Vaccination Vacation Season Begins: 3 Travel Companies to Watch
It’s official. The European summer vacation season will be back in 2021, with Europe reopening its borders to vaccinated travelers from the U.S. and U.K. for the first time in more than a year. Many Americans are now more than ready to follow Mark Twain’s advice…
“Twenty years from now, you will be more disappointed by the things that you didn’t do than by the ones you did do. So, throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”
Now, most folks won’t be “catching the trade winds” in their sails, as cruise lines have continued to struggle amidst the rough COVID-19 seas. Most cruises aren’t anticipated to be fully operational until late summer or fall, depending upon CDC regulations. The CDC currently has strict guidelines in place for cruise lines: 98% of the cruise line’s employees and 95% of travelers must have vaccinations.[1]
It’s important to note that cruise lines aren’t the only ones following strict guidelines for welcoming travelers back on board. Even with Europe reopening its borders to foreign travelers, proof of vaccination and a negative COVID-19 test are requirements for entering most European countries.
Still, for vaccinated Americans with a severe case of wanderlust, Europe is calling. Travel app Hopper recently revealed that searches for flights to Europe soared 47% after the European Union announced reopening its borders. Barcelona, London, and Paris topped the list for the most-searched European destinations.
For other Americans, though, the requirements to travel overseas may be too much of a hassle. As a result, the social media analytics company Sprout Social recently reported that most Americans may still opt for road trips or flights to domestic locations this summer. More than 1.6 million Twitter conversations were related to travel in May, and road trips were cited 32,000 times and flights 22,000 times.[2]
Overall, whether folks are traveling domestically or abroad this summer, the increase in travel bookings could help many travel and leisure companies recover. Let’s consider three companies that are worth watching over the coming months.
Delta Air Lines, Inc. (DAL)
As the first U.S. airline to provide “quarantine-free” flights from the U.S. to Italy, Delta Air Lines, Inc. (DAL) is undoubtedly a company to keep a close eye on as the summer vacation season heats up.
In December, Delta Air Lines introduced “COVID tested” flights from three major airports in the U.S.—Atlanta, New York, and Newark—to Rome, Italy. As part of the program with Alitalia, Delta required that American travelers take a PCR COVID-19 test up to 72 hours before departure, a rapid COVID test before boarding their flight, and another rapid test at the airport in Rome. Negative results from each ensured that the traveler could skip Italy’s 14-day quarantine.[3]
Now, with Italy reopening its borders for non-essential travel, Delta Air Lines is expanding its COVID-tested flights to even more locations in Italy, including Venice and Milan.
The addition of more routes and the anticipation for an increase in demand both abroad and domestic is undoubtedly a welcome development for the ailing airline industry. Delta Air Line’s president, Glen Hauenstein, recently commented, “Recent demand trends are encouraging with rising confidence in air travel as vaccination rates improve and restrictions ease, with current domestic leisure bookings 85% recovered to 2019 levels.”
During its first quarter in the fiscal year 2021, Delta Air Lines experienced a steady increase in revenue. March revenue was 50% higher than February revenue. The company still only achieved adjusted operating revenue of $3.6 billion, which is down 65% from the first quarter of 2019, and reported an adjusted earnings per share loss of $3.55, which compares to earnings of $0.96 per share in the first quarter of 2019.
But, if demand continues to improve, Delta Air Lines expects second-quarter results to be even more robust, and it looks to achieve profitability in the third quarter.[4]
Airbnb, Inc. (ABNB)
If you’re unfamiliar with Airbnb, Inc. (ABNB), the company operates an online platform that connects folks looking for something different from traditional hotels to unique experiences and stays. The company has more than 5.6 million active listings, including boats, cabins, castles, farms, igloos, lighthouses, treehouses, and yurts, in 100,000 cities worldwide.
Airbnb has been wildly popular in recent years, with more than four million hosts welcoming more than 800 million guests since the company’s founding back in 2007. Despite the success of its business, Airbnb went public at seemingly the wrong time for a travel and leisure company: December 2020.
