Wrapping up Q3 earnings, we take a closer look at the numbers and key takeaways for the travel and vacation providers stocks, including Soho House (NYSE:SHCO) and its peers.
The Shift to Experiences
Airlines, hotels, resorts, and cruise line companies often sell experiences rather than tangible products. In the last decade-plus, consumers have slowly shifted from buying ‘things’ (wasteful) to buying ‘experiences’ (memorable). The internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional airlines, hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
Q3 Earnings Results
The 17 travel and vacation providers stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was 0.9% below. Fortunately, travel and vacation providers stocks have performed well with share prices up 13.8% on average since the latest earnings results.
Soho House (NYSE:SHCO)
Boasting fancy locations in hubs such as NYC and Miami, Soho House (NYSE:SHCO) is a global hospitality brand offering exclusive private member clubs, hotels, and restaurants.
Revenues
Soho House reported revenues of $333.4 million, up 13.6% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a miss of analysts’ members estimates and full-year EBITDA guidance missing analysts’ expectations significantly.
CEO’s Statement
“Our third quarter results reflect the strength of our membership model. Membership revenues grew 17% year-on-year, while we achieved our highest ever quarterly Total revenues and Adjusted EBITDA. At the end of the period, we opened Soho Mews House in London, our 45th House, with great feedback from members. We have continued to see significant demand for other recent openings, including Sao Paulo, Mexico City and Portland,” said Andrew Carnie, CEO of Soho House & Co.
Soho House Total Revenue
Soho House delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 51.4% since reporting and currently trades at $7.45.
Read our full report on Soho House here, it’s free.
Best Q3: Target Hospitality (NASDAQ:TH)
Building mini-communities at places such as oil drilling sites, Target Hospitality (NASDAQ:TH) is a provider of specialty workforce accommodations and support services.
Revenues
Target Hospitality reported revenues of $146.1 million, up 18.8% year on year. This print topped analysts’ expectations by 6.5%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ EPS estimates.
CEO’s Statement
“Our results demonstrate the strength and resilience of our business model, which continues to attract customers seeking quality accommodations in areas with high demand for workforce housing,” said Steve St. Romain, CEO of Target Hospitality.
Why We Like Target Hospitality
Target Hospitality has a proven track record of delivering strong financial performance, a growing customer base, and significant growth opportunities through its expanded services and strategic acquisitions.
Stock Performance
The stock is up 24.1% since reporting and currently trades at $25.56.
Read our full, actionable report on Target Hospitality here, it’s free.
Other Key Players
Hilton Worldwide Holdings Inc. (HLT)
Hilton reported revenues of $5.85 billion, up 15.3% year on year. This print topped analysts’ expectations by 4.2%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ EPS estimates.
Marriott International Inc. (MAR)
Marriott reported revenues of $8.43 billion, up 14.1% year on year. This print topped analysts’ expectations by 4.5%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ EPS estimates.
Expedia Group Inc. (EXPE)
Expedia reported revenues of $2.67 billion, up 17.3% year on year. This print topped analysts’ expectations by 6.8%. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ EPS estimates.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs.
What’s Next?
The outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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Disclaimer
This article is not investment advice. Investing in stocks involves risk, including the potential loss of principal. It’s essential to do your own research and consult with a financial advisor before making any investment decisions.
