With tourism fully rebounded following the COVID-19 pandemic, travel companies operating in the airline, hotel, and online travel agency sectors are thriving. In this article, we’ll cover some of the top opportunities awaiting savvy investors in the Canadian travel sector.
Best Travel Stocks in CanadaÂ
Here are five travel stocks worth considering adding to your portfolio:
Air Canada
- Ticker symbol: AC.TO
- Market Cap: $6.951 billion
- PE Ratio: 3.25
- 52-Week Trading Range: 16.04-26.04
- Dividend Yield: N/A
The most well-known travel stock in Canada is undoubtedly Air Canada. As Canada’s flag carrier, the airline operates over 1,600 flights daily to over 220 destinations worldwide.
With the record high demand for flights coming out of the pandemic, Air Canada has been able to increase its services to meet demand. For example, the company is projecting a 5% increase in seat capacity to North American and Caribbean destinations in 2024.Â
Air Canada accounts for nearly half of the country’s domestic travel, with their main competitor being privately held WestJet. This means that Air Canada is among the only few options for Canadian investors looking for airline sector travel stocks.
Aside from airfare, Air Canada also operates Air Canada vacations, which offers travel packages that include accommodation and tours.Â
Transat A.T.
- Ticker symbol: TRZ.TO
- Market Cap: $137.069M
- PE Ratio: N/A
- 52-Week Trading Range: 2.95-5.15
- Dividend Yield: N/A
Transat A.T. is a vertically integrated travel company. Based in Montreal and founded by current Premier of Quebec Francois Legault, the company has a fleet of 36 planes and flies to 66 destinations worldwide.
Air Transat also operates nearly 600 travel agencies nationwide, offering vacation packages that combine Air Transat flights with hotels and tours.Â
American Hotel Income Properties REIT
- Ticker symbol: HOT-UN.TO
- Market Cap: $46.626M
- PE Ratio: N/A
- 52-Week Trading Range: 0.58 – 2.64
- Dividend Yield: N/A
American Hotel Income Properties REIT is a unique way to invest in travel sector stocks. As a real estate investment trust, the company owns and operates 70 premium branded, select-service hotels across 22 U.S. states.
Through licensing agreements, American Hotel Income Properties operates under brands such as Marriott, Hilton, IHG, and Choice Hotels.Â
REITs such as American Hotel Income Properties generate monthly dividends. Distributions were paid annually in 2023 but were recently put on hold, with challenging conditions in the hotel industry being cited as the reason for the pause.
Booking Holdings Inc.
- Ticker symbol: BKNG:NASDAQ
- Market Cap: $122.542B
- PE Ratio: 30.50
- 52-Week Trading Range: 3,546.93 – 3,617.34
- Dividend Yield: 0.98
Another tourism stock to consider is Booking Holdings Inc. The online travel fare aggregator company is most well known as Booking.com, but the holdings company has also expanded by acquiring other websites, including Priceline.com, Agoda.com, Kayak.com, and OpenTable.
Founded as Priceline.com in 1996, the company now offers travel services to over 220 countries, including 28 million stay listings for hotels, homes, and apartments.
The company continues to grow rapidly, with over $150 billion in bookings through its various websites in 2023. Booking Holdings Inc. saw adjusted EBITDA of $7.1 billion for 2023, a 34% increase over the prior year.
Airbnb
- Ticker symbol: ABNB:NASDAQ
- Market Cap: $102.237B
- PE Ratio: 22.14
- 52-Week Trading Range: 103.55 – 170.10
- Dividend Yield: N/A
Another major player in travel and leisure stocks is Airbnb. The American company was founded in 2008 by two roommates who had an idea to start a bread and breakfast in their own house.
Since then, the company has rapidly expanded its short-term vacation rental operations worldwide. The platform has over 5 million hosts in 220 countries.Â
Due to the platform’s popularity impacting the housing market, several major cities have begun imposing strict rules on hosts. For example, British Columbia has established rules that only allow hosts to post their primary residences on Airbnb.
How To Buy Travel and Vacation Stocks in Canada in 2024
You can buy travel stocks on any brokerage platform in Canada. To maximize your returns, consider using one of many Canadian discount brokerages to save on commission fees.
Questrade
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Qtrade
Up to $150 sign-up bonus
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Benefits and Downsides of Travel Stocks
Travel stocks can be a lucrative investment, but they come with potential risks. One factor to consider is the impact of broader economic conditions on the travel industry. During times of economic growth, there will be more disposable income in the economy, resulting in many individuals and families choosing to spend more on travel.
During economic uncertainty, one of the first things individuals and families will choose to cut is travel. For this reason, the performance of travel stocks is very closely tied to broader economic conditions.Â
Best Travel ETFs
Travel stock ETFs are a great way to gain broad exposure to the tourism sector. Here are some of the best travel ETFs.
- Amplify Travel Tech ETF (NYSE: AWAY)
- Harvest Travel & Leisure Index ETF (TSX: TRVL)
- Defiance Hotel Airline and Cruise ETF (NYSE: CRUZ)
- AdvisorShares Hotel ETF (NYSE: BEDZ)
- U.S. Global Jets ETF (NYSE: JETS)
Are Travel Stocks a Good Investment?
Travel stocks can definitely be a good investment. However, the sector is very dependent on favourable broader economic conditions. Understanding what is going on in the economy and how it impacts travel stocks is important before deciding whether or not to invest.
Methodology
Deciding which travel stocks to include on this list was not easy. We wanted to focus on Canadian-listed stocks that operate primarily in Canada but also mention several American companies with track records of success. We also wanted to choose a mix of newer companies with potential for growth alongside older companies that would stabilize any portfolio.
