Royal Caribbean has been Carnival’s longtime cruise rival – and has also seen its share price drop by more than 80% this year.
The question now is whether the company has the resilience to survive until demand for cruise vacations picks up. Stories of cruise ships becoming breeding grounds for the coronavirus may mean demand is returning more slowly for cruises than for other travel industries.
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How to analyze travel shares
The variation within the travel industry means that a one-size-fits-all approach to fundamental analysis doesn’t really work.
Investors in airlines, for example, could look at revenue per available seat mile (RASM) or load factor, which measures the average occupancy rate of a flight. Hotels, on the other hand, are often analyzed on occupancy data. And online booking companies are tech stocks, judged again by totally different criteria.
The coronavirus, however, has leveled the playing field somewhat. With revenues and profits falling sharply across much of the industry, the question for tourism stocks is whether they can hold up until demand. resume. Investors are therefore paying more attention than ever to balance sheets, using metrics such as liquidity and leverage ratios to assess the short- and long-term creditworthiness of each stock.
Trading and investing in travel stocks at a glance
- The travel industry is made up of stocks of airlines, hotels, reservations and cruises
- Major players include Southwest Airlines, Marriott Hotels, Booking Holdings and Carnival
- There are many different metrics you can use to analyze tourism businesses.
- Open a real account to buy and sell hundreds of travel stocks