Travel & Leisure Q3 Earnings Quotes
Interesting quotes and anecdotes from Q3 2023 travel and leisure company earnings calls. Lots of interesting commentary on volatility and the impact from the war in Israel/Gaza.
We’re mostly through earnings season for travel and leisure companies and we’ve definitely seen mixed messages across the board on the health of the consumer and travel demand. We’ve seen global travel and leisure multiples continue to contract throughout earnings season and we’re approaching the lowest multiples since 2016.
Quick takeaways for each segment of travel & leisure from earnings calls:
Airlines: Peak Q4 demand remains incredibly strong but some concerns over off-peak trough periods and ULCC pricing. Concerns over international demand are rebuffed.
OTAs: Lot of volatility in October bookings given War in Israel/Gaza, but overall demand trends remain strong, especially in US.
Hotels: Corporate demand remains strong as well as high-end luxury, but seeing some trade down on lower end consumer.
Cruise: Companies are monitoring for consumer weakness but both booked positions for 2024 and real-time onboard spend indicators remain incredibly strong.
Car Rental: Not seeing any weakness and whatever there may be in leisure is being more than offset by stronger corporate demand.
Other Travel: Mixed messages depending on low end leisure exposure (weaker) vs mid/high end (stronger)
Macro Quotes from Credit Card Companies:
Visa: "Cross-border travel volume continued to improve but remained below 2019 levels. Travel volume outbound from the U.S. to all geographies continued to be strong in the mid-150s indexed to 2019. U.S. inbound travel recovery accelerated this quarter, pushing the index above 2019 levels for the first time even as the dollar continued to remain strong relative to pre-COVID levels."
American Express: "We saw sustained double-digit growth in travel and entertainment spending. This double-digit T&E growth has been driven by continued demand for travel and dining experiences with restaurant spending, our largest category, up 13% this quarter."
Mastercard: “When compared to the 2019 index, cross-border travel metrics remained strong. Cross-border card not present ex travel continues to show strength.“
Online Travel: Volatile but Still Strong
From Airbnb Q3 Call:
“Well, I'll just start with the volatility in room nights. There's not a specific region where we're seeing it. I think maybe the biggest thing we've seen is that it's more broad-based on a global basis right now, which is why we've kind of called out the macroeconomic and potential geopolitical issues as a potential driver to it. We saw maybe some of it just late September and it's kind of been early October. And again, it's just a little too early to tell how much volatility we see going into the rest of the quarter.”
From Booking Q3 Call:
“Now turning to October, we estimate that room night growth was about 8% Year-over-Year and about 20% versus 2019. Excluding Israel, we estimate these growth rates would have been about 9% in 22% respectively. We saw a significant negative impact on our business in Israel. And there was some impact on travel trends outside of Israel. Nevertheless, we were encouraged to see global room night growth improve towards the end of the month”
“I was very pleased to see this resiliency in global leisure travel demand and saying that we're looking at 2024, we're seeing strong growth on the books for travel and that's going to happen in the first quarter.”
From Expedia Q3 Call:
“As for the fourth quarter, based on the uncertain geopolitical environment and its potential impact on travel, we expect gross bookings growth to be relatively in line with third quarter levels, with modest sequential acceleration in year-over-year revenue and EBITDA growth versus the third quarter.”
“We haven't seen really anything on the consumer side. We keep looking, but there's definitely, nothing obvious, and you'd have to squint really hard and look by sub, sub, sub region to try to for, and cut it by price point and a lot of things to really see anything noticeable.”
From Trivago Q3 Call:
“The main travel trends remain stable in October. We continue to see robust travel demand and elevated average booking values on our platforms in all regions. The dynamic in performance marketing channels remains volatile, while monetization levels in our own auction have normalized”
Airlines: Corporate Strength, Leisure Questions
From American Airlines Q3 Call:
"We have seen steady improvement in business travel with encouraging signs from both managed and unmanaged corporate customers."
"We continue to see strength in Q4. A lot of it is, domestic marketplace for customers opened up a lot sooner and a lot more completely and comprehensively than what many of these or many countries outside of the US did. So, we're still in a period where some of that demand is coming back and we as many are beneficiaries of that."
"We are anticipating continued, it's like year-over-year improvement in holiday performance."
