The United States bolsters its global appeal as a premier travel destination by attracting international travelers. Positive experiences and word-of-mouth endorsements from these visitors further solidify the country’s allure, paving the way for sustained growth in the hotel and travel industry.
Given this backdrop, it could be wise to consider investing in fundamentally strong hotel and travel stocks, Booking Holdings Inc. (BKNG), Expedia Group, Inc. (EXPE), and Travel + Leisure Co. (TNL).
A notable trend in the U.S. travel market is the growth of experiential travel, where travelers focus on activities and experiences that enable them to fully engage with the local culture. Additionally, the use of technology, like mobile apps for booking stays and experiences, has gained significant popularity among American travelers.
The travel and tourism market is expected to grow at a CAGR of 4.4% by 2029. Moreover, major companies operating in the hospitality market are increasing their focus on introducing customization features to sustain their position in the market. Therefore, the hospitality market is expected to grow at a CAGR of 6.1% by 2029.
Given these favorable industry trends, let’s look at the fundamentals of three hotel and travel stocks.
Booking Holdings Inc. (BKNG)
BKNG provides online reservations for travel, restaurants, and related services worldwide. The company offers online accommodation, travel reservations, rental car reservation services, and vacation packages through five primary consumer-facing brands: Booking.com, Priceline, Agoda, KAYAK, and OpenTable.
In terms of the trailing-12-month EBIT margin, BKNG’s 31.97% is 295.6% higher than the 8.08% industry average. Likewise, its 31.38% trailing-12-month levered FCF margin is 590.8% higher than the 4.54% industry average.
For the fiscal fourth quarter, which ended on December 31, 2024, BKNG’s total revenues increased 14.4% year-over-year to $5.47 billion, while its operating income rose 183.9% from the year-ago value to $1.73 billion. The company’s adjusted net income amounted to $1.39 billion and $41.55 per share, up 23.1% and 29.9% from the prior-year quarter, respectively.
The consensus revenue estimate of $4.58 billion for the fiscal first quarter (ending March 2025) represents a 3.7% increase year-over-year. The consensus EPS estimate of $49.93 for the quarter ending June 2025 indicates a 19.2% improvement year-over-year. The company has an excellent surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past nine months, the stock has gained 32.7%, closing the last trading session at $5034.55.
BKNG’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
BKNG has an A grade for Quality and a B for Sentiment. It is ranked #19 out of 50 stocks in the Internet industry. Click here to see the additional ratings for BKNG (Value, Stability, Momentum, and Growth).
Expedia Group, Inc. (EXPE)
EXPE operates as an online travel company in the United States and internationally. The company operates through B2C, B2B, and trivago segments.
In terms of the trailing-12-month gross profit margin, EXPE’s 89.46% is 138.4% higher than the 37.52% industry average. Similarly, the stock’s 13.58% trailing-12-month levered FCF margin is 185.4% higher than the 4.76% industry average.
For the fourth quarter of 2024, which ended December 2024, EXPE’s revenue increased 22.7% year-over $10.30 billion. Its net income increased 126.5% and 139.1% year-over-year to $301 million and $2.20 per share, respectively.
Street expects EXPE’s revenue and EPS for the fiscal first quarter (ending March 2025) to increase 4.5% and 97.4% year-over-year to $3.02 billion and $0.41, respectively.
Shares of EXPE have gained 47.9% over the past year to close the last trading session at $199.54.
EXPE’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
EXPE has an A grade for Quality and a B for Value, Sentiment, and Growth. It is ranked #2 out of 50 stocks in the Internet industry.
In addition to the POWR Ratings we’ve stated above, we also have EXPE ratings for Momentum and Stability. Get all EXPE ratings here.
Travel + Leisure Co. (TNL)
TNL provides hospitality services and travel products in the United States and internationally. The company operates in two segments: Vacation Ownership and Travel and Membership.
In terms of the trailing-12-month levered FCF margin, TNL’s 7.57% is 59% higher than the 4.76% industry average. Its 19.46% trailing-12-month EBIT margin is 141.7% higher than the 8.05% industry average.
For the fourth quarter that ended on December 31, 2024, TNL’s net revenues rose 3.9% year-over-year to $971 million. Its net income was reported at $119 million. In addition, the company’s EPS stood at $1.72.
The consensus revenue estimate of $931.86 million for the fiscal first quarter (ending March 2025) represents a 1.7% increase year-over-year. The consensus EPS estimate of $1.13 for the same quarter indicates a 16.4% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past three months, the stock has surged 1.4%, closing the last trading session at $56.28.
TNL’s POWR Ratings reflect its bright outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
TNL has a B grade for Value and Sentiment. It is ranked first out of 18 stocks in the Travel - Hotels/Resorts industry. Click here to see the additional ratings for TNL (Stability, Momentum, Growth, and Quality).
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BKNG shares were trading at $4,936.29 per share on Thursday afternoon, down $98.26 (-1.95%). Year-to-date, BKNG has declined -0.65%, versus a 0.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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