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The travel recovery is coming, and it's going to be explosive.
As the pace of COVID-19 vaccinations continues to accelerate, demand for travel-related services is growing. People are going to want to get out and about once again.
It will be a much-needed relief for the travel industry.
Travel spending in the United States dropped by 42% in 2020 as people stayed home because of COVID-19 restrictions. According to the U.S. Travel Association, the travel industry lost $1.6 billion a day from the first of March until the end of 2020.
A lot of the pain from the pandemic fell on the hotel and lodging companies. Hotel occupancy averaged just 44% in 2020, and revenue per available room was 48% lower than in 2019. Not only were those the largest year-over-year declines ever, but they were also all absolute lows in dollars since records started being kept.
In other words, there's nowhere left for the industry to go but up. Investors are right to target these rebound stocks.
One of the most intriguing debates among investors is whether Airbnb stock or hotel stocks are a better play here.
Airbnb offers the tantalizing growth of a startup, while hotels are tried and true businesses. The pandemic hurt each business in unique ways, and their recovery could be different too.
To help you find which travel stock makes the most sense for your money, we're digging into Airbnb, Marriot, and Hilton to see which of these makes the best stock to buy...
Airbnb Stock or Hotel Stocks
The question many investors are asking right now is which stock to buy. Should they buy Airbnb Inc. (NASDAQ: ABNB) or one of the leading hotel chains like Hilton Hotels Corp. (NYSE: HLT) or Marriot International Inc. (NYSE: MAR) to profit from the travel recovery boom we should see in the second half of 2021?
Back in late March and early April, the survival of Airbnb was in question. If not for about $2 billion in equity and debt investments from institutional and private equity firms, it is unlikely the innovative lodging company would have survived.
It did raise the money, travel restrictions began to ease, and the company not only survived, but it also triumphed. In December 2020, Airbnb pulled off its long-anticipated IPO, and the stock has moved pretty much straight up from there.
Having survived the pandemic, Airbnb is here to stay.
There is no question that Airbnb has changed the lodging industry forever. It had an impact on bookings at regular hotel properties even before the pandemic hit.
Airbnb is going to be a massive player in recreational travel bookings. The luxury of renting a full condo in a desirable part of town for the same or less the price of a single hotel room in a luxury full-service hotel is appealing. It will take market share from leading hotel operators.
Airbnb is also going to see demand from digital nomads as the pandemic subsides. It has already seen some of the demand develop.
Now that we know we can work from anywhere, who needs to stay in one place? Why pay $3,000 and up to live in a tiny room in Manhattan when right now digital nomads can rent one-bedroom condos on the beach in south Florida for about $80 a night?
The stock also has strong momentum, so as long as the market rides the Fed's massive liquidity injection higher, the stock should be a leader.
But Airbnb may not catch all of the travel rebound.
Business travel will bounce back, and hotels are still primed to scoop up that demand. We are going to see conventions, trade shows, and conferences happen in person again soon. Most people will want to stay in the hosting hotel rather than staying off-site and missing networking and deal-making opportunities.
In and out of town for a day, business travelers will prefer the convenience of a hotel with all the amenities over an Airbnb as well.
Marriott and Hilton are the best choices for a business travel recovery, and we are going to take Marriot by a nose.
With 1.4 million rooms, Marriott has more rooms than any other hotel group in the United States right now. Its loyalty program has 141 million members, and those members were responsible for more than 50% of bookings in 2019.
Marriott also has the strongest online presence and booking system.
Marriott has an advantage over both Hilton and Airbnb in the Caribbean. It has over 25 all-inclusive destination resorts in the region that attract high-end vacationers.
Buying Airbnb or a leading hotel company is not an either/or choice.
Buy Airbnb to benefit from the rise of digital nomads and the return of vacation travel.
Buy Marriott to capture the boom in business travel.
The travel recovery is going to be huge, and it will be long-lasting. Cash has been building up in bank accounts for both individuals and businesses.
A lot of that cash is going to be spent getting back on the road.
Three Stocks Even Better Than ABNB
Chief Investment Strategist Shah Gilani just held his first-ever stock-picking lightning round event - running through more than 50 stocks to tell you if they are stocks to buy or stocks to sell.
Dozens are overpriced and overhyped - you should ditch them ASAP.
But Shah says THESE three stocks are "screaming buys."
All three are trading at a discount... they're under-the-radar companies most people haven't even heard of... and they have massive tailwinds ready to send their share prices into the stratosphere.
To get the company names, tickers, and price targets for Shah's picks, go here now.