But Airbnb wasn’t deterred, confident that travel would rebound impressively in 2021.
In a survey conducted back at the start of 2021, Airbnb discovered that most Americans missed traveling the most in the past year. As a result, the majority of folks were ready to start traveling again: 54% of those surveyed had booked a trip, were planning a trip, or were looking forward to traveling in 2021.[5]
Based on the company’s first-quarter results, the survey was accurate.
Airbnb announced that its first-quarter revenue rose 5% to $886.9 million, which exceeded analysts’ expectations for $714.4 million. That was also up from a 22% drop in revenue during the fourth quarter. The company still isn’t profitable, reporting an earnings per share loss of $1.95, as demand for its rentals remained muted in the first quarter.
However, with restrictions lifting and vaccinations more widely available, Airbnb expects folks to be more comfortable traveling and looks for a significant rebound in its business this year.
“… we expect this rebound to be unlike anything that we have ever seen before, and we expect travel to be very different than before. People are discovering that they don’t have to be tethered to one location to live and work. And what this means is that people are more flexible about where and when they travel. People can now travel any time. People are also traveling everywhere.”
As a result, Airbnb has seen folks booking places for extended stays. During the first quarter, 24% of bookings were for 28 nights or more. That’s a trend that the company anticipates will continue—and one that could add significantly to its top and bottom lines going forward.
TripAdvisor, Inc. (TRIP)
If you’re looking for the best accommodations, a great restaurant nearby, or activities and sites to check out during your travels, there’s a good chance that you may have used TripAdvisor, Inc. (TRIP).
The company’s popular online platform and app offer folks’ reviews on hotels, restaurants, and things to do at locations around the world. TripAdvisor’s site boasts that it helps 463 million people every month, with more than 860 million reviews of 8.7 million accommodations, airlines, cruises, experiences, and restaurants.
Like most travel and leisure companies, TripAdvisor experienced a drop in demand for its services over the past year. But in the company’s latest shareholder letter, TripAdvisor reported that demand and revenue improved as the first quarter progressed. The company has seen a marked improvement in activity from U.S. travelers.
A recent TripAdvisor survey showed that about 45% of Americans surveyed were planning to travel abroad in 2021, and 64% would likely stay in a hotel.[6] The company’s first-quarter results also revealed that folks are tired of being cooped up. As TripAdvisor CEO Steve Kaufer commented, “QI demonstrated consumers want to get back out there and travel. Traffic and revenue trends improved as vaccination rates climbed, particularly in the U.S. market.”
In January, February, and March, the number of monthly users increased month-to-month and accounted for about 53%, 56%, and 58%, respectively, of the same period in 2019. TripAdvisor also noted that monthly users in the U.S. climbed to nearly 80% of 2019 levels in 2020.
As a result, TripAdvisor anticipates that second-quarter revenue will exceed first-quarter results ($123 million) and that its business will rebound even more impressively in the second half of 2021.[7]
Please click here for important disclosures.
[1] https://www.cntraveler.com/story/cruising-is-returning-this-year-heres-what-to-know
[2] https://www.cnbc.com/2021/05/17/where-should-i-go-this-summer-see-where-other-travelers-are-headed.html
[3] https://www.travelandleisure.com/airlines-airports/rome-airport-pre-flight-testing-us-travelers
[4] https://ir.delta.com/news/news-details/2021/Delta-Air-Lines-Announces-March-Quarter-2021-Financial-Results/default.aspx
[5] https://news.airbnb.com/2021-travel/
[6] https://www.forbes.com/sites/lealane/2021/05/12/tripadvisor-inspires-travelers-with-the-worlds-best-lodgings-for-2021/?sh=4e5782794301
[7] https://ir.tripadvisor.com/static-files/b910ac62-f9f6-4823-9c87-4cd3c4a5f1c1