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© Reuters. 3 Travel Stocks to Continue to Avoid This Summer
While increasing numbers of Americans are getting vaccinated and the U.S. is slowly getting back on track economically, the global travel industry is far from witnessing a decent recovery; indeed, several parts of the world are currently experiencing a resurgence of COVID-19 cases, undermining any interest in travel to those locations. Amid this scenario, we think it could be wise to avoid shares of travel-related companies Royal Caribbean (NYSE:RCL), Hyatt (H), and Hawaiian (HA) based on their weak financials and unfavorable growth prospects. Read on.The travel industry had a major setback last year as leisure and business travel practically came to a halt and most hotels closed. But as the COVID-19 vaccines developed by companies such as Pfizer Inc. (NYSE:PFE) and Moderna , Inc. (NASDAQ:MRNA) received Emergency Use Authorization (EUA) from the FDA, it was expected that the travel industry's prospects would soon improve. However, despite more than 50% of American adults now fully vaccinated, the travel industry has yet to see sufficient demand to return to profitability.
The key reason behind consumers’ avoidance of international travel is that several parts of the world are experiencing a resurgence of COVID-19 cases. Also, the vaccine hesitancy of many Americans is creating a challenge for people that may want to travel domestically. Furthermore, several tourist destinations and travel-related companies have increased their charges to stay solvent amid the difficult market situation. The increased charges are hardly an inducement to lure more travelers.
Given this backdrop, we think travel-related companies Royal Caribbean Group (RCL), Hyatt Hotels Corporation (NYSE:H), and Hawaiian Holdings , Inc. (NASDAQ:HA) are unfavorably positioned going into the summer because of their weak financials. So, we think it’s wise to avoid their shares now.
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