2 – 6 Aug | Earnings Season Part 4: Tourism

The tourism sector is navigating troubled waters again this summer as the Delta variant threatens to bring more travel restrictions. In this fourth earnings season article, we take a closer look at the travel industry and how the results could impact your broader portfolio.

Note: you can find all the travel stocks on the BUX Zero app by searching for the tag “Tourism.”

Tourism sector: the big picture

Last week, US President Joe Biden announced that travel restrictions would remain in place for Europe (Schengen area) to the US. It’s another blow to the tourism industry which is still struggling to get back on track since the border closures of March 2020.

The prospect of another pandemic wave hangs over the industry. However, second quarter results should reflect a significant recovery, including a boom in hotel reservations and airline tickets over the summer season. For example, in France, bookings have climbed 30% this year compared to the 2019 summer season.

Additionally, the new European health pass program will extend further across the European Union from the first week of August. This strategy, which uses a health certificate system to allow free movement, could also have an impact on the tourism market on a larger scale. 

For these reasons, stocks in the tourism sector will be particularly volatile in the coming months. And that means there’s plenty of opportunity, as well as some risk.

Booking on the rise?

This Wednesday, August 4th, Booking will report its figures for the second quarter. The company’s shares are up 7.9% over the last six months, thanks to a recovery in reservations for the summer season. This growth is impressive when you compare to the tourism sector as a whole, which has lost 21.7% in share value in the same period.

Analysts think that Booking will maintain its position as leader in the tourism market thanks to new international partnerships (in Thailand, France etc.) and the company’s colossal advertising budget.

Will Expedia keep pace?

American company Expedia will reveal its figures on Thursday, August 5th. Analysts are expecting quarterly profits to increase year-over-year, with earnings-per-share estimated at $0.83. That would be a 80.9% rise from the same period last year.

Expedia’s stock price has risen 22% over the last year, which could be an indication of solid results. However, some analysts have warned that earnings could fall below expectations.

Space tourism

Is the sky the limit? Not anymore! You probably heard about space tourism recently after Richard Branson and Jeff Bezos made their trips to the edge of space. Some analysts predict that stocks linked to this niche sector could take off in the coming weeks, such as Virgin Galactic. Looking further ahead, it’s estimated the space tourism market could reach $8 billion by 2030.

How to read company reports like a pro

Do you want to know what the pros are looking for when they look at quarterly earnings reports? We wrote a new article on the subject, which can help you identify the most important statistics in a company’s quarterly results, and how to find investment opportunities from them.

Economic and results calendar

Monday – Manufacturing PMI index in Italy, France, Germany and the euro zone. Quarterly results from Heineken, Take-Two Interactive.

Tuesday – Unemployment rate in Spain. Trade balance in the United States. Quarterly results from Activision Blizzard, Infineon, Under Armour.

Wednesday – Services PMI index in Italy, France, Germany and the euro zone. Inflation rate in the Netherlands. Quarterly results from Commerzbank, Booking, Uber, Kraft Heinz.

Thursday – Bank of England decision on interest rates. Unemployment rate in the United States. Quarterly results from Adidas, Bayer, Expedia, Siemens, Zalando.

Friday – Trade balance in France.

We’ll be back again next week with another BUX Breakdown. In the meantime, have a good week on the markets!

The BUX Breakdown was written by Clémentine Pougnet.

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All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.