From United Airlines Q3 Call:
"The other thing I've said is like the last part of the world to recover is Asia. And Asia is still, however, you want to look at it, very strong. We're growing a lot of capacity on the front."
"Demand for the Atlantic and the Pacific was truly outstanding and we see that trend continuing into the fourth quarter."
From Delta Airlines Q3 Call:
"Domestic demand remains steady and initial bookings for the peak holiday periods are strong."
"Business travel continues to steadily improve as corporates continue with return-to-office initiatives. Less-recovered sectors like technology and financial services saw double-digit growth during the quarter."
“Travel remains a top purchase priority and our core customer base is in a healthy financial position. We continue to see strength in bookings across Delta's global network driven by our consumers."
From Southwest Airlines Q3 Call:
“Moving to the fourth quarter. We're seeing a continuation of healthy leisure booking demand and stable business travel patterns. As a result, we expect a nominal sequential increase in operating revenue resulting in record fourth quarter revenue and passengers, which would bring us to 3 consecutive quarters of record operating revenue. October performance has been strong to date, and bookings for the holidays as a whole are also strong.”
“Again, we are steadfastly committed to addressing RASM performance to ensure a revenue plan that is appropriate for the current demand and cost environment. In the near term, we are continuing to execute a strategy of fair sale campaigns to address low-demand flights with meaningful advanced purchase requirements. This helps build load factor and suboptimal capacity without impacting higher demand flights or diluting close and yield strength.”
From International Airlines Group Q3 Call:
"Bookings for the Q4, as we said, are in line with expectations. For Q1 and Q2, we have very reduced visibility. So, as we said in the statement, we are very mindful of the geopolitical and macroeconomic uncertainties, and in particular the events that we are having in the Middle East right now."
"As we have said, we see a correlation between the business travel and the people returning to the office, there is also a difference in the rate of recovery between the different types of business trips and between regions."
From JetBlue Q3 Call:
"For the fourth quarter, we continue to see healthy travel demand during peak periods specifically demand for travel around the fourth quarter, holidays is in line with our expectations. However during off-peak periods, we are seeing elevated industry capacity significantly outpacing demand."
"We have seen an acceleration in corporate bookings since Labor Day, an encouraging sign that recovery in business travel is picking back up after notably dropping off through the summer."
From Alaska Air Q3 Call:
“First, the strong close-in revenue performance we saw from April through most of August moderated as we moved into September close-in demand for leisure looks to have normalized and without further return of business demand shoulder periods a more challenged than they have been in the past couple of years.”
“If you average it out between Thanksgiving and Christmas sort of November and December. We're probably a little higher on the bookings, but not very much.”
From Frontier Airlines Q3 Call:
"In the '24, we believe demand patterns will normalize and industry capacity growth will moderate and rebalance across geographies."
"We also did see and it doesn't help when you've got maybe one or two carriers that are behind material on load factor and they are very large and their promotional activity kind of did rob a lot of demand at a time when, yes, we were planning on getting some bookings."
From Allegiant Air Q3 Call:
“We conduct a weekly customer sentiment tracking survey where we ask our customers how they feel about the state of the economy. At the beginning of the third quarter about 50% said they felt the economy was getting somewhat or much worse. In the past several weeks, that number has grown to nearly 70%. However, during that same time span as captured within the same survey, the portion of customers saying they intend to book air travel in the next 90 days has remained virtually unchanged.”
From Hawaiian Airlines Q3 Call:
"In the current environment, accommodations inventory has not been a constraint. Rather, it has been the hesitation of travelers about coming to Maui in the wake of the fires."
Honestly the push back against weakness, especially from the legacy carriers is surprising given that US to Europe demand has continued to nosedive even vs last week as the war in Israel/Gaza has progressed:
Hotels: High End & Corporate Strong, Some Weakness in Low End Leisure
From Hilton Q3 Call:
"I know everybody wants to say, nobody's going to travel for business, but that's just that, you know, people are traveling like crazy, look around and, you know, the makeup of there's some industries, technology and financial services that haven't, you know, rebounded as much and have issues of, you know, like over hiring and then reduction of workforce and all that. But again, the bulk of it's driven by SMEs and they're traveling more than they were. And most of the corporates and even those corporates, the people they still do have are traveling more."
From Marriott Q3 Call:
"While there is heightened geopolitical risk and continued macroeconomic uncertainty and consumer is still generally holding up well, and our forward bookings through the end-of-the year. In most regions around the world remain solid."
