Are you the kind of traveler who won’t book a hotel room without first comparing rates and reading reviews on one or more online travel websites? If you are, you are not alone. Every year, millions and millions of people, all over the world, visit companies like Priceline, Expedia, TripAdvisor, and Orbitz to find information and great deals on hotel rooms, airline flights, and car rentals. While you probably are not thinking about the amount of revenue these online businesses generate, each time you make a hotel reservation or buy an airline ticket, you are helping to add to that revenue and boost the value of the company.
The Investment Results of Travel Websites
You can spend smarter by going to the various travel sites to plan your vacation or business trip. You can invest better by adding some of these publicly traded stocks to your total portfolio. If you had invested $1,000 in Priceline 3.6 years ago, your shares would be worth well over $11,000 today. With some of those profits, you could take what amounts to a very nice free vacation. Let’s look at what your returns would have been if you had invested in some select travel stocks.
As previously mentioned, you would have earned an amazing return of 1159% if you purchased Priceline on January 2, 2009 for $73.65 per share and sold it on August 7, 2013. Priceline performed much better than hi-tech stocks like Google and Apple over the same 3.6 year period. Your $1,000 investment back in 2009 would be worth $11,594 in 2013.
While it was not possible to invest better than buying Priceline, if you had put $1,000 into Expedia or TripAdvisor, you would also have some extra money today for traveling. Expedia went from a per share price of $16.48 back on January 2, 2009 to an August 7, 2013 share price of $50.80. Earning a 208% profit or $34.32 per share is excellent.
TripAdvisor, which was spun off into a separate company by Expedia back in 2011, has had an impressive rate of return of 185% since it started trading under the symbol TRIP on December 7, 2011. In about a year and a half, the stock price rose from $27.41 to a closing price of $77.99 on August 7, 2013.
Investments in Orbitz did not do as well as the other listed online travel companies, but it may be worth a look if its business shows signs of improvement.
Some Hotels Did Better
Investing in hotels also offered very nice returns. From their lows beginning March 3, 2009 until August 7, 2013, Wyndham Worldwide (NYSE-WYN) and Starwood (NYSE-HOT) saw dramatic increases in their stock prices. Wyndham Worldwide went from $3.09 to $61.01, yielding a return of 1874%, while Starwood went from $9.89 to $67.20 for a very respectable 579% gain.
You Need to Diversify and Manage Risks
When setting up your portfolio of travel stocks, don’t choose all online travel agencies or all hotels. Spread out your investments to achieve diversification and lower your risk. Airlines, credit card companies, car rental companies, and even a company like Vail Resorts (NYSE-MTN) are all ways to invest better when building your “investing in travel” portfolio. You can achieve better investing by thoroughly researching and analyzing each investment rather than by simply picking a few stocks you associate with travel.
Considering that the stock market took a serious dive in the latter half of 2008 and the first quarter of 2009, the five-year performance of these stocks, and many others in the travel industry is even more impressive. The travel and tourism industry is hot, and the new mobile technology that allows users to access these sites with a smartphone or tablet device will lead to continued growth and popularity for travel sites. Perhaps now is the time to add some of these quality travel stocks to your portfolio.
How IBSS Can Help
In upcoming blogs our InvestBetterSpendSmarter (IBSS) Team and investment analysts will share more travel stocks investment ideas with our subscribers. Make sure you are a subscriber so you will hear about our ideas as soon as they are posted.
Your IBSS Team
Update: We have included some of these travel stocks (for example, Priceline and Expedia) in our Fun Stocks Watchlist™, so you can track them by following our Fun Stocks Watchlist™ and/or our IBSS Stock Picks.