Travel Stocks Ready to Soar?

Written by Jennifer Clark
Posted May 18, 2022

Memorial Day weekend is a little more than a week away. In the U.S., Memorial Day and the weekend leading up to the holiday have always been the unofficial start to the summer season. The forecast for summer travel is at an all-time high for 2022. AAA is predicting that 39.2 million Americans will travel 50 miles or more from home over the Memorial Day weekend. That would be an 8.3% increase in travelers compared with 2021. Paula Twidale, senior vice president at AAA Travel, said:

Memorial Day is always a good predictor of what’s to come for summer travel. Based on our projections, summer travel isn’t just heating up, it will be on fire. People are overdue for a vacation and they are looking to catch up on some much-needed R&R in the coming months. 

Earlier this month when I took a trip to Las Vegas, Nevada, it was one of the busiest times I’ve traveled that I can remember. And I’ve traveled during the week of Christmas. On my way back to Baltimore, I had to take two flights. First I flew from Las Vegas to Dallas, Texas. When I got off the plane in Dallas the airport was packed. It was early afternoon on Thursday. I did not expect the airport to be as busy as it was. 

Then there were slight delays. After almost three hours, I was finally back home. Like I said earlier, this recent trip was one of the busiest times I’ve seen for the airports. The lines for checking bags and security were long. Usually, I can get through those lines swiftly, especially when traveling in the early morning. I think my recent trip could be a sign that this Memorial Day weekend and summer will be “on fire, ” as Paula Twidale said. The travel industry as a whole is expected to be robust and in high demand this summer. People are ready to get out of their houses, especially with mask mandates removed from almost every aspect of public traveling. 

Earlier this week, travel stocks trended higher based on these expectations of high demand forecasts. United Airlines (NASDAQ: UAL) was up about 7% on Tuesday. United Airlines CEO Scott Kirby has said that the demand environment has been “the strongest it’s been in 30 years.” United Airlines wasn’t the only airline to see an upward trend. American Airlines (NASDAQ: AAL) was up 6%, Delta Air Lines (NYSE: DAL) was up 5%, Southwest (NYSE: LUV) was up 3%, JetBlue (NASDAQ: JBLU) up 7%, Hawaiian Airlines (NASDAQ: HA) up 9%, and Spirit (NYSE: SAVE) up 6%. Airlines are benefiting from the optimistic forecast for the summer travel industry.

Airlines aren’t the only travel business benefiting, either. Hotels and hospitality companies also experienced an uptick earlier this week. While not as significant as those for airlines, there were still jumps, which is notable after a tough few months for companies in the travel industry. Hilton Worldwide (NYSE: HLT) was up 1.5%, Hyatt Hotels (NYSE: H) was up 2.9%, Marriott (NASDAQ: MAR) up 1.2%, Wyndham (NYSE: WH) up 2.5%, and Airbnb (NASDAQ: ABNB) up 2.22% on Tuesday. 

Cruise lines also saw increases — Royal Caribbean Cruises (NYSE: RCL) was up 3%, Carnival Corporation (NYSE: CCL) up 4.4%, and Norwegian Cruise Line Holdings (NYSE: NCLH) up 4.6%. These boosts in stock prices are exactly what these companies needed. It’s been a tough month and tough first half of the year for most of the stock market. Optimism hasn’t been a part of these industries for a while. Since the emergence of the COVID-19 omicron variant, this industry has struggled. Now, with mask mandates lifted and people ready to get to their favorite vacation destinations, you can expect airports, roads, hotels, and cruises to be busy. It’s been far too long since some people went on vacation or left their home state.

I’m bullish on the travel industry this year, as traveling should ramp up this summer. Given that it’s expected to be a strong summer, I’m going to keep an eye on Expedia (NASDAQ: EXPE). If you aren’t familiar with Expedia, it’s essentially a one-stop shop for anyone interested in making travel accommodations or searching for travel deals. On the company’s platform, you can book flights, hotels, cruises, holiday packages, and car rentals all over the world. The company is currently one of the world’s largest online travel agencies.

Back in February, shares were trading at over $200. On Tuesday, shares of EXPE were trading near $122 — a massive decrease from a few months ago. The travel industry in February was attempting to recover from the omicron variant wave. However, market volatility and Russia’s invasion of Ukraine at the end of the month caused even more uncertainty within the market. I believe when we get an idea of how busy Memorial Day weekend really will be, we'll have a better understanding of whether these optimistic forecasts for the travel industry could be accurate. And if they are, getting in on Expedia or any other travel stocks at these discounted prices could be worthwhile.

Until next time, 

Jennifer Clark
Pro Trader Today
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