The travel industry is expected to grow due to a resurgence in travel demand, increasing demand for quality experiences, technological advancements, the resurgence of business travel, and the rise of remote work.
Given the industry's solid growth outlook, investors are looking at fundamentally strong travel stocks such as Atour Lifestyle Holdings Limited (ATAT), Playa Hotels & Resorts NV (PLYA), and Travel and Leisure Company. (TNL) may be considered. Before we dig deeper into the basics, let's discuss what's going on in the travel industry.
The travel industry is steadily recovering, driven by increased demand for leisure travel, hotels, airlines, and cruise lines. Strong performance is expected this year due to a recovery in business travel and increased demand for leisure travel. The global travel market is projected to grow by $3.39 trillion from 2023 to 2027 at a CAGR of 14.2%.
According to the World Travel and Tourism Council (WTTC), travel and tourism is expected to have a record year in 2024, contributing a record $11.1 trillion to the global economy. This growth will be driven by increased consumer demand and advances in technology and infrastructure.
International travelers are expected to spend $1.89 trillion this year, just shy of the 2019 peak. WTTC projects that by 2034, this sector will boost the global economy, contributing $16 trillion, or nearly 11.4% of the total economy.
Investor interest in travel stocks is evidenced by the Defiance Hotel, Airlines and Cruise ETF (CRUZ)'s 19.4% return over the past six months.
With these positive trends in mind, let’s dig into the basics of Travel – Best 3 Hotels/Resorts, starting with the third option.
Stock #3: Atul Lifestyle Holdings Limited (atat)
Headquartered in Shanghai, China, ATAT offers themed hotels that cater to a variety of lifestyles, including music, basketball, and literary hotels. The company provides hotel management services and sells related products.
ATAT's trailing 12-month leveraged FCF margin of 30.33% is 441.8% higher than the industry average of 5.60%. The company's trailing twelve month net profit margin was 15.80%, which was 238.7% higher than the industry average of 4.66%. Additionally, its trailing twelve month common stock return of 45.15% was 300.2% higher than the industry average of 11.28%.
ATAT's net revenue for the fourth quarter of the fiscal year ended December 31, 2023 was RMB 1.51 billion ($212 million), an increase of 140.4% year-on-year. The company reported adjusted net income and EBITDA of RMB 222.24 million ($31.3 million) and RMB 250.82 million ($35.33 million), an increase of 175.8% and 116.1%, respectively, from the same period last year. did.
Street expects ATAT's revenue to increase 62% year over year to $178.21 million for the quarter ending March 31, 2024. EPS for fiscal 2024 is expected to be $1.16, up 28.5% from the previous year. The stock price has risen modestly since the beginning of the year, closing at $17.40.
ATAT's POWR Rating reflects this promising outlook. The overall rating is B, which is equivalent to a “buy” according to our own rating system. POWR Ratings evaluates stocks by 118 different factors, each with its own weighting.
ATAT has an A quality grade and a B growth grade. It ranks #5 out of 19 stocks in the Travel – Hotels/Resorts industry. Click here to see additional ratings for ATAT on Value, Momentum, Stability and Sentiment.
Inventory #2: Playa Hotels & Resorts NV (Priya)
Headquartered in Amsterdam, Netherlands, PLYA owns, develops and operates resorts in prime coastal locations in Mexico and the Caribbean. We also organize weddings, lodging, meals, entertainment, meetings, events and other hospitality services at our hotels.
PLYA's gross margin for the trailing twelve months was 47.13%, which was 29.8% higher than the industry average of 36.30%. His EBITDA margin for the past 12 months was 26.28%, 138% higher than the industry average of 11.04%. The company's trailing 12-month CapEx/Sales of 4.79% is 57.5% higher than the industry average of 3.04%.
PLYA's revenue for the fourth quarter of its fiscal year ended December 31, 2023 was $242.52 million, an increase of 15% compared to the same period last year. Additionally, adjusted EBITDA increased by 2.9% year-on-year to $60.83 million.
Additionally, the company's adjusted net income was $6.05 million and $0.04 per share, respectively.
PLYA's revenue and EPS for the quarter ending March 31, 2024 are expected to be $282.76 million and $0.33, up 3.3% and 5.1% year-over-year, respectively. It exceeded revenue expectations in each of the subsequent four quarters. Shares have increased 32.1% over the past six months, closing the last trade at $9.21.
PLYA's strong fundamentals are reflected in its POWR rating. The overall rating is B, which is equivalent to a “buy” according to our own rating system.
It ranks 4th in the industry. Rated B for Value, Emotion, and Quality. Click here to see PLYA's growth, momentum, and stability rating.
Stock No. 1: Travel + Leisure Co., Ltd. (TNL)
TNL is engaged in vacation ownership and hospitality services, including selling vacation ownership, managing real estate, and operating a travel business and technology platform. The company also offers direct-to-consumer rental and private label travel booking solutions.
TNL's trailing twelve month return on assets of 5.88% was 38.3% higher than the industry average of 4.25%. His EBIT margin for the past 12 months was 19.95%, which is 159.6% higher than the industry average of 7.68%. The company's trailing 12-month EBITDA margin was 22.93%, which was 107.7% higher than the industry average of 11.04%.
TNL's net revenue for the fourth quarter ended December 31, 2023 was $935 million, an increase of 4% year over year. The company's operating income was $191 million, an increase of 18.6% year-on-year. Adjusted net income and EPS increased 37.1% and 52.3% year over year to $144 million and $1.98, respectively.
Analysts expect TNL's EPS for the quarter ending June 30, 2024 to be $1.38, up 4% year over year. Revenue for the quarter ending March 31, 2024 is expected to be $904.52 million, up 2.9% year over year. It beat consensus EPS estimates in each of the trailing four quarters. TNL stock has increased 33% over the past six months, closing at $44.27.
It's no surprise that TNL receives an overall B rating, which equates to a Buy on the POWR rating system.
Rated B for Value, Emotion, and Quality. Travel – Ranked #3 in the hotel/resort industry. In addition to the above, we also evaluated TNL on growth, momentum, and stability. Get all TNL ratings here.
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TNL stock was trading at $43.87 per share Tuesday morning, down $0.40 (-0.90%). Year-to-date, TNL has increased his 13.44%. In comparison, the benchmark S&P 500 index rose 6.38% in the same period.
About the author: Rashmi Kumari
Rashmi has a passion for capital markets, asset management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With her Master's degree in Commerce, she hopes to make complex financial issues easier to understand for individual investors and help them make good investment decisions. more…
