Recent earnings from travel & hospitality companies point to a slowdown in consumer demand. As consumers become more cautious with spending, some on Wall Street are wondering where to best position their portfolio to capitalize on these trends.
Ronald Josey, Citi Research Internet Analyst, joins Yahoo Finance to discuss travel stocks and where investors should keep an eye out for opportunities.
Josey mentions Booking Holdings (BKNG) as one of this top picks, citing: "It is a matter of scale. There's no ifs, ands or buts about it. The more hotels you have, in what is an increasingly supply-driven market, the more you can generate greater demand. Booking having as many hotels as they do in Europe, increasingly in North America, also also in Asia-Pac, and, we think they're among the best positioned to benefit from this continued trend of travel... The thing that Booking has not just the scale in hotels to your question, it's also the know how and marketing efficiency on how to really go after those consumers that are willing and able to and want to spend on travel, and that's a super power that I think Booking has that everybody wants to emulate."
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
AKIKO FUJITA: Well, a slew of travel earnings this week from Airbnb, Expedia, and Marriott all pointing to a slowdown or moderation in consumer demand, but our next guest says there's still opportunity for investors in the sector. For where to play in the travel space, let's bring in Ron Josey, City Research Internet Analyst.
Great to have you on today. Give me your sort of snapshot based on what we've heard from the companies before. Tough to make the comparison to the revenge travel that we saw last year but maybe not as bad as some people expected.
RONALD JOSEY: Yeah. No, Akiko, I think you're right. It's a challenging time now, because we're coming off of 4Q where from what we heard, October was a challenge given the conflict in the Middle East, but then you heard Airbnb talk about accelerating growth in November and December.
You heard Expedia say that, you know, Vrbo continues to be somewhat challenged as they migrate to the new platform yet by and large, it seems as if consumer travel trends remain healthy. Unemployment is better or is where it is, and, you know, the big question we get constantly is we heard about the summer travel in '22, would that repeat in '23?
The answer was yes. The question is, does that repeat in '24? And frankly, I don't see any signs that would suggest otherwise and so it seems to me that the market is healthy. We do have some challenging comps overall. Everyone has already taken the trip, but when you have unemployment where it is and when you have, sort of, consumer confidence as high as it is, I actually think travel will be just fine this year.
And 4Q was a little messy because of the October-- the conflict in the Middle East and 1Q gets a little bit messy, because Easter is early on in the year, but by and large, it seems like travel trends are holding up relatively well.
AKIKO FUJITA: Yeah, so let's talk about some strategy here. I mean, Booking Holdings, your top pick, still waiting for those results to come through. But is it about scale when you think about where to put your money in what is expected to be continued momentum in the travel space?
Booking is one of those that's got sort of a presence across the stack.
RONALD JOSEY: Yeah, I know. I mean, within the online travel sub vertical, if you will, Booking is our top pick followed by Airbnb. Bigger picture, we love meta. We love Amazon. We love Uber as well, so we can talk about those. But no, it is a matter of scale. There's no if, ands, or buts about it.
And the more hotels you have in what is increasingly a supply driven market, the more you can generate greater demand. And so Booking, you know, having as many hotels as they do in Europe, increasingly in North America and also in Asia Pac, we just think they are amongst the best positioned to benefit from this continued trend of travel.
And again, might be a little messy here with where Easter lies in 1Q and given the issues in 4Q, but I think come summertime, I still think Booking is amongst the best position. And the thing that Booking has not just the scale and hotels, to your question, it's also the know how and marketing efficiency on how to really go after those consumers that are willing and able to and want to spend on travel.
And that's a superpower that I think Booking has that everybody wants to emulate and what's different with Airbnb is, you know, they talk about 90% of traffic comes direct to their site, and so they don't need to advertise as much for performance, i.e. Getting that last booker, rather they're building up their brand, and they do a very good job of that.
And the last thing I would just say on Airbnb is one of the key takeaways that we heard about from Airbnb this last quarter was they added or they now have 7.7 million listings on their site growing 18%. As that supply grows and you see travel becoming more intraregion, if you will, I think that's a positive for Airbnb as we go through this.
