Summer travel season kicks off, will tourism stocks ride the wave? A guide to leading players in Taiwan and the US

As temperatures rise, the peak travel season is about to fully kick off. After experiencing the cold winter of the pandemic, the tourism market is rebounding strongly, and the return of crowds has become a fact, while soaring housing prices and ticket prices are further fueling the surge. In this wave of tourism stocks, how should investors precisely position themselves? This article will deeply analyze the investment logic of tourism stocks and reveal the industry leaders in Taiwan and the US that deserve the most attention.

What industries are included in tourism stocks?

When it comes to tourism stocks, many people tend to have a misconception — thinking that anything related to “travel” counts. In fact, the scope of the tourism industry is astonishingly broad. From food, transportation, accommodation, entertainment to itinerary planning, all commercial activities involved in a traveler’s journey can be encompassed under the umbrella of tourism stocks. Even foreign currency exchange services at banks can be considered from certain perspectives.

However, there is a key point often overlooked — most tourism-related companies are not purely travel service providers. Hotels need to cater to business travelers, airlines are also involved in cargo, which makes precise investment more complex. Therefore, savvy investors must first clarify: what proportion of the company’s revenue comes from tourism? Only by understanding this metric can one truly target the core profit engines of tourism stocks.

Post-pandemic aftermath and current turnaround

During the pandemic, the tourism industry was extremely bleak. Many companies went bankrupt directly, while survivors began to diversify wildly — hotels started offering takeout, airlines shifted to cargo flights. To survive, companies took on debt and issued more shares, leading to widespread capital expansion.

In 2022, global inflation surged, and central banks worldwide raised interest rates. These already heavily indebted companies were once again squeezed by high interest rates. Even today, with crowds returning and revenues surpassing pre-pandemic levels, profit margins have yet to recover due to capital expansion and interest expenses eroding earnings.

But a turning point is also emerging at this moment.

The long-restrained public’s desire for travel is at an unprecedented high, prompting companies to significantly raise prices, while consumers, having not traveled for a long time, have become highly price-sensitive. Prices for accommodation, dining, and transportation are all higher than before the pandemic. As long as the flow of people continues, and companies gradually pay off high-interest debts or refinance at lower rates after interest rate cuts, the future of tourism stocks is worth looking forward to. Currently, many travel agencies are fully booked; once these bookings translate into revenue recognition, profit figures will come into view.

Leading tourism stocks in the US stock market

The US stock market hosts the most concentrated capital and top-tier tourism companies globally. Compared to Taiwan stocks, US tourism stocks have significantly greater profit scale and growth potential.

Booking Holdings (BKNG) — The one-stop empire of online travel

Under Booking Holdings are well-known brands like Booking.com, Agoda, Priceline, Kayak, etc., with a strategy similar to Procter & Gamble (PG) — an extensive brand matrix ensuring omnipresence. From airline tickets, accommodation, car rentals to attraction tickets, everything is covered. The company’s revenue mainly comes from three pillars: agency income, merchant income, and advertising revenue, with the first two accounting for over 90%. Agency income refers to hotel booking commissions, while merchant income is the profit margin from booking hotel rooms and reselling. CEO Fogel announced plans to launch “connected trip,” an AI-powered one-stop experience platform, promising abundant growth momentum.

Airbnb (ABNB) — Disrupting the traditional landlord economy

Unlike Booking, which relies on hotels and inns, Airbnb pioneered a new era of全民房東 (everyday homeowners as hosts). Ordinary hosts can earn an average net profit of $9,600 annually, achieving mutual benefit. Compared to large hotels, staying with locals offers a deeper cultural experience. However, Airbnb’s weakness is service scope — it only offers accommodation, without value-added services like car rentals.

Airbnb’s positioning is precise: targeting travelers seeking unique experiences and budget control. The average global room price is only $67, far below traditional hotels. Concerns about safety, hygiene, and privacy are addressed through review systems, insurance, and big data. Its core competitive advantages are “matching efficiency” and “customer service” — as long as each transaction is handled fairly and both parties are satisfied, growth potential far exceeds that of traditional booking websites.

