, with the likes of Tui and EasyJet finishing the day more than 5% higher.
“Travel demand, in general, is expected to be high in 2022, but one important factor is the course of the pandemic, omicron and other variations,” said Maxim Manturov, head of investment advice at Freedom Finance Europe. “But, as many experts argue, the rapid spread of omicron, though dangerous, could give enough people what they call ‘natural immunity’ to help turn a Covid pandemic into a much less serious ‘endemic’ phase.”
If investor optimism can hold, there could be a wide range of travel and tourism stocks growing exponentially over the course of 2022. Let’s take a deeper look at three stocks that hold plenty of potential:
1. Royal Caribbean Cruises Ltd (RCL)
Royal Caribbean Cruises has already bounced back from the financial crash of early 2020 when the pandemic first took hold. Now, there’s sufficient optimism that the company’s stock could recover to pre-pandemic levels in 2022 depending on whether or not booking volume can return to its former glories.
Available data suggests that higher levels of bookings are taking place throughout the summer months and across the year, and at higher prices than those prior to the pandemic. Furthermore, in Q3, Royal Caribbean reported revenues of approximately £339 million – which is a strong improvement from the £-25 million in the year prior. Adjusted loss per share also fell to £4.15 from £3.97 the year prior. The fundamentals behind RCL have shown steady performance growth over every quarter in 2021. This has led to a wave of cautious optimism for the stock.
2. American Airlines Group Inc (AAL)
Despite American Airlines being hit hard by the pandemic, the company’s Q3 earnings in 2021 stood relatively firm despite the emergence of omicron concerns for holidaymakers. AA recorded $9 billion in revenue for the quarter – up some 20% from Q2 of 2021. The airline also welcomed 6,000 peak day departures in Q4 2021 as the holiday season brought a flurry of individuals making journeys domestically in the US.
American Airlines, alongside its Northeast Alliance with JetBlue Airways, has successfully added fresh international services to its roster in 2021, and the airline now offers flights from New York’s John F. Kennedy International Airport to Tel Aviv, Athens, and Delhi. With AA clearly looking to grow its reach in 2022, it may be reasonable to expect its stock to climb as more flights are booked across Q2 and Q3 of this year.
Maxim Manturov notes “American Airlines is again seeing growth in travel and its third-quarter earnings show why they should keep an eye on them in 2022. Revenue for the quarter was almost $9 billion, a 20% increase on the second quarter of last year. The airline expects high demand during peak travel periods in the fourth quarter. On average they expect more than 6000 departure days during this period. The third quarter was a good time for American Airlines as they reported an unexpected profit of $169 million.”
3. Airbnb Inc (ABNB)
Having gone public in late 2020, Airbnb’s early stock market performance has been impacted by the ramifications of the pandemic. However, the home-sharing platform has also grown into one of the world’s best-loved holiday apps. The company’s Q2 financial reports indicated a strong summer, with revenue of $1.3 billion representing a strong increase from the company’s early 2021 struggles. Airbnb also claims that its latest product innovations are set to enable individuals to travel in new ways – affording customers greater levels of freedom around where and when they travel.
For instance, in early 2021, the company announced Flexible Dates to better scout out strong deals for customers. Recently, Airbnb also introduced Flexible Matching and Flexible Destinations tools to help guests to explore more diverse listings and new destinations. As a leading tech platform, it’s possible that Airbnb will react positively to a holiday booking boom in the coming months. Provided that skies remain clear and the Covid-19 outlook remains positive, we may see some positive performance across 2022 for the world’s brightest travel and tourism stocks.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.