Although the COVID-19 Delta variant has marred the travel industry’s recovery, the rapid rollout of vaccines, easing of restrictions, and pent-up demand for travel ahead of the holiday season should help the industry return to its recovery track. In addition, since the stock market is bracing for a year-end rally, some travel stocks should gain significantly. Specifically, we think InterContinental Hotels (IHG), SkyWest (NASDAQ:SKYW), and Mesa Air (MESA) are poised to deliver solid returns in the coming months. Read on.The travel and tourism market is expected to reach $924.28 billion by 2025, registering a 24.5% CAGR, but the industry’s year-over-year contribution to global GDP is expected to rise by less than one-third in 2021. Despite fears surrounding the rapid spread of the COVID-19 Delta variant, nearly 54 million tourists crossed international borders in July 2021, the strongest results since April 2020.
With the rapid rollout of COVID-19 vaccines globally, and the economy’s reopening, the travel industry is expected to regain its momentum in the near term. Pent-up demand for travel ahead of the holiday season and the rising need for business travel as offices reopen should bolster the industry’s recovery. Moreover, since better days may be coming for the stock market as the end of October and beginning of November nears , many travel stocks could witness a rally.
Therefore, we think it could be wise to bet now on quality travel stocks InterContinental Hotels Group PLC (IHG), SkyWest, Inc. (SKYW), and Mesa Air Group, Inc. (NASDAQ:MESA). They are expected to deliver significant returns in the near term based on their strong position in the market and solid financials.