Disney (DIS) — An entertainment ecosystem of an IP empire

Disney is best known for its theme parks, but it has quietly evolved into a diversified entertainment group. From 2010 to 2020, growth was mainly driven by movies and theme parks, but declining advertising revenue led to poor recent performance, prompting the company to launch the streaming platform Disney+. Although theme park data is flat in the latest financial report, streaming has turned profitable. The downturn is an ideal time for strategic layout — as long as any IP hits a blockbuster, Disney can extract commercial value from movies, sequels, merchandise, and theme parks across multiple dimensions.

Royal Caribbean Cruises (RCL) vs Carnival Cruise Line (CCL) — Differentiated strategies of cruise giants

Carnival Cruises has the largest number of ships globally, but Royal Caribbean relies on high-end routes to maintain higher gross margins. RCL targets high-end customers, with higher per capita spending onboard; CCL focuses on the mass market, with revenue mainly from ticket sales, and passengers’ shopping desire onboard is weaker. Both benefit from increased travel spending, hotel and ticket price hikes pushing more people toward cruises, and an aging society favoring cruise vacations. However, in terms of growth potential, RCL has more room for imagination. Notably, RCL has announced that its 2024 cruise tickets are sold out, and prices are expected to rise in 2025 — investors can estimate next year’s earnings by multiplying this year’s revenue by the expected price increase.

Marriott International (MAR) — The expansion of the global hotel empire

Founded in 1927 as a small tavern, Marriott has become the world’s largest hotel operator, covering luxury, upscale, and mid-range segments. Against the backdrop of rising global travel expenditure expectations, Marriott is raising prices accordingly. Global RevPAR (Revenue per Available Room) increased by 4.2% annually, and the number of rooms continues to expand — in 2023, adding 46,000 rooms. Compared to Taiwan’s Regent Hotel, Marriott is undoubtedly a global giant with unlimited growth potential.

Sands Group (LVS) — Developer of Asian financial centers

Sands Group’s casino resort empire in Macau and Singapore is optimistic about the future. Macau benefits from the recovery of demand in Greater China, while Singapore is expected to become an Asian financial hub outside Hong Kong, with continuous capital and visitor inflows. The company plans to increase investments in both locations to consolidate its leadership position.

Top picks for Taiwan tourism stocks

Shangri-La Hotels (2707.TW) — The laboratory of boutique hotels

Among Taiwan tourism stocks, Shangri-La is the most representative player. From backpacker inns to five-star luxury hotels, Shangri-La’s hotel portfolio covers the full spectrum. Occupancy rates remain high-end, with steadily rising room prices, and new hotels opening continuously. Food and beverage revenue has also been steadily increasing. During the pandemic, Shangri-La began to strengthen its F&B momentum, and today’s revenue still maintains growth. Compared to Wang Pin (2727.TW), which mainly relies on daily dining consumption and lacks clear seasonality, Shangri-La, as a hotel operator, has a stronger tourism attribute, aligning more with the core features of tourism stocks.

Risks to consider when investing in tourism stocks

The pandemic once brought the entire industry to the brink of collapse; this lesson must not be forgotten. Infectious diseases have a devastating impact on tourism, so it’s essential to assess disease risks when investing.

Second, many scenic spots and tourism businesses do indeed have “off-season and peak-season” differentiation. While stock prices may not skyrocket on peak days, booking volume, amount, and popularity can be sensed in advance. For example, RCL’s 2024 cruise tickets are already sold out, and prices are expected to rise in 2025. Smart investors can estimate future performance based on this.

Finally, when calculating next year’s profits, don’t forget two key variables: the maturing high-interest debts (reducing interest expenses), and the continued increase in consumers’ travel expenditure expectations. The combination of these factors can gradually boost the profit space of tourism stocks year by year.

Why are tourism stocks called summer concept stocks?

Outdoor activities and scenic tours are naturally suitable for summer. Coupled with summer vacation driving travel waves, tourism revenue peaks in summer. Just like the Olympics are mainly held in summer with fewer winter events, although winter also has unique scenery, the richness of travel activities is far less than in summer. Therefore, the industry habitually refers to tourism stocks as summer concept stocks.

Conclusion

Summer is approaching, and summer vacation planning has already begun. Some plan to surf and ride the waves at the beach, others yearn for cool mountain escapes. Whatever your vacation choice, when you purchase travel services from a company, consider holding that company’s stock as well — let your investment returns and travel happiness cycle together. As long as you believe in the prospects of tourism stocks, there are ample reasons to ride the wave in this summer surge.