Investing in the stock market can be risky and overwhelming if you are not properly educated on it. Personally, everything I know about the stock market is either self-taught, or learned in college courses. With the implications of COVID-19 on travel restrictions, the travel industry has hit an all time low. Although we are sad about these unfortunate repercussions, it is important that we take advantage of the travel industry stocks as the market begins to rise again. Since these stocks have been so low, now is a perfect time to buy in. Here's a guide to the 5 ways in which you can invest in the travel industry.
First, how can you begin to invest?
Investing can be easy if you have the right tools for success. The easiest way to invest is through various investing applications that you can download on your phone. Just simply download the free app, link your bank information, research the stocks you wish to invest in, then put your money into them! Here are a few of my favorite mobile investing applications:
These applications are free and easy to use for beginners.
1. Online Travel Providers
As with industries of all different types, revenue continues to shift to the internet when it comes to travel and tourism services. If you think about it, 10 years ago, individuals planned vacations with a hired travel agent. This agent would plan the trip according to what the consumers wanted, they'd book the flights and hotels, then plan itineraries of activities for the duration of the trip. This method of travel is no longer popular as travelers can now seamlessly book trips themselves with new technology. The new technology allows for travelers to book their trips for lower prices and convenient schedules.
With the growth of online travel services, it may be beneficial to look into some for potential investment. The leading online travel providers include publicly-traded companies such as Orbitz, Priceline, and Expedia. Specifically, Booking Holding's Priceline has been highly successful in driving traffic to its website.
During the COVID-19 pandemic, the airline industry revenue fell more than 65% in 2020 compared to 2019 (Motley Fool). However, the arrival of vaccines and international flight restrictions lifted, there is much hope for the future. Although recovery is inevitable, it will take time. Researcher say passenger volumes are unlikely to return to pre-pandemic levels until around 2024 at the earliest (Motley Fool).
Investing in airlines is definitely a long-term investment process. If you're willing to keep your money in these stocks for the next 10+ years, you will most likely benefit from them, but if you're looking for short-term investments, I'd skip this one. There are currently about a dozen publicly traded airlines in the US, but here are the most important ones to know (and keep track of):
Delta Air Lines (NYSE:DAL), prides itself on differentiation by providing limited ticket sales for their planes. This is beneficial for the future because it is the only airline that is continuously emphasizing health & safety for anxious passengers.
United Airlines Holdings(NASDAQ:UAL), large operations catering ot Silicon Valley, the energy sector, and throughout Asia making it one of the only airlines in which revenues will depend on technology and energy (which will be constantly improving over at least the next 20 years).
Southwest Airlines(NYSE:LUV), optimal marketing strategies and smart purchasing has placed Southwest in a good position for the future. When prices of airport hangars dipped during the pandemic, Southwest bought up and are now much more prepared for the future compared to other airlines.
3. Resorts & Hotels
Large resort operators combine entertainment, amenities, and events with lodging. These resorts allow for big groups to travel for conventions and massive gatherings and specialize in a wide variety of options for every type of travelers needs. Publicly traded stocks in this group include Ryman Hospitality Group, Vail Resorts, and Walt Disney.
The hotel industry is dominated by a few leading international players. These publicly-traded firms include Marriott, Starwood Hotels, and Hilton. These companies also announced their merger in 2015 in order for these firms to dominate the international market. Each of these chains have been growing immensely and will continue to do so post-pandemic.
4. Cruise Lines
Even though the cruise line industry has been around for more than a century, it is still not seen as a widespread travel choice for many consumers. However, capacity is growing nicely and quickly allowing more travelers on board and more amenities as well. It is important to note that most cruise lines are now requiring all passengers to show a vaccination record before coming on board. This will ensure the safety of the travelers while enjoying vacation. Since this is now such an appealing factor in this day and age, it is expected to see a spike in cruise lines in the next few years.
The top 3 cruise lines that are publicly traded are rated based on best value, least sales decline, and most momentum. These stocks include:
Carnival Corp (CCL) - price $26.70, market cap. 30.9, 12-month trailing P/S ratio 3.7
Norwegian Cruise Line Holdings Ltd. (NCLH) - price $29.54, market cap. 10.7, 12-month trailing P/S ratio 5.9
Royal Caribbean Group (RCL)- price $87.32, market cap. 22.2, 12-month trailing P/S ratio 8.5
Las Vegas-style gambling is growing immensely across Asia. Macao has grown into the largest gambling market in the world. Growth in the casino market is rapidly expanding into Singapore, Vietnam, and Japan. The two publicly traded companies that will be expanding into Asia include Wynn Resorts and Las Vegas Sands. This emerging new economy is something that is not consistently discussed in the investment world, and therefore might be one of the better ways to invest as there is projected growth in the future.
These are just some of the many ways in which you can invest in the stock market. Overseas growth should continue to outpace developing marketing in North America, so understanding about emerging market economies is vital in the success of your investments. Since the travel industry is making a quick comeback and recovery, it is beneficial to look into the ways in which you can make a profit from it. And if you think about it, investing in the traveling industry will ultimately provide you with more money to travel yourself!
Any questions about investment opportunities in the travel industry? Let us know in the comments below.