It is anticipated that the travel and tourism sector will keep expanding due to rising global income and a desire for novel experiences. Opportunities for growth and expansion arise from increased investments in tourism development, transportation, and infrastructure.
According to Tourism Research Australia (TRA), international tourism is expected to bounce back and exceed pre-pandemic levels in the coming years, and domestic travel has already surpassed pre-pandemic levels. The total visitor expenditure is projected to surpass pre-pandemic levels by 2027. Overall, TRA forecasts total visitor expenditure to reach $227.7 billion by 2027, with domestic overnight trip and day trip expenditure projected to reach $137.9 billion and $41.1 billion, respectively, by the same year.
The rise of social media and travel blogging on platforms like Instagram and Twitter is expected to fuel interest in adventure travel in Australia and around the world. More people will probably be motivated to visit Australia as travelers share their stories and highlight the stunning scenery of the nation. (Reference: Tourism Research Australia (TRA)
There are a few characteristics that the top travel and tourism stocks have in common, such as a devoted customer base, an intuitive website or app, and strong brand recognition. There are the following best ASX companies that are in the travel sector:
Note: The market cap and the share price of the selected ASX companies below are mentioned as of 17 January 2024.
Auckland International Airport Limited (ASX: AIA)
Market cap: $11.86 billion
CMP: $8.04
In Auckland, New Zealand, Auckland International Airport Limited offers airport amenities and auxiliary infrastructure. Along with utility services that support the airport, it also provides services that make it easier for planes, passengers, and cargo to move around. It also leases space for facilities like terminals, cargo buildings, and investment properties.
With a final order book exceeding A$1.2 billion, Auckland Airport has successfully completed a new Australian medium-term note (AMTN) issue of A$350 million 10-year fixed rate bonds due on 16 November 2033.
Qantas Airways Limited (ASX: QAN)
Market cap: $8.90 billion
CMP: $5.16
Qantas Airways Limited (QAN) is involved in the operation of international and domestic air transportation services, the provision of freight services, and the operation of a frequent flyer loyalty programme.
The Qantas Group's fleet renewal and expansion strategy is poised to reshape its aviation operations positively. Despite encountering some supply chain disruptions that could delay certain deliveries, the group remains on course for a significant transformation of its fleet. The introduction of QantasLink A220s, mid-life A320s, and E190s from Alliance Airlines, and A321 converted freighters underscores its commitment to enhancing various segments of its operations. Additionally, Jetstar's fleet expansion with A321LRs and A321XLRs showcases its dedication to bolstering its low-cost carrier's market presence.
Flight Centre Travel Group Limited (ASX: FLT)
Market cap: $4.50 billion
CMP: $20.49
FLT is poised for growth, capitalizing on increased collaboration with major airlines and the expected record-breaking Total Transaction Value (TTV) driven by new accounts. The company focuses on innovation, leveraging AI, machine learning, and RPA to enhance customer experiences and drive sales efficiency. FLT's commitment to diversifying products aligns with evolving airline distribution models. With a sound financial approach and a successful "Growing to Win" strategy, FLT is well-positioned for ongoing success in the ever-evolving travel industry.
Corporate Travel Management Limited (ASX: CTD)
Market cap: $2.92 billion
CMP: $19.96
• Corporate Travel Management Limited is a global supplier of creative and affordable travel management solutions to the corporate market. The organization is dedicated to creating customized travel solutions that produce outcomes and is aware of the intricate travel requirements of businesses in all international markets.
• CTD has demonstrated a commendable financial trajectory marked by consistent growth in revenue, EBITDA, and NPAT since 2019. Notably, the company has effectively curtailed its total debt while augmenting cash flow from operations on an annual basis. This prudent financial management is paralleled by an impressive enhancement in net margins, transitioning from a negative figure in FY20 to a noteworthy 12% in FY23.
Helloworld Travel Limited (ASX: HLO)
Market cap: $386.35 million
CMP: $2.40
Helloworld is still in high demand in Australia and New Zealand for leisure travel. Given that the company is still growing its core competencies, the number of FTEs now surpasses 750.
Cruise operations have increased dramatically, with more capacity both globally and in Australian and New Zealand waters. The fundamentals of the company get vibrant support due to its zero external borrowings and strong liquidity maintenance. All recent acquisitions have been funded from internal resources only, which indicate HLO's capability to deal with intricate situations.
With greater capacity, cruise operations have expanded significantly worldwide, as well as in the waters of Australia and New Zealand. The company's strong liquidity management and zero external borrowings provide robust support for its fundamentals. The fact that every recent acquisition has only been financed by internal resources shows HLO's strong capability of handling challenging circumstances. Over 680 retail consultants in Australia and New Zealand are currently using the ResWorld platform, and the company is still investing in its own core technologies.
Frequently Asked Questions (F.A.Q)
What are the best ASX travel stocks to buy?
• Auckland International Airport Limited (ASX:AIA)
• Qantas Airways Limited (ASX: QAN)
• Flight Centre Travel Group Limited (ASX: FLT)
• Corporate Travel Management Limited (ASX: CTD)
• Helloworld Travel Limited (ASX: HLO)
What is the outlook for the travel industry?
It is anticipated that the travel and tourism sector will keep expanding due to rising global income and a desire for novel experiences. Opportunities for growth and expansion arise from increased investments in tourism development, transportation, and infrastructure.
Does it make sense to invest in Qantas Airways Limited?
Qantas is making a remarkable financial comeback, reporting a substantial FY2023 profit of $2.47 billion. With a strong focus on fleet modernization and sustainability through Sustainable Aviation Fuel (SAF), the company is aligning with industry trends. Additionally, an on-market share buyback program, returning up to $500 million to shareholders, underscores its commitment to delivering value to investors. Despite supply chain challenges, Qantas has displayed resilience and adaptability. These factors, combined with its solid financial performance, suggest a promising future for the company.
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