Top 5 hospitality & travel stocks for October 2021

Highlights 

• The tax rate for restaurants, pubs, admission, and holiday accommodation rose to 12.5%.
• In April 2022, VAT on hospitality and tourism sector-based purchases is expected to return to the pre-pandemic level of 20%.

Heads of various associations of the hospitality and tourism sector such as the British Beer and Pub Association, UKHospitality, Tourism Alliance, and the Association of Leading Visitor Attractions, have appealed the government to permanently lower the VAT rate to safeguard jobs in the still struggling sector. The appeal comes after the tax for restaurants, pubs, admission, and holiday accommodation rose to 12.5%, post a temporary cut to 5% introduced in July 2020 to aid struggling businesses during the pandemic.

In April 2022, VAT on hospitality and tourism sector-based purchases will return to the pre-pandemic level of 20%. The rise in VAT would prove detrimental for businesses already registering lower margins due to COVID-19. It would discourage investments, lead to loss of jobs, restrict growth, and impact tourism recovery.

Here are the top five hospitality and tourism stocks for October 2021 -

Intercontinental Hotels Group Plc (LON: IHG)

FTSE100 listed InterContinental Hotels Group is a UK-based hospitality group. On 13 September, the company announced a collaboration with Josh.ai to develop a voice-controlled smart room at its Kimpton Rowan hotel in the US. It also announced a strategic partnership with Association for Persons with Special Needs (APSN) to provide jobs and training for IHG trainees in Singapore.

In the last one year, the shares of Intercontinental Hotels Group returned 14.26% to shareholders, and its market cap stood at £8,713.77 million as of 1 October 2021.

InterContinental Hotels Group’s revenues from reportable segments increased by 16% year-on-year to $565 million in H1 2021 compared to $488 million in H1 2020. It reported a significant growth in demand during H1, resulting in an increase of 20% in RevPAR compared to 2020.

Whitbread Plc (LON: WTB)

Whitbread is a UK-based hotel and restaurant business based in England. In April, the owner of Premier Inn hotels announced an investment of £350 million in hotels and marketing operations.

In the last one year, the shares of Whitbread returned 54.87% to shareholders, and its market cap stood at £6,698.23 million as of 1 October 2021.

Whitbread’s UK accommodation sales declined by 60.9%, and food & beverage sales declined by 86.0% in the quarter ended 7 May 2021 due to government-imposed lockdown restrictions. With only essential business travel stays being allowed in the quarterly period prior to 17 May, occupancy levels increased from 35% at the beginning of the quarter to nearly 50% in mid-May. Its average room rate of £40.94 fell by 33.4% in the quarter ended 7 May 2021 versus FY20.

EasyJet Plc (LON: EZJ)

EasyJet is a budget airline company with headquarters in Switzerland. EasyJet’s passenger numbers for the quarter ended 30 June 2021 rose to 3.0 million. Its total seat capacity increased to 4.5 million, up by 17% compared to Q3 2019 figures. Recently, EasyJet rejected a $2 billion acquisition bid from Wizz Air Holdings Plc.

In the last one year, the shares of EasyJet returned 33.01% to shareholders, and its market cap stood at £5,024.09 million as of 1 October 2021.

EasyJet’s group revenue reached £212.9 million in Q3 ended 30 June 2021, compared to £7.2 million in the same period in 2020. Its passenger revenue rose to £151.9 million in Q3 2021 compared to £3.6 million in Q3 020.

Carnival Plc (LON: CCL)

Carnival is a cruise operator and one of the largest travel leisure companies across the globe. Recently, the company added a second cruise Carnival Legend to Greenland post its first sell out within 24 hours. Carnival announced a collaboration with Quest Diagnostics to offer easy access to pre-cruise COVID-19 testing appointments to passengers having bookings on any Carnival cruise liner.

In the last one year, the shares of Carnival returned 66.93% to shareholders, and its market cap stood at £3,106.89 million as of 1 October 2021.

Carnival’s revenues for the quarter ended 31 August 2021 increased to $546 million compared to $31 million in the same period in 2020.

International Consolidated Airlines Group S.A. (LON: IAG)

International Consolidated Airlines Group is an international airline holding firm. Recently, IAG Cargo, International Airlines Group’s cargo division, joined the CargoAi platform, an AI-powered airfreight platform that connects airlines and freight forwarders.

In the last one year, the shares of International Consolidated Airlines Group returned 89.58% to shareholders, and its market cap stood at £8,855.28 million as of 1 October 2021.

In Q2 ended 30 June 2021, International Consolidated Airlines Group’s passenger capacity stood at 21.9% of 2019 levels. Its passenger capacity plans for Q3 are about 45% of 2019 capacity. For H1 ended 30 June 2021, its passenger revenues declined by 72.3% year-on-year to EUR1,141 million compared to EUR4,113 million for the same period in 2020.