With the lowest unemployment rate in 50 years, it’s not surprising that many Americans are finding themselves with a little disposable income. With disposable income, it can seem a sure bet that people will start turning to travel in their leisure time. The savvy investor would turn to travel stocks. However, many want to know exactly how the stock market fares in terms of travel. What can have an effect on a travel stock?
There are many factors that can affect travel stocks. With the recent spate of unpredictable weather patterns firing off hurricanes, and international tensions on the rise, leading technology-based booking sites like Priceline and Expedia have reported a slowdown in their third-quarter earnings.
Weather, the traveler’s best friend, and worst enemy entered into the equation for the Caribbean and Southeast US, both popular tourist destinations. The impacts were massive, affecting most tourism-based businesses such as hotels and cruises. Of course, this made the tenured investors uneasy.
Priceline’s outlook painted a grim picture of booking growth topping 16%, certainly a far cry from the 25% growth seen for the third quarter only a year previous. Expedia saw it’s a fair share of slowdowns as well, due to poor management and weather.
Trivago, another major technology-based travel booking company, managed to disappoint its investors with a guidance revenue growth rate of only 40% for a full-year outlook. This was after closing with the first half of the year at an unprecedented 67% growth.
However, to every cloud there is a silver lining. Investing in technology-based travel companies, while seemingly shaky, is still a great idea! The slowdowns are par for the course, and the industry is still seeing a viable growth rate in the double digits. This leaves plenty of room for an exponential uptick in booking sales, and from there, the sky’s the limit.
The moral of the investing story for the savvy investor is while the weather may seem like an untenable opponent, the perseverance of the individual to vacation happily away from their locale still stands. The stocks in the major companies will still grow, and sticking out the slowdown can see amazing returns in the future. While stocks can never be termed a “sure bet” travel stocks are as close to one as an investor can get.