The travel industry is expanding significantly this year as it bounces back from the COVID-19 pandemic-led damages. According to the United Nations World Tourism Organization (UNTWO), international tourism is on track to reach 65% of pre-pandemic levels by the end of this year. Approximately 700 million tourists traveled internationally between January and September, more than double the number recorded for the same period last year.
Moreover, investors are gaining confidence as holiday reservations keep steady despite mounting pressure on household budgets from high inflation, increasing energy costs, and rising mortgage rates.
According to the International Monetary Fund, pent-up demand for travel is fuelling strong growth, which is expected to surpass the global Gross Domestic Product (GDP) in 2023. Arnold Donald, chairman of the World Travel & Tourism Council (WTTC), said that the travel industry is expected to enjoy a growth of up to 5%, compared to 2.7% GDP growth.
Furthermore, the popularity of all-inclusive resorts is growing, making travel consultants a crucial component of the planning process. The trend toward investing in genuine, local experiences rather than purchasing items has gained momentum, which has significant ramifications for the travel sector. The global leisure travel market size is expected to grow at a CAGR of 22.6% to reach $1.74 trillion by 2027.
Given the backdrop, fundamentally sound travel and leisure stocks Playa Hotels & Resorts N.V. (PLYA), trivago N.V. (TRVG), and Bluegreen Vacations Holding Corporation (BVH) could be ideal bets right now.
Playa Hotels & Resorts N.V. (PLYA)
PLYA is a leading owner, operator, and developer of all-inclusive resorts located on prime beachfront in Mexico and the Caribbean. It owns a portfolio of 23 resorts with 8,595 rooms across Mexico, Jamaica, and the Dominican Republic. It leverages years of expertise to provide a best-in-class experience to its guests.
On August 2, PLYA announced its agreement to assume the management of the Seadust Cancun Family Resort in Mexico, managing all operations, sales, and marketing. The company will gain strategically by entering the very competitive Cancun sector, which has a high barrier to entry and frequently offers few opportunities for less experienced operators.
The signing of this management agreement will demonstrate PLYA’s capabilities as a management firm and provide more proof of the value and profitability that can only be delivered by Playa’s business model and domain knowledge.
For the fiscal 2022 third quarter ended September 30, 2022, PLYA’s total revenue increased 35.3% year-over-year to $204.62 million. The company’s operating income grew 78.1% from the year-ago value to $13.26 million. Also, its comprehensive income came in at $884,000, compared to a loss of $9.38 million in the prior year’s quarter.
As of September 30, 2022, the company’s total assets stood at $2.15 billion, compared to $2.06 billion as of December 31, 2021.
The consensus revenue estimate of $190.83 million for the current fiscal quarter (ending December 2022) indicates a 7.9% year-over-year improvement. Likewise, the consensus revenue estimate of $830.17 million for the fiscal year 2022 reflects a rise of 55.3% from the prior year.
The stock has gained 4.7% over the past five days to close the last trading session at $6.09.
PLYA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Value and Quality. Within the Travel – Hotels/Resorts industry, it is ranked #6 of 21 stocks.
Beyond what we stated above, we also have PLYA’s ratings for Growth, Sentiment, Stability, and Momentum. Get all PLYA ratings here.
trivago N.V. (TRVG)
Headquartered in Düsseldorf, Germany, TRVG runs a hotel and lodging search engine internationally. It provides a meta-search engine for finding lodging online from individual hotels, hotel chains, and online travel agencies. The business offers access to its platform through 53 regionalized websites and applications in 31 languages.
On October 18, TRVG announced a global partnership with AXS, a global leader in ticketing for live sports and entertainment events, to provide event attendees with accessible, inexpensive hotel booking choices with event ticket purchases made through AXS.
This alliance can be strategically advantageous for both businesses by making it easier for people to find hotels close to AXS ticketed venues and live entertainment events.
For the fiscal 2023 third quarter ended September 30, 2022, TRVG’s total revenue increased 32.5% year-over-year to €183.70 million ($193.71 million), while its net other income grew 63.6% from the year-ago value to €404,000 ($426,010). The company’s adjusted EBITDA was €33.50 million ($35.41 million), up 116.1% year-over-year.
As of September 30, 2022, the company’s total current assets stood at €372.41 million ($392.70 million), compared to €310.39 million ($327.30 million) as of December 31, 2021.
Analysts expect TRVG’s EPS to come in at $0.22 for the current fiscal year (ending December 2022), indicating a 294.3% year-over-year improvement. The company’s revenue for the same year is expected to increase 35.7% from the previous year to $560.29 million. TRVG has surpassed its consensus EPS estimates in each of the four trailing quarters.
The stock has gained 22.5% over the past month to close the last trading session at $1.47.
TRVG’s POWR Ratings reflect its strong outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Quality and a B for Growth and Value. Within the Internet industry, it is ranked #2 of 59 stocks.
To see additional POWR Ratings for Stability, Momentum, and Sentiment for TRVG, click here.
Bluegreen Vacations Holding Corporation (BVH)
BVH is a vacation ownership organization that manages resorts in both leisure and urban regions and advertises and sells vacation ownership interests (VOI). It also provides financing to qualified VOI buyers and management services for vacation clubs and homeowners’ associations.
On October 12, BVH announced the recent acquisition of two buildings in the Streamside at Vail Resort neighborhood in Vail, Colorado, as well as a 320-room resort and spa in Panama City Beach, Florida. The business may strategically benefit from the upscaling strategies as it will be able to meet owner demand and allow them to experience new things.
The same month, BVH announced the amendment and extension of the vacation ownership interest (VOI) notes receivable purchase facility. The amended and restated purchase facility extended the advance period from December 2022 to September 2025 and increased the maximum outstanding financings from $80 million to $250 million.
“This expansion and extension support our strategy of enhancing our liquidity and operating flexibility while lowering our cost of funding,” said Ray Lopez, BVH’s Executive Vice President, Chief Financial Officer & Treasurer.
For the fiscal 2022 third quarter ended September 30, 2022, BVH’s gross sales of VOIs increased 45.1% year-over-year to $185.90 million, while total revenues increased 16.9% from the year-ago value to $250.84 million. Income before income taxes came in at $36.23 million, a 2.7% rise from the year-ago value.
In addition, the company’s net income increased 1.2% year-over-year to $27.65 million, and its EPS came in at $1.19, a 12.3% increase from the previous year’s quarter.
The consensus revenue estimate of $899.77 million for the fiscal year (ending December 2022) reflects a rise of 18.8% from the previous year. The consensus EPS estimate of $3.45 for the current year indicates a 19.8% year-over-year increase.
Furthermore, the company’s EPS and revenue for the next year are expected to increase 5.8% and 4.4% year-over-year to $3.65 and $939.49 million, respectively. The stock has gained 27.4% over the past month to close the last trading session at $21.95.
BVH’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Sentiment and Quality. Within the Travel – Hotels/Resorts industry, it is ranked #2 of 21 stocks.
Click here to see additional ratings of BVH for Stability, Growth, and Momentum.
PLYA shares were trading at $6.09 per share on Monday morning, down $0.04 (-0.65%). Year-to-date, PLYA has declined -23.68%, versus a -13.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More…
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