Travel Earnings Analysis: 4 Trends that Dominated

07.09.2023 - 16:43 / skift.com / Royal Caribbean / Seth Borko / Airlines

Labor Day is in the rearview mirror but, believe it or not, travel companies have only just finished reporting their second quarter results.

How’d they do? We wanted to look at the the entire group – 200 publicly traded travel companies worth a combined $1 trillion-plus.

There’s no one easy way to track them all, so Skift Research is working on new indices and data tools. That’s still to come, but we’ve already dug into the second quarter numbers. Here’s what we found.

Revenue for the travel industry grew 19% in the second quarter. That’s blazing fast compared to the S&P 500, which posted just 1.1% revenue growth. However, it’s a big drop from the 47% growth of the prior quarter and the 70%-plus gains of late-2022.

This is part of an ongoing trend towards normalization to more baseline growth rates. Travel has seen a whiplash effect: The revenue collapse in 2020 set up years of high growth from an artificially low base.

Those easy comparisons, along with strong pent-up demand, supported big gains but those twin tailwinds are fading.

It’s not just revenues that are normalizing. Travel profits, as measured by earnings before interest, taxes, depreciation, and amortization (EBITDA), were deeply affected by the pandemic. At its worst, in March 2021, the industry posted a -30% EBITDA margin. Today, however, the travel industry has hit a new post-pandemic profitability record.

As measured over the past 12 months, the industry earned a 15% EBITDA margin. That’s up from 11% at the start of 2023 and within striking distance of its 18% margin in 2019.

Skift Research divides travel industry stocks into five major sectors: accommodation, airlines, travel tech, cruise and tours, and ground transportation. Travel tech posted the fastest revenue growth in the second quarter and airlines had the biggest profit gains. Accommodations had the highest profit margins.

Travel tech’s impressive 32% revenue gain was powered by rebounding growth out of Asia. This includes Chinese online travel agency Trip.com Group (159% revenue growth) and Indian booking site MakeMyTrip (38%). Stalwarts Booking Holdings (27%) and Amadeus IT Group (22%) also posted strong top-line performance.  

Cruise and tour companies were also in the top-tiers of revenue growth in the second quarter. That is because they have been slower to recover than other sectors and so continued to benefit from the snap-back in demand and easy comps. Carnival Corporation (105% revenue growth), Royal Caribbean (61%) and TUI (25%) all posted large sales gains.

Updated Sep. 7, 2023

On the profits side, it was all about the airlines. United Airlines grew revenue by 17% compared to last year, but its EBITDA shot up by 90%. American Airlines (65% EBITDA growth) and