It benefits from speculation linked to the reopening of economies and even exceeds commodity baskets.
The travel industry could be a booming sector this year, favored by investors betting on strong demand as economies recover. Judging by current levels near five-year highs, it appears investors are betting not only on a sharp uptick in activity, but also on prices driven by excess demand and market constraints. A successful travel basket can consist of approximately 40 stocks. Although geographically and sectorally diverse, it can be a good indicator of signs of recovery in the economy and the travel industry in general.
Stock indices and ETFs that track this segment are rare and inadequate. The main track, for example, is the STOXX 600 Voyages & amp; leisure, but is limited and also includes stocks from the gaming industry. If we can focus mainly on the travel sector, we must therefore select about forty stocks that cover the entire value chain of the sector: aircraft manufacturers, booking platforms, hotel chains, software, airlines, cruise lines, airports and resorts. Whether traveling for business or leisure, careful selection of stocks traded on many exchanges helps you recoup your travels.
Cap. Stock market (millions of dollars)
Estimated revenue growth over 12 months (%)
12-month EBITDA margin (%)
Target Price Spread (%)
Shanghai International Airport Co.Ltd.
International Consolidated Airlines Group SA
InterContinental Hotels Group PLC
Norwegian Cruise Line Holdings Ltd.
South East Airports Group SAB de CV
Aggregate data (total or average)
In our view, the segment remains today dominated by Boeing, Airbnb, Booking, Airbus and Marriott International. In contrast, travel agency revenues fell 52% and for many of these companies the EBITDA margin is negative. In the next two years, the world’s population is expected to start traveling again and the turnover will increase significantly. It’s also worth noting that most travel titles are currently priced above analyst target prices.
Best performing segment year-to-date
Travel stocks are doing very well this year. It is one of the best performing sectors thanks to a rise of 21.3%, even surpassing the baskets of commodities, which are currently benefiting from reflation. Shares in the travel sector are benefiting from speculation linked to the reopening of economies. Indeed, this recovery should have a positive impact on these segments of the stock market next year, as vaccination allows savings to reopen and travel-related activity to recover.
Overview of Saxo Bank stock performance by theme
Source: Bloomberg and Saxo Bank
As the multi-year price chart below shows, travel inventories are rapidly approaching late 2015 highs, indicating high profitability expectations. During the first phase of recovery, short and medium-haul journeys are likely to increase, while long-haul journeys are much slower. We still don’t know exactly how much consumer and business travel habits will have changed. Many of these companies are well valued with a two-year horizon and have taken on debt so as not to affect their assets and business. Other price increases suggest that, according to investors, companies in the travel sector will be able to increase prices during the period of normalization due to excess demand and travel limitations, supply due to bankruptcies, etc.
Saxo Bank’s Travel Industry Basket vs. MSCI World