Pack Your Bags and Your Portfolio: 3 Must-Own Travel Stocks for 2024

Stocks to buy

As the world continues to embrace the joys of travel, post-pandemic, the industry is poised for sustained momentum throughout the rest of 2024. The post-pandemic “revenge travel” trend, which began in 2022, remains a significant driving force.

Data from The European Travel Commission shows a 7.2% increase in foreign arrivals and a 6.5% rise in overnight stays in Europe during the first quarter of 2024. Similarly, Collinson reports strong tourism volumes in Asia, with significant contributions from India and signs of recovery in China after years of depressed travel volumes. The travel industry is clearly booming. As a Greek citizen living on a Greek island, I witness this trend daily.

The following three names appear to be some of the best travel stocks to buy for exposure in the ongoing travel industry boom. These companies feature robust growth potential and scalable, high-margin business models, ensuring outstanding profitability.

Booking Holdings (BKNG)

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As one of the leading global online travel and reservation service providers, Booking Holdings (NASDAQ:BKNG) naturally thrives during the industry’s ongoing surge. With a top-tier portfolio of leading online platforms such as Booking.com, Priceline.com, Kayak, Agoda, Rentalcars.com, and OpenTable, the company experienced a strong surge in revenues and profits in recent quarters.

In 2023, Booking’s revenues increased by 25%, reaching a record $21.4 billion. This momentum appears to have seamlessly carried over into 2024, with Booking posting revenue growth of 17% in the first quarter to $4.4 billion. Notably, this marked a record first quarter in terms of revenues as well.

In the meantime, the company’s business model, characterized by collecting high-margin booking fees, makes Booking profitability incredibly scalable. Evidently, its adjusted net income surged 39% in 2023 to $5.6 billion and 61% in this year’s first quarter to $707 million. These growth rates should comfortably sustain elevated buyback activity and significant increases in the company’s recently initiated dividend.

Airbnb (ABNB)

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Just like Booking, Airbnb (NASDAQ:ABNB) is reaping the fruits of a flourishing travel industry. As the dominant peer-to-peer accommodation rental and experiences booking platform, Airbnb continues to thrive in the current industry landscape despite its periodic regulatory hurdles. I am personally quite fond of Airbnb’s widespread prospects, which is why I became a shareholder in the company a couple of years ago.

To illustrate Airbnb’s ongoing momentum, the company reported year-over-year revenue growth of 18% in the first quarter to $2.14 billion. This result mirrors Booking’s performance during the same period. In the case of Airbnb, this result was powered by the solid growth in the “nights and experiences booked” category (up 9.5% year-over-year), a further boost in average day rate (ADR), and this year’s Easter timing.

Looking ahead, Airbnb’s bullish case seems solid. I’m impressed by its dedication to innovation, including the recent launch of “Icons.” Further, I am excited about Airbnb’s evolution into a free cash flow machine. Its free cash flow margin reached 89% in the first quarter, a further gain from last year’s already impressive 87%. After years of analyzing stocks, I’ve never come across another that consistently posts such high levels of free cash flow.

Hilton Worldwide (HLT)

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Hilton Worldwide (NYSE:HLT) emerges as another standout choice in the current vibrant travel industry landscape. Reflecting on Booking’s and Airbnb’s robust revenue growth, it’s evident that the demand for accommodation continues to soar. As a leading player in the hospitality business, Hilton is positioned to capitalize on this trend.

Hilton’s revenues grew by 12.2% in the first quarter to $2.57 billion. The company experienced significant momentum in its “franchise and licensing fees” division. This was, in turn, due to growth in the underlying number of hotels operating under one of its brands and higher occupancy rates due to the ongoing boom in the travel industry.

In the meantime, Hilton operates a rather lean business model. With the majority of its 7,626 properties, which include about 1.2 million rooms, being franchised, the double-digit revenue growth resulted in even stronger earnings growth. Earnings per share grew by 23.4% in Q1 on an adjusted basis to $1.53, compared to last year. This momentum is poised to last moving forward, fueling Hilton’s bullish case.

On the date of publication, Nikolaos Sismanis held a long position in ABNB. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Nikolaos Sismanis is a professional research analyst with five years of experience in the field of equity research and financial modeling. Nikolaos has authored over 1,000 stock-related articles that focus on uncovering deep value opportunities, identifying growth stocks at reasonable valuations, and shining a spotlight on overlooked international equities.

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