Coach

From Delta to Expedia, travel companies are still on the rebound — but the economy isn’t feeling the vacay vibes

Tuesday, May 3, 2022 by Robinhood Snacks |
Packed week of travel earnings (Peter Dazeley/Getty Images)

Packed week of travel earnings (Peter Dazeley/Getty Images)

Stocking up on mini shampoos... one bottle = one squeeze. It's hospitality week, with Hilton, Marriott, Airbnb, Booking.com, and Royal Caribbean dropping earnings. First up: Expedia reported sales were up 81% from last year as bookings reached pandemic-era highs. Ahead of the rest, we're checking in on travel:

  • In the sky: TSA traveler volume is almost back to 2019 levels, as you reveal holes in your socks en route to Cabo. Delta returned to profitability in March, while United and American expect to hit green this quarter.
  • On the bed: Disappearing mandates, spring-break getaways, and inflated room prices are helping hotels. In March, US hotel profit per available room reached its highest level since 2019.
  • On the card: Amex saw travel spend more than double last quarter as you swiped for gate-side chardonnay, while Mastercard said cross-border travel beat 2019 levels for the first time since the pandemic.

Flying coach to Stagecoach... Travel companies are considered "cyclical" because they tend to do well when the economy thrives (and vice versa). ICYMI: the economy isn't exactly crushing it. US GDP shrank last quarter, and global economic growth forecasts have been slashed. Still:

  • Travel-related companies have outperformed on earnings compared to their cyclical peers (think: tech, banks, construction).
  • Some travel stocks are beating the market. Delta, Southwest, United, and Marriott shares are all up over 5% for the year, while the S&P 500 is down nearly 14%.
THE TAKEAWAY

The vacay rebound doesn’t appear to have peaked yet… Unlike the booms experienced by tech and banks last year, travel companies have seen more of a slow-and-steady climb (peppered with Covid-related dips). So far, it looks as if it’s still going, and Visa said demand for summer bookings is “very high.” But inflated prices, war, and new Covid outbreaks could threaten the jet-set recovery.