The global tourism industry is thriving on the back of technological progress, which is allowing greater exposure and access to previously inaccessible destinations. More efficient worldwide communication links, such as motorways, railways and air travel are leading to faster and cheaper travel.
Recently, UNWTO World Tourism Barometer inferred that international tourist arrivals increased 4% in the first half of 2019 (January to June). This upside was primarily driven by the Middle East and the Asia Pacific, which grew 8% and 6%, respectively. International arrivals in Europe, Africa and the Americas jumped 4%, 3% and 2%, respectively.
Rise in leisure travel by millennials increased awareness about travel destinations, primarily through social network. Also, decrease in cost of air travel aided in driving up the number of people traveling across the globe.
Travel & Tourism Economically Significant
Notably, the global travel and tourism industry recorded the second highest annual growth in 2018 among all major economic sectors (trailing the broader manufacturing sector). It contributed $8.8 trillion to the world’s GDP and grew 3.9% year over year.
Moreover, the industry added 319 million new jobs across the world, highlighting its massive economic importance.
However, notably, after about a decade of 23% average annual growth of Chinese visitors to the United States, the same remained flat in 2018.
The travel and tourism activities done by Chinese visitors contribute to about 11% of all economic activity. This indicates that the ongoing trade war has slowed down the U.S. tourism industry’s growth to some extent.
Nonetheless, if we consider the global travel industry, macroeconomic events like the U.S.-China trade war and Brexit have not stopped this industry from flourishing.
Per Research Nester, the global tourism industry is anticipated to hit $11.38 trillion (10% of global GDP) by 2025. Moreover, total spending on global travel and tourism sector is anticipated to surge to $1.34 trillion in 2025.
Moreover, increasing per capita income in most of the emerging countries is one of the key drivers of global travel and tourism industry. Promotion of tourism by government bodies like UNWTO is also expected to enhance global tourism.
The bright prospects of this fast-growing sector present lucrative opportunities for numerous companies related to travel and tourism. Here, we focus on five of them.
Booking Holdings BKNG is expected to benefit from its strong international presence. It generates the bulk of its revenues from lucrative international markets. Moreover, Booking Holdings has increased focus on Latin America and Asia Pacific through Agoda, booking.com and its agreement with Ctrip.com International CTRP which enables this Zacks Rank #2 (Buy) stock to share inventory. It also helps it capture outbound traffic from China. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company delivered a positive average earnings surprise of 4.28% over the trailing four quarters.
Ctrip.com is a leading travel service provider of hotel accommodations, airline tickets and packaged-tours in China. This Zacks Rank #3 (Hold) stock continues to expand presence in the international market with its strong performing international air and hotel businesses, Moreover, Skyscanner’s direct booking program is gaining traction, which bodes well for the company’s international presence.
It pulled off an impressive positive average earnings surprise of 91.46% over the trailing four quarters.
Expedia’s EXPE international business is gaining momentum. The company is capitalizing on this opportunity by adding inventory, collaborating with local players and stepping up its own marketing efforts. All these factors are helping the company to make the most of travel opportunities between different international destinations.
Expedia also has a Zacks Rank #3. The company delivered a positive average earnings surprise of 15.04% over the trailing four quarters.
Sabre Corporation SABR has a wide range of solutions for the travel marketplace as well as travel and hospitality suppliers. The company’s solution Sabre Red Workspace is gaining traction among prominent travel agencies. Additionally, this Zacks Rank #3 stock’s Airline Solutions offerings such as Sabresonic Reservation system, AirVision and AirCenter, and Hospitality Solutions including SynXis software and services have witnessed robust growth over the years. Growth in the global travel and tourism industry is expected to drive adoption of the company’s solutions, which is a key catalyst.
Sabre pulled off a positive average earnings surprise of 9.13% over the trailing four quarters. Earnings estimates for the current year have remained steady at $1.01 in the past 30 days.
Another Zacks Rank #3 stock, TripAdvisor TRIP provides a platform for users to share reviews, ratings and opinions on hotels, destinations, attractions and restaurants. Increasing user base on the back of its solid marketing initiatives, hotel business and innovative mobile-centric products is encouraging. We believe, TripAdvisor’s expanding footprint in the international restaurant reservation space and improved cost-control methods will consistently drive business growth.
TripAdvisor delivered a positive average earnings surprise of 11.47% over the trailing four quarters. Earnings estimates for the current year have remained steady at $1.84 in the past 30 days.
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