The outlook for the travel industry looks positive given continued demand for travel, a growing preference for quality experiences, and advances in technology.
Given the positive outlook for the industry, fundamentally strong travel stocks Atour Lifestyle Holdings Limited (ATAT), Playa Hotels & Resorts NV (PLYA), and Travel and Leisure Company (TNL) It's worth paying attention to.
Few industries have been hit as hard as the travel and tourism sector during the pandemic. However, the sector rebounded strongly on the back of revenge travel. With a recovery in business travel, growing demand for leisure travel, workplace flexibility and increased interest in in-destination experiences, the industry appears well-positioned to perform well this year.
The U.S. Travel Association released its January 2024 survey results, showing that air passenger growth increased by 6% and the number of foreign visitors to the United States increased by 24%. According to a survey by Longswoods International, 93% of American travelers plan to travel within the next six months, the highest level in three years.
International tourism finished 2023 at 88% of pre-pandemic levels, with 1.3 billion international arrivals, according to UNWTO's World Tourism Barometer. International tourism receipts reached $1.4 trillion last year. International tourism is expected to fully recover to pre-pandemic levels in 2024, with growth expected to be 2% above 2019 levels.
Driven by strong demand, CBRE expects RevPAR growth to increase by 3% in 2024, occupancy to improve by 45 basis points and average daily rate to increase by 2.3%. His RevPAR for the lodging industry this year is expected to rise 13.2% over 2019 levels. The global travel and tourism market is projected to grow at a CAGR of 3.5% and reach $1.6 trillion by 2028.
With these positive trends in mind, let's dig into the basics of the top three travel – 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 447.3% higher than the industry average of 5.54%. The company's trailing twelve month net profit margin was 15.80%, which was 232.6% higher than the industry average of 4.75%. Additionally, its trailing twelve month common stock return of 45.15% was 307.5% higher than the industry average of 11.08%.
For the fourth quarter of the fiscal year ended December 31, 2023, ATAT's net revenue increased by 140.4% year-on-year to RMB 1.51 billion ($208.04 million). The company reported adjusted net income and EBITDA of RMB 222.24 million ($30.72 million) and RMB 250.82 million ($34.67 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. Shares have increased 12% over the past three months, closing at $18.98.
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. Ranked #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 31.2% higher than the industry average of 35.91%. The company's trailing 12-month leveraged FCF margin is 8.95%, which is 61.5% higher than the industry average of 5.54%. The company's trailing twelve month net profit margin was 5.58%, which was 17.5% higher than the industry average of 4.75%.
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 38.8% over the past six months, closing the last trade at $9.59.
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 net profit margin of 10.56% was 122.3% higher than the industry average of 4.75%. The trailing 12-month EBIT margin was 19.95%, which was 162.5% higher than the industry average of 7.60%. The company's trailing 12-month EBITDA margin was 22.93%, which was 108.5% higher than the industry average of 11%.
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 37.5% over the past six months, closing at $47.42.
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 Thursday morning at $47.68 per share, up $0.26, or 0.55%. Year-to-date, TNL has increased his 23.30%. In comparison, the benchmark S&P 500 index rose 10.28% in the same period.