"On a macro basis, the consumer continue we continue to see fairly consistent strength in the consumer. We've seen a little bit of trade-down."
From Hyatt Q3 Call:
“Luxury ADR right now is running at about 25% 26% above 2019 levels. And so, that is quite strong. And I think it's not only going to be maintained, but will improve. And of that, it's plus 30% in the Americas."
"Demand in China is extremely strong, and international travel is steadily recovering. A little surprising to me, actually, because air cover and air schedules are still well below where they were before. And the relevance of that is that the inbound international travelers are spending more."
Cruise: Monitoring but Strong Consumer
From Carnival Cruise Q3 Call:
"We appreciate there are heightened concerns around the state of the consumer as of late. But the fact is, we just haven't seen it in our bookings or our results."
"We just haven't seen it in our bookings or our results, and we believe consumers are continuing to prioritize spending on experiences over material goods."
From Royal Caribbean Q3 Call:
“We continue to see strong demand and pricing for both 2023 and 2024 sailings. This has resulted in higher-than-expected load factors and record yields in the third quarter, along with a record booked position on a forward-looking basis.”
“So obviously, we are feeling very good about the business, the demand for our brands, the demand for our ships and destinations, and we're seeing that as I noted in my remarks, not only in terms of the daily interactions with our guests, but also just the high level of booking activity and the strength we're seeing in bookings where we have been booking at an accelerated pace really since early this year.”
From Norwegian Cruise Line Q3 Call:
"On a 12-month forward basis, our booked position continues to be at record levels within our optimal ranges and at higher prices."
"Onboard revenue generation, which we view as our single best real-time indicator of consumer confidence, also continues to knock it out of the park."
Rental Cars: Demand Still Strong
From Hertz Q3 Call:
"Demand in the quarter was strong across our business with leisure corporate and rideshare volumes all up year over year, demonstrating the continued strength of the traveling consumer."
"We believe that various inflationary factors will continue to support tighter fleets and more elevated rates versus those historically experienced in the industry."
From Avis Budget Q3 Call:
"We saw a sizable change in demand as we started the summer season as customers booked closer in with a velocity never before seen as travel was peaked and extremely robust."
"Demand does not stop through October which looks to be the busiest October on record with solid midweek commercial demand coupled with leisure activity that supports the weekends."
Other Travel: Mixed Messages
From Travelzoo Q3 Call:
"Demand for the upcoming holiday season is still strong, but lower than what the travel suppliers have seen last year."
"We are hearing, particularly from hotels and airlines in North America, that demand is slowing down and normalizing; also probably a result of the higher prices because prices for hotels and flights has gone up tremendously over the last 2 years."
From Travel & Leisure Co Q3 Call:
"Forward resort bookings Q4 owner nights on the books are 7% ahead of fourth quarter 2019. Reflecting a continued strong booking pace total owner arrivals are ahead and length of stay is 5% above the fourth quarter of 2019."
“The core, the primary driver of our business for our consumer is continuing to perform consistently well, it is not showing signs of weakness.”
Tickers Mentioned: UAL 0.00%↑ AAL 0.00%↑ DAL 0.00%↑ CCL 0.00%↑ TZOO 0.00%↑ V 0.00%↑ AXP 0.00%↑ TNL 0.00%↑ RCL 0.00%↑ LUV 0.00%↑ MA 0.00%↑ HTZ 0.00%↑ CCL 0.00%↑ ALK 0.00%↑ HA 0.00%↑ ULCC 0.00%↑ JBLU 0.00%↑ DASH 0.00%↑ UBER 0.00%↑ NCLH 0.00%↑ CAR 0.00%↑ H 0.00%↑ MAR 0.00%↑ TRVG 0.00%↑ EXPE 0.00%↑ BKNG 0.00%↑ ALGT 0.00%↑
Resources:
The information presented in this newsletter is the opinion of the author and does not necessarily reflect the view of any other person or entity, including Altimeter Capital Management, LP ("Altimeter"). The information provided is believed to be from reliable sources but no liability is accepted for any inaccuracies. This is for information purposes and should not be construed as an investment recommendation. Past performance is no guarantee of future performance. Altimeter is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training.
This post and the information presented are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future.
Excellent 🔥