Despite sky-high prices and several operational disruptions, travel demand is pretty overwhelming in the post-pandemic era. According to a recent OAG survey, 27% more people traveled this summer compared to 2021. Moreover, 50% of the participants said that travel plans will return to pre-pandemic levels or above by 2023.
In addition, according to the UNWTO World Tourism Barometer, international tourism witnessed a 182% year-over-year surge from January to March 2022. In the Americas, arrivals soared 117% year-over-year for the same period.
Also, the resumption of international trade activities is expected to fortify global travel demand. The global business travel market is projected to expand at a CAGR of 8.5% from 2021 to 2027.
Given this backdrop, we think fundamentally sound travel stocks Bluegreen Vacations Holding Corporation (BVH), Playa Hotels & Resorts N.V. (PLYA), InterContinental Hotels Group PLC (IHG), Target Hospitality Corp. (TH), and Travel + Leisure Co. (TNL) could be ideal buys.
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. It markets and sells vacation ownership interests; and manages resorts in leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston, New Orleans, and others.
On May 5, 2022, Alan B. Levan, BVH’s Chairman and CEO, said, “Overall, the demand for vacations by Bluegreen Vacation Club owners has been strong, and we believe our core strategy of primarily offering a ‘drive-to’ network of resorts will continue to serve as a growth driver.”
Also, on May 2, 2022, BVH announced the completion of a private offering and sold approximately $172 million of vacation ownership interest receivable-backed Notes. This transaction is expected to boost the company’s balance sheet.
BVH’s total revenues came in at $195.13 million, up 33.3% year-over-year, for its first quarter ended March 31, 2022. Its comprehensive income came in at $15.99 million, up 437.6% year-over-year, while its EPS came in at $0.76, up 406.7% year-over-year. Also, its adjusted EBITDA came in at $31.05 million, up 144.1% year-over-year.
Analysts expect BVH’s revenue to increase 11.2% year-over-year to $841.78 million in 2022. Its EPS is expected to increase 34.8% year-over-year to $3.76 in 2022. The stock surpassed its EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 46.5% to close the last trading session at $24.89.
BVH’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an A grade for Value, Sentiment, and Quality. Within the B-rated Travel - Hotels/Resorts industry, it is ranked first among 22 stocks. Click here for the additional POWR Ratings for Growth, Momentum, and Stability for BVH.
Playa Hotels & Resorts N.V. (PLYA)
PLYA and its subsidiaries own, develop, and operate resorts in prime beachfront locations in Mexico and the Caribbean. It holds a portfolio of around 22 resorts with 8,366 rooms in Mexico, Jamaica, and the Dominican Republic.
On July 11, 2022, PLYA opened bookings for the new Hyatt Zilara Riviera Maya across both Hyatt.com and PlayaResorts.com. In the face of growing demand, this move should benefit the company.
Moreover, on May 16, 2022, PLYA and Marriott International, Inc. (MAR) announced an agreement between Francisco Martínez, the owner of Sanctuary Cap Cana, and MAR to launch MAR’s first all-inclusive extension of The Luxury Collection brand, Sanctuary Cap Cana. This partnership with such a world-renowned brand should prove strategically beneficial for PLYA.
PLYA’s occupancy came in at 72.4% for the first quarter ended March 31, 2022, compared to 31.6% in the previous period. Its total revenue came in at $219.57 million, up 182.4% year-over-year. In addition, its net income came in at $42.75 million, compared to a loss of $69.75 million in the prior-year period.
Street expects PLYA’s revenue to be $823.16 million in 2022, representing a 54% year-over-year rise, while the company’s EPS is expected to increase 185.4% year-over-year to $0.41 in 2022. Over the past year, the stock has lost 5.5% to close the last trading session at $6.54.
PLYA’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, equating to a Buy in our POWR Ratings system.
It has a B grade for Growth, Sentiment, and Quality. It is ranked #3 in the Travel - Hotels/Resorts industry. Click here to see the additional ratings for PLYA (Value, Momentum, and Stability).
InterContinental Hotels Group PLC (IHG)
Headquartered in Denham, the United Kingdom, IHG owns, manages, franchises, and leases hotels in the Americas, Europe, Asia, the Middle East, Africa, and Greater China. Currently, the company operates around 5,991 hotels and 880,327 rooms in approximately 100 countries.
On June 8, 2022, IHG launched the ‘6,000 Club’ in agreement with several renowned sports and entertainment events, as it celebrated reaching the 6,000 hotels milestone. This demonstrates the company’s solid positioning and its continued growth.
Furthermore, on May 19, 2022, IHG announced its partnership with acclaimed British artist Claire Luxton to launch a joyride series at InterContinental London Park Lane, InterContinental New York Barclay, and InterContinental Dubai Festival City. The Claire Luxton Experience at InterContinental should attract customers.
IHG’s group RevPAR increased 60.8% year-over-year for the 2022 first quarter. Its net system size increased 3.4% year-over-year. Moreover, its American RevPAR increased 57.9% year-over-year. Also, its average daily rate increased 26.7% year-over-year.
IHG’s revenue is expected to come at $1.83 billion in 2022, representing a 31.4% year-over-year rise. The company’s EPS is expected to increase 75.1% year-over-year to $2.57 in 2022. Also, its EPS is estimated to grow 30.5% per annum for the next five years. The stock has gained 4.2% over the past month to close the last trading session at $57.52.
Unsurprisingly, IHG has an overall B rating, equating to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and a B for Sentiment.
IHG is ranked #4 in the same industry. Click here to see the additional POWR Ratings for IHG (Value, Momentum, Stability, and Quality).
Target Hospitality Corp. (TH)
TH operates as a specialty rental and hospitality services company in North America. The company operates through four segments: Hospitality & Facilities Services – South; Hospitality & Facilities Services – Midwest; Government; and TCPL Keystone.
On May 10, 2022, Brad Archer, President, and CEO, said, “We remain committed to pursuing strategic growth aspirations that fit squarely within our existing core competencies, while preserving the financial strength we have achieved over the last several years. We believe these core tenets provide the greatest opportunity to accelerate value creation for our shareholders.”
TH’s total revenue for the first quarter ended March 31, 2022, came in at $80.33 million, up 76.6% year-over-year. Its comprehensive income came in at $476,000, compared to a loss of $13.16 million in the year-ago period. Its EPS came in at $0.01, compared to a loss per share of $0.14. Also, its adjusted EBITDA came in at $33.38 million, up 109.2% year-over-year.
TH’s revenue is expected to increase 74.1% year-over-year to $507.17 million in 2022. Its EPS is estimated to grow 2,460% year-over-year to $1.18 in 2022. Over the past year, the stock has gained 259.6% to close the last trading session at $13.34.
It’s no surprise that TH has an overall B rating, equating to a Buy in our proprietary rating system. In addition, it has an A grade for Growth and Sentiment and a B for Quality.
TH is ranked #2 in the Travel - Hotels/Resorts industry. In addition, we’ve also rated the stock for Value, Momentum, and Stability. Click here to get all the TH ratings.
Travel + Leisure Co. (TNL)
TNL and its subsidiaries provide hospitality services and products in the United States and internationally. The company operates in two segments, Vacation Ownership; and Travel and Membership. It has around 245 vacation ownership resorts.
On July 21, 2022, TNL completed a term securitization transaction involving issuing $275 million of asset-backed notes. Mike Hug, TNL’s Chief Financial Officer, said, “Investor demand continues to be strong as witnessed by solid oversubscription levels. We are very excited about the closing of this transaction and its terms, as well as the enhancement it provides to our liquidity position.”
TNL’s net revenues came in at $809 million for the first quarter ended March 31, 2022, up 28.8% year-over-year. Its net income came in at $51 million, up 75.9% year-over-year, while its EPS came in at $0.59, up 78.8% year-over-year. The company’s adjusted EBITDA margin came in at 21%, compared with 20.5% in the previous period.
TNL’s revenue is expected to increase 14.5% year-over-year to $3.59 billion in 2022. Its EPS is expected to grow 22.5% from the year-ago value to $4.47 in 2022. It surpassed EPS estimates in three of the four trailing four quarters. TNL has gained 4.5% over the past month to close the last trading session at $43.60.
TNL's overall B rating equates to a Buy in our POWR Ratings system. It has a B grade for Value and Quality. It is ranked #5 in the same industry. Click here to see the additional POWR Ratings for TNL (Growth, Momentum, Stability, and Sentiment).
BVH shares were trading at $25.63 per share on Wednesday morning, up $0.74 (+2.97%). Year-to-date, BVH has declined -26.57%, versus a -16.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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