BEACH stocks are flying high

HORIZON: Summer holidays are on the horizon and travel & tourism BEACH stocks soaring. Our global and European leisure baskets of booking sites, entertainment, airline, cruise, and hotel stocks are beating even high-flying big-tech stocks (See chart). The industry is enjoying a ‘new normal’. Volumes have regained pre-pandemic levels but now lag a global economy a quarter bigger. Whilst limited new capacity keeps pricing power high. From chronic Boeing (NYSE:BA) plane and RTX (RTX) engine backlogs. To high interest rates curbing new hotel build and rising restrictions hitting short-term rental supply. Whilst 5% cruise capacity growth lags pre-covid.

BEACH: This is an acronym of Booking (NASDAQ:BKNG) sites (like BKNG, EXPE, ABNB), Entertainment (DIS, LYV, LVS), Airlines (DAL, RYAAY, AAL), Cruise Lines (CCL, RCL, NCL), and Hotels (MAR, HLT, IHG (LON:IHG)) stocks. We created equal-weight 15-stock BEACH baskets to track the theme. One for US-focused global players (above) and another for European focused stocks, from AMS.MC to AC.PA. The 46% global BEACH basket gain the past year is double that of global equities and even outpaced the high-flying NASDAQ-100. Its European version is not far behind. Airlines, hotels, and Disney led recent share price gains with booking sites lagging. See @TravelKit.

TRENDS: Travel has seen three back-to-back years of 20%+ recovery growth rates. This has returned it to pre-pandemic volumes. But now set for a further catch up to a global economy 25% larger by end of this year than 2019. Air traffic boomed 37% last year, led by international, and has returned to pre-pandemic levels. Hotel bookings surged 80% but remain lower. Whilst the cruise industry saw a 50% passenger rebound to slightly over 2019 levels. The global travel & tourism industry represents c. 8% of the global economy and tourism is over 50% of GDP in small economies, like Maldives and Macau, and 15% from Greece to Portugal and Mexico.