As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the travel and vacation providers industry, including Travel + Leisure (NYSE:TNL) and its peers.
Airlines, hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional airlines, hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
The 16 travel and vacation providers stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 0.8% while next quarter’s revenue guidance was 0.9% below.
Luckily, travel and vacation providers stocks have performed well with share prices up 11.6% on average since the latest earnings results.
Travel + Leisure (NYSE:TNL)
Formerly known as Wyndham Destinations, Travel + Leisure (NYSE:TNL) is a global vacation company that provides travelers with vacation ownership, exchange, and travel services.
Travel + Leisure reported revenues of $993 million, flat year on year. This print fell short of analysts’ expectations by 1.8%. Overall, it was a mixed quarter for the company with a decent beat of analysts’ EPS estimates but a miss of analysts’ conducted tours estimates.
“Our results this quarter show that we are executing well against our key priorities for the year and that demand for our products remains solid. We have good momentum in our Vacation Ownership business and were especially pleased with our VPG performance, which remains consistently above $3,000, even during our peak new owner mix quarters,” said Michael D. Brown, President and CEO of Travel + Leisure Co.
Travel + Leisure Total Revenue
Interestingly, the stock is up 18.2% since reporting and currently trades at $53.69.
Sporting a roster of beachfront properties, Playa Hotels & Resorts (NASDAQ:PLYA) is an owner, operator, and developer of all-inclusive resorts in prime vacation destinations.
Playa Hotels & Resorts reported revenues of $183.5 million, down 13.9% year on year, outperforming analysts’ expectations by 4.1%. The business had a stunning quarter with a solid beat of analysts’ EPS and EBITDA estimates.
Playa Hotels & Resorts Total Revenue
The market seems happy with the results as the stock is up 5.5% since reporting. It currently trades at $9.51.
Originally a division of American Airlines, Sabre (NASDAQ:SABR) is a technology provider for the global travel and tourism industry.
Sabre reported revenues of $764.7 million, up 3.3% year on year, falling short of analysts’ expectations by 1.4%. It was a slower quarter as it posted a significant miss of analysts’ EPS and airline bookings estimates.
Sabre delivered the weakest full-year guidance update in the group. As expected, the stock is down 12.4% since the results and currently trades at $3.61.
Essentially a builder of mini communities, Target Hospitality (NASDAQ:TH) is a provider of specialty workforce lodging accommodations and services.
Target Hospitality reported revenues of $95.19 million, down 34.8% year on year. This number topped analysts’ expectations by 8.3%. It was a very strong quarter as it also produced an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ adjusted operating income estimates.
Target Hospitality achieved the biggest analyst estimates beat and highest full-year guidance raise, but had the slowest revenue growth among its peers. The stock is down 7.7% since reporting and currently trades at $8.49.
With almost 100% of its properties under franchise agreements, Choice Hotels (NYSE:CHH) is a hotel franchisor known for its diverse brand portfolio including Comfort Inn, Quality Inn, and Clarion.
Choice Hotels reported revenues of $428 million, flat year on year. This print lagged analysts' expectations by 0.9%. Taking a step back, it was still a strong quarter as it logged a solid beat of analysts’ EPS estimates and a decent beat of analysts’ adjusted operating income estimates.
The stock is up 4.2% since reporting and currently trades at $144.57.
As a result of the Fed's rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed's 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump's victory in the US Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain. Said differently, there's still much uncertainty around 2025.
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