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| Summer is Here! 3 Stocks to Play The Passion Tourism Trend |
Gone are the days of generic vacation packages and aimless sightseeing. Today’s travelers are increasingly seeking experiences fueled by their passions. This rising trend, known as passion tourism, caters to those eager to dive deep into their hobbies and interests. Whether it’s attending a K-Pop concert in Seoul, chasing the Northern Lights in Iceland, or witnessing a total solar eclipse in Mexico, passion tourism takes travelers far beyond typical postcard destinations.
The economic impact of passion tourism is significant. For example, Taylor Swift's UK Eras Tour concerts boosted the British economy by over $1.3 billion (£1 billion), with accommodation costs even keeping inflation higher than expected. This shift in consumer behavior presents a substantial opportunity for the hospitality and online travel industries.
Investing in stocks poised to benefit from this trend could be a smart move for those seeking long-term growth. The following hotel and travel companies are well-positioned to capitalize on the rise of passion tourism:
Wyndham Hotels & Resorts (WH)
- Fair Value Estimate: $88.00
- Price/Fair Value: 0.83
- Economic Moat: Narrow
- Capital Allocation Rating: Standard
- Morningstar Rating: ★★★★
Wyndham Hotels & Resorts operates 872,000 rooms across more than 20 brands, with Super 8, Days Inn, and Ramada being the most prominent. The U.S. accounts for 57% of its rooms. Wyndham capitalized on the April solar eclipse by promoting its properties along the path of the event, which spanned from Texas to Maine and into Canada.
For instance, Wyndham's Ramada hotel in Miramichi, New Brunswick, saw a surge in bookings, with all rooms reserved around the event. Rates at Wyndham’s Niagara Falls property in Ontario skyrocketed from $100 to $3,000 per night during the eclipse.
"Despite near-term macroeconomic challenges like elevated inflation and depleted consumer savings, we expect Wyndham Hotels & Resorts to gradually expand its room share in the hotel industry," says a Morningstar equity report. The operator holds a 40% share of U.S. economy and midscale-branded hotels and plans to expand its pipeline by about 28% of its current units.
Accor (AC)
- Quantitative Fair Value Estimate: €42.96
- Price/Quantitative Fair Value: 0.91
- Quantitative Economic Moat: Narrow
- Capital Allocation Rating: None
- Quantitative Morningstar Rating: ★★★★
Accor owns 50 brands with 821,518 rooms ranging from economy to luxury. Its most visible brand, Ibis, accounts for 35% of total rooms, with Mercure and Novotel also prominent. Europe and North Africa make up 44% of its rooms, followed by Asia-Pacific, the Americas, and India, Middle East, and Africa.
Earlier this year, Accor Stadium in Sydney hosted four Taylor Swift shows, drawing 335,000 fans and boosting hotel bookings near the stadium. Accor is in talks to acquire luxury brand Habitas, which operates properties in Mexico, Namibia, Morocco, and more, with rapid growth in Saudi Arabia.
"Accor's growing room share is driven by an increased presence in higher-end luxury and premium rooms, which made up 23% of its total in 2023," says a Morningstar equity report. The company is expected to continue enjoying economic growth over the next decade due to its solid loyalty membership and increasing exposure to premium, luxury, and lifestyle segments.
Expedia Group (EXPE)
- Fair Value Estimate: $185.00
- Price/Fair Value: 0.7
- Economic Moat: Narrow
- Capital Allocation Rating: Standard
- Morningstar Rating: ★★★★
Expedia offers services for lodging, air tickets, rental cars, cruises, in-destination activities, and advertising revenue. The firm operates several branded travel booking sites, including Expedia, Hotels.com, and Vrbo, and owns the metasearch brand Trivago.
Since the announcement of Taylor Swift's shows in Vancouver, Expedia has seen a 5,000% spike in searches for the city, attributed to Gen Z travelers favoring experiential travel. Among its offerings is a Guided Northern Lights Tour in Iceland.
Expedia is expected to benefit from the remote working trend, which has increased long-term travel demand. "We think worker flexibility will boost long-term travel demand," says a Morningstar equity report. Expedia's strong user base from its leading online travel network is a key advantage that will persist despite challenges.
Expedia is also expanding its international presence and has a collaboration with Trip.com, China’s leading online travel agency. Recently, the company introduced over 40 new AI-powered products and features to offer a more personalized travel experience.
