Which Of These Travel Stocks Are The Better Bet In The Stock Market Today?
Travel stocks are flourishing in the stock market today. With vaccines rolling out nationwide, investors are optimistic that it will lead to pent-up demand in the travel sector. For this reason, investors are looking for top travel stocks to buy as they are expected to benefit from the broader economic recovery in the post-pandemic world.
Vaccines aren’t the only thing giving the economy a shot in the arm. Considering the unprecedented amount of stimulus along with the pent-up savings rate during the pandemic, it’s easy to see why some of the best travel stocks are a hot topic on Wall Street in recent weeks. With travel restrictions also starting to ease up, investors are bidding up the prices of these stocks. For instance, Norwegian Cruise Line Holdings’ (NYSE: NCLH) stock surged after it submitted a plan to the Centers for Disease Control (CDC) to resume U.S. cruises on July 4 yesterday. As a result, NCLH stock surged by over 7% on Monday, starting the week on a strong note.
With vaccinations ramping up, these companies focusing on travel could be in for sustained growth in the years ahead. Amongst them are Airbnb (NASDAQ: ABNB) and Booking.com (NASDAQ: BKNG). With travel restrictions easing up and industries working together to resuscitate the travel industry, which travel stock is the better buy in the stock market today?
Among the many unicorns that have come public over the past few years, Airbnb is certainly a standout name. The vacation rental company, dubbed one of the hottest IPOs of 2020, continues to catch investors’ attention. Many investors are putting ABNB stock on their watchlist because they see Airbnb benefiting from improving travel conditions. Essentially, this is because the company facilitates home rental and travel experiences on its digital marketplace. The likes of which provide hosts with additional income and travelers with affordable vacation experiences.
Of course, the hospitality industry isn’t at its best state right now for obvious reasons. The same thing can be said about Airbnb. It saw strong revenue growth in 2018 and 2019. But that followed by an abrupt decline in 2020 when the travel industry got upended.
However, there’s a silver lining to that. When most of the leading hotel operators saw their revenue plunge by up to 70%, Airbnb was holding up relatively well. And it is also for this reason that Airbnb could recover first. Here’s why.
The Reopening & ABNB Stock
In the new normal, you wouldn’t expect everyone to cram into hotel rooms with so many people around the hallways and other common areas. Perhaps you may find it comfortable, but many will likely opt for somewhere safer as we slowly come out of the pandemic. And that is what Airbnb has to offer.
Moreover, it appears that there is significant pent-up demand for travel. According to Airbnb: “More than half of those surveyed (54%) said they either already booked, are currently planning to travel, or expect to travel in 2021. This includes 57% of 18- to 29-year-olds and 60% of 30- to 49-year-olds.”
So Airbnb’s growth is poised to accelerate. And all in all, ABNB stock should be a pretty good way to play the reopening trade. That seems to be a big focus for Wall Street now. Once the pandemic is in the rearview mirror, investors might realize Airbnb’s massive potential. The company estimates that it has a total addressable market of $3.4 trillion. Hence, it is not hard to believe that better days are ahead for the company. With the underlying potential pent-up demand in travel, would you consider buying ABNB stock when it dips?
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Similar to Airbnb, Booking has been hit hard by the global pandemic. The company is one of the world’s largest online travel agencies. After shedding more than 40% of its stock price during the March 2020 sell-off, the stock has actually recouped back all its pandemic losses. The company’s stock price has gotten a boost with a recent analyst upgrade.
Analyst Justin Post from BofA Global Research lifted his rating on the online travel agency to “Buy” with a price target of $2,950. This implies a 20% potential upside from its current level.
While many analysts are getting increasingly bullish about Booking.com, we would have to look at the speed of vaccination. After all, you would not expect too many consumers to be going on vacations before the vast majority of the population receive their shots. That’s especially considering many of its businesses come from Europe. Therefore, it makes perfect sense to wait for more clarity before diving in.
Vaccine Passports Could Be The Catalyst For BKNG Stock
There’s no question that Booking Holdings will bounce back strong when the travel and tourism industries return to growth. But that’s not going to be anytime soon. With the emergence of new variants, it seems like many European countries are going back to lockdown, where most of their business comes from. Many of these countries are still struggling to tame the insidious virus. While businesses are unlikely to pick up in Europe anytime soon, it’s interesting to know how other countries, particularly those in East Asia and Australia are faring in 2021.
Now, no one can be sure when the company could fully rebound in terms of its bookings. But with increasing vaccine distribution, more government stimulus, and the gradual reopening of the economy, there are reasons to be cheerful. With that in mind, will you be watching BKNG stock?
By and large, both companies are respective leaders in their niche. No doubt, Booking.com was the pioneer in online travel in the early internet days. The company has since built a highly profitable business model by signing up hotels to list on its website.
However, today, Airbnb is the challenger. And it has a faster growth rate if we were to compare. Its focus on home-sharing means that it could appeal to people who are keen to travel but are cautious about the coronavirus. By staying in a home rather than in a hotel, it reduces contact with other people. For this reason, ABNB stock may be the better investment. On the flip side, if you believe the home-sharing model will continue to face regulatory hurdles, then BKNG stock may be the better bet.