A fully flexible way to invest
3 minute read
We discuss ways investors can invest in the travel sector.
Who's it for? All investors
The value of investments can fall as well as rise and you could get back less than you invest. If you’re not sure about investing, seek independent advice. Tax rules can change in future. Their effects on you will depend on your individual circumstances
Our thoughts turn to travel over the summer when we traditionally take a break with our family and enjoy the spoils of a sandy beach or to explore brand new overseas city. Investors might also be tempted to turn to travel – as a theme for their portfolio. Investing in a theme is a popular pastime for investors who believe in the growth story of a certain sector.
As a sector, revenue in the Travel & Tourism market is projected to reach US$854.80bn in 2023 and is expected to show an annual growth rate of 4.41% between 2023-2027.1
There’s plenty of choice when it comes to finding companies in the travel space to back. There are booking platforms, hotel chains, travel software, airlines, cruise lines, airports, and resorts.
Stephen Peters, Portfolio Manager at Barclays, said: “This is an industry that investors can relate to and there is plenty of choice. In most cases, travel companies – from airlines to tour operators – have seen a remarkable turnaround since the lows of lockdowns when share prices plummeted.”
There are plenty of travel companies listed on the stock market for investors to consider. Examples of such companies include household names such as International Consolidated Airlines Group, the owner of British Airways, and Easyjet, the budget carrier, Ryanair.
There are hotel brands such as Hilton, Marriott and Intercontinental Hotels Group (IHG), the company behind Holiday Inn and Crowne Plaza. There are also firms linked to the travel industry who stand to benefit, including retailer WH Smith.
Peters adds: “Previously a high street staple, WH Smith has reinvented itself to being present in airports where holidaymakers can pick up water, newspapers and books before their journey.”
It’s also worth exploring firms who are behind the scenes for companies who provide technology for the travel world. For example, Amadeus is a tech firm which powers booking systems.
With the staycation proving popular for those who want to cut travel costs, there’s holiday home marketplace Airbnb, rail ticket retailer Trainline and Whitbread, the owner of Premier Inn who stand to benefit.
These are just some examples to consider – they are not recommendations. Barclays Smart Investor does not offer personal investment advice.
Investing in a single company can be a risky business. By instead investing in a pooled fund which holds shares in a wide range of companies you can spread your risk.
There are several funds on the Barclays Funds List which hold shares in travel companies including Polar Capital Global Technology which owns Airbnb and Trip.com as well as Blackrock European Dynamic which owns Amadeus. A number of these companies have captured the attention of fund managers.
Seek true balance
Make sure you are comfortable with the risks involved when investing in one sector.
Peters adds: “Investing in companies that are part of the travel industry is just one of many investment ideas and should be part of a widely diversified portfolio. Travel companies can be volatile as they are what’s known as a cyclical stock which simply means they go in and out of favour as consumer spending changes.”
Please remember that the fund manager may choose to sell the fund’s holdings in a company at any time.
Investing in companies that are part of the travel industry is just one of many investment ideas and should be part of a widely diversified portfolio.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
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