Attention is turning to summer holidays as the warmer weather gets Brits in the mood for a much-needed break.
The UK’s Brexit trade deal with the European Union may have raised the prospect of shorter queues at passport control but travellers may be feeling weary at airfare prices,
Airfares rose by 27.5% annually in April, according to the latest inflation data, while cruise fares are also on the rise.
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It comes as services inflation rose 5.4%.
But for investors, there could be an opportunity to take advantage of rising prices in the travel sector.
The tourism industry has struggled over the past few years due to the pandemic and geopolitical tensions, but a busy summer holiday period is expected and there are some airline and holiday stocks to consider buying that are benefiting from a boost in demand.
Affordable flights fuel easyJet rebound
EasyJet (LON: EZJ) is a favourite among budget-conscious travellers.
The company is known for its affordable flights, especially to Europe, which consumers are more likely to choose over more expensive transatlantic holidays as the cost of living crisis bites.
Despite posting a loss in its first half results for the six months to 2025 that was blamed on investment in longer routes, the brand is expecting a busy year ahead.
EasyJet reported that its third quarter is 80% booked and the fourth is at 42%, both ahead of this time last year.
Meanwhile, its holidays business landed a £44 million profit, up from £31 million, which was helped by 25% expected customer growth this year. Forward bookings for holidays in the second half are 77% sold, EasyJet said.
Adam Vettese, market analyst at eToro, said: “Diversifying revenue streams, without sole reliance on core airline operations, should help give earnings more stability. Geopolitical tensions or fuel price volatility remain factors that could potentially come into play.
“The share price has struggled to rise above the 600p mark in the last 3 years, and longer-term holders will remember many years of a handle much higher. Investors will have to decide whether easyJet has enough in the tank to get back to those levels or whether they have the patience to wait.”
Package holidays boost Tui
The trends that are boosting easyJet are also in place for Tui.
The airline and holiday brand, which delisted from the London Stock Exchange in 2024 to focus on its Frankfurt listing, said in its second quarter (Q2) results that it has a pipeline of 8.6m bookings for Summer 2025.
Its Q2 2025 airline revenue was up 1% to €3 billion.
Meanwhile, hotel and resort revenue rose 3.2% but cruise sales dropped 1.7%, blamed on refocused itineraries.
The brand is expecting revenues across its airline, holidays and cruise brands to rise between 5% and 10% over the year to €23 billion.
You would need to purchase shares in Tui from the Frankfurt Stock Exchange through your investment platform as it is no longer listed in London. There may be exchange rate risks and other fees to consider.
Staycation boom bodes well for Whitbread
Whitbread owns Premier Inn – a budget hotel option for staycations.
Whitbread (LSE: WTB) owns Premier Inn – a budget option for staycations and has seen more demand for its rooms, as customers seek out more affordable options.
Whitbread's full year results show total accommodation sales were down in the UK by 1% but it still outperformed the market.
Room sales in Germany, a key growth area for the brand, were up 23% though.
Group revenue was down 1% while pre-tax profits fell 14% over the year but Whitbread said it is on track to deliver incremental profit of at least £300 million by 2030.
The group has previously warned that its expansion in the UK and Germany will weigh on earnings.
A one-stop-shop poised for growth
WH Smith (LSE: WHS) offers a slightly different way to invest in travel.
The brand has been shifting its focus from the high street to airports, where it has rapidly been expanding its footprint and has a dominant market position.
It sold its high street locations to Modella Capital in March 2025.
WH Smith now has hundreds of shops mainly in airