Renowned travel company Airbnb, Inc. (ABNB) has been plagued by a series of regulatory compliances and heightened insider selling. However, as the travel sector displays solid prospects, quality travel stocks, Travel + Leisure Co. (TNL), Target Hospitality Corp. (TH), and InterContinental Hotels Group PLC (IHG) are outperforming ABNB.
On September 25, 2023, Aristotle Balogh, the CTO of ABNB, sold 2,750 shares of the company. The insider transaction history for ABNB indicates 0 insider buys and 86 insider sells over the past year.
To add to that, Brian Chesky, Airbnb's CEO and Chairman sold 150,000 shares on September 12, 2023, adding to a year-long trend of selling 270,000 shares, and Chief Strategy Officer Nathan Blecharczyk also sold 20,000 shares on September 5, 2023, contributing to his total sales of 60,000 shares over the past year with no purchases.
Furthermore, new regulations in New York City have caused a substantial 70% decrease in short-term ABNB listings between August 4 and September 5, 2023. These developments have raised concerns about the stability of the short-term rental market.
As a result, Robert Kiyosaki, author of "Rich Dad Poor Dad," recently expressed concerns that a downturn in the short-term rental market, exemplified by ABNB's recent struggles in New York City due to new regulations, could trigger a real estate crash.
In contrast, the broader travel and tourism industry is displaying resilience, as international travel has rebounded to nearly 90% of pre-pandemic levels in 2023, despite the sticky inflation, based on data from the International Air Transport Association.
With projected revenue reaching $854.70 billion this year and an estimated CAGR of 4.4% from 2023 to 2027, the travel and tourism industry’s future shines bright.
Within this sector, the Hotels market is the fastest growing, set to reach $410 billion this year. Additionally, boosted by the surge in internet penetration, online sales are projected to account for 74% of total revenue in the Travel & Tourism market by 2027.
Moreover, the increasing use of social media and access to mass media is growing demand for hotel and other travel accommodation markets. The global hotel and other travel accommodation market is expected to grow to $1.05 trillion in 2027 at a CAGR of 5.5%.
Considering these conducive trends, let's take a look at the fundamentals of the three best Travel – Hotels/Resorts stocks, starting with number 3.
Stock #3: Travel + Leisure Co. (TNL)
TNL offers hospitality services globally, focusing on two segments: Vacation Ownership; and Travel and Membership.
On September 20, 2023, TNL introduced a new concept for a network of future sports-themed resorts and lifestyle complexes in popular college towns near universities with devoted fan bases.
On August 9, TNL declared a regular cash dividend on the company’s common stock of $0.45 per share, payable to shareholders on September 29, 2023.
Its annual dividend of $1.80 yields 5.03% on the prevailing price level, higher than its four-year average dividend yield of 3.85%. Its dividend payouts have grown at a 4.9% CAGR over the past five years.
TNL’s net revenues increased 2.9% year-over-year to $949 million for the fiscal second quarter that ended June 30, 2023. Its operating income amounted to $183 million and adjusted earnings per share increased 4.7% from the prior-year quarter to $1.33. Also, TNL’s adjusted EBITDA increased 2.6% from a year-ago quarter to $236 million.
TNL’s EPS is estimated to grow 17% year-over-year to $1.50 for the fiscal third quarter ending in September 2023. Its revenue is expected to rise 4.8% from the previous-year quarter to $981.77 million in the same quarter. The company has an impressive surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
The stock declined marginally intraday to close the last trading session at $35.71.
TNL’s POWR Ratings reflect its solid outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
TNL has a B grade for Value and Quality. It is ranked #8 out of 22 stocks in the B-rated Travel – Hotels/Resorts industry.
In addition to the POWR Ratings stated above, one can access TNL’s additional ratings for Growth, Momentum, Stability, and Sentiment here.
Stock #2: Target Hospitality Corp. (TH)
TH is a specialty rental and hospitality services company in North America that operates through four segments: Hospitality & Facilities Services – South; Hospitality & Facilities Services – Midwest; Government; and TCPL Keystone.
In the second quarter, TH partnered with government service providers to propose solutions for new ICF sites, offering flexibility in location. The company submitted proposals totaling approximately $1 billion in capital deployment to create customized solutions backed by multi-year government contracts.
In addition, TGT also acquired strategic humanitarian assets to address the government's need for additional ICF sites, meeting various specifications and requirements. TGT's experience in providing such solutions positions them well for these opportunities.
During the fiscal second quarter that ended on June 30, 2023, TH’s revenue increased 31% year-over-year to $143.63 million. Its operating income rose 71.2% year-over-year to $64.76 million. Also, TH’s net income stood at $46.45 million and $0.44 per share, up 103.3% and 83.3% from the prior-year quarter.
The consensus EPS estimate of $0.43 for the current quarter (ending September 2023) indicates a 32.1% improvement year-over-year. Additionally, it topped the revenue estimates in each of the trailing four quarters.
The stock has gained 13.8% over the past three months to close the last trading session at $14.92.
TH’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
TH also has a B grade for Growth and Quality. It is ranked #6 in the same industry.
Click here to see TH’s other ratings for Value, Momentum, Stability, and Sentiment.
Stock #1: InterContinental Hotels Group PLC (IHG)
Headquartered in Windsor, United Kingdom, IHG is a global hotel company that operates various hotel brands worldwide and offers the IHG Rewards loyalty program. The company operates hotels under notable brand names, including Six Senses, Regent, InterContinental Hotels & Resorts, and Vignette Collection.
On September 27, IHG announced that its recently launched The IHG One Rewards mobile app is revolutionizing the travel experience, earning high praise for its user-friendly design and new features. It has become IHG's fastest-growing booking channel, responsible for over half of all digital bookings in 2023, and a key platform for loyalty engagement.
The app boasts a 4.9-star rating on the Apple store and a 4.8-star rating on the Android store.
The company pays an annual dividend of $1.43 that yields 1.94% on the current market price, higher than the four-year average dividend yield of 1.37%. IHG has raised its dividend payouts at a 4.8% CAGR over the past five years.
In the six-month period that ended on June 30, 2023, IHG’s total revenue increased 24.1% year-over-year to $2.23 billion. Its operating profit increased 61.8% year-over-year to $584 million.
Additionally, the company’s adjusted earnings stood at $316 million, increasing 41.1% from the year-ago quarter, and adjusted earnings per ordinary share improved 50% year-over-year to 182.70 cents.
Analysts expect IGH’s EPS and revenue to rise 29% and 14.4% from the previous-year quarter to $3.64 and $2.11 billion in the fiscal year 2023.
The stock has soared 53.8% over the past year, closing the last trading session at $73.64.
IHG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
It has a B grade for Growth, Sentiment, and Quality. Within the same industry, it is ranked #3.
To access IHG’s additional ratings for Value, Momentum, and Stability, click here.
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IHG shares were trading at $75.11 per share on Thursday morning, up $1.47 (+2.00%). Year-to-date, IHG has gained 31.46%, versus a 12.96% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Travel Stocks Outperforming Airbnb (ABNB) StockNews.com
