Here’s why this earnings season is signaling a summer travel boom

Published Fri, May 6 20221:11 PM EDTUpdated Fri, May 6 20221:27 PM EDT

Summer travel season is just around the corner, and company executives are predicting a boom in demand, according to recent earnings conference calls. Travel was one of the hardest-hit industries during the pandemic as lockdowns and restrictions put a dent in tourism and cross-border travel. Some consumers have returned to vacationing more quickly than others as vaccinations ramp up, outbreaks slow and borders reopen. To be sure, travel demand may continue to seesaw as new variants emerge and Covid-19 lockdowns in China persist . Meanwhile, rising prices and surging inflation could slow consumer spending. But executives from a myriad of tech companies, payments firms and airlines have shared optimistic metrics and commentary on earnings calls, signaling a broader travel rebound may come in the near future. Technology On its quarterly earnings call, Alphabet offered several indicators of a travel rebound in the coming months as the category became the second-biggest contributor to year-over-year advertising growth in the quarter after retail. First-quarter travel searches were back above numbers during the same period in 2019, according to Philipp Schindler, chief business officer at Alphabet. Meanwhile, many consumers are vying for tropical vacations, with Google's parent company reporting 27% growth in searches for categories such as beaches and islands versus 2019, while queries for vacation rentals climbed 37%. Global travel also seems poised for a comeback as searches for passports jumped 80% compared to last year, while travel insurance queries doubled. Financials Payments and credit card companies such as Visa , Mastercard and American Express also expect travel demand to bounce back after omicron's headwinds dominated the beginning of the first quarter. As of March, cross-border travel has risen above 2019 levels for the first time since the pandemic started, Michael Miebach, CEO of Mastercard said on the company's earnings call. Visa executives think a surge in demand will lead consumers to spend more money, suggesting this may outweigh rising prices even as inflation hits record highs. American Express shared 121% year-over-year growth on an adjusted FX scale for travel and entertainment spending in the quarter. Global bookings for consumers also rose 37% over 2019 and 48% in the U.S. "People will continue to have colds and get sick and off we'll go, but I think the world is opening back up at this point and people are getting excited to go out and see the world again," said Stephen Squeri, American Express' chair and CEO during an earnings call. Hotels and lodging Big hotel chains and rental services such as Airbnb had a revival in travel during the first quarter and expect further growth, thanks to pent-up travel demand. "When we look at our forward booking data, we think the summer is going to be gangbusters," Marriott said on CNBC's "Squawk on the Street" on Wednesday . The average daily per-room rate at the hotel chain rose 5% above 2019 levels in March while worldwide revenue per available room came in just 9% below prepandemic figures. Meanwhile, Hilton expects leisure revenue per available room to exceed peak 2019 levels for the full year. Booking Holdings reported $27 billion in gross bookings over the first three months of the year, the highest quarterly amount ever, CEO Glenn Fogel said on the company's earnings call. The travel stock remained a bright spot in Thursday's market sell-off, rising nearly 3.3% after the company trounced analysts' expectations. Travel rental companies are also seeing a strong rebound in demand. By the end of April, Airbnb posted 30% more nights booked for summer travel than at the same point in 2019. On an earnings call, Expedia CEO Peter Kern also noted that inflation could weigh on summer plans, but he remained upbeat on the overall outlook for travel. "The pent-up demand that's out there for travel seems to be outweighing anything the market can throw at it, and we continue to be feeling very good about a summer recovery that should be very robust," he said. Airlines As consumer travel returns and entry international requirements start to ease up, airlines are also feeling the love. In March, Southwest Airlines saw monthly record cash sales as bookings ramped up for summer and spring leisure travel revved up, even as the airline faced delays. Demand for travel may be booming, but supply is still behind 2019 levels. Meanwhile, American Airlines said domestic travel surpassed 2019 levels in both traffic and revenue in March, and long-haul international revenue recovered 60% in March alone. At Delta, domestic and Latin America are leading the travel recovery, though the company expects a comeback in appetite for places such as Australia and Southeast Asia amid reopenings. "Air travel remains a great bargain," said United Airlines CEO Scott Kirby during a company earnings call as the company expects to fly 87% of its 2019 schedule in the current quarter. "I don't think we're anywhere close to the demand destruction point of the curve." To be sure, companies continue to see headwinds from Covid-19 lockdowns in China. For example, Comcast said that overall attendance at the company's Universal Studios theme park in Beijing remained low due to Covid-related travel restrictions. However, executives at many companies remain optimistic. "So, this is a category that they are prioritizing as they're looking at where their spend is going into travel," said Delta's CEO Ed Bastian during an earnings call. "You see it in credit card data, you see it all across the board, and this is not just true at Delta, this is true within our industry." Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.

Travelers view the arrival and departure boards at the Hartsfield-Jackson Atlanta International Airport (ATL) in Atlanta, Georgia, U.S., on Tuesday, Dec. 21, 2021.

Elijah Nouvelage | Bloomberg | Getty Images

Summer travel season is just around the corner, and company executives are predicting a boom in demand, according to recent earnings conference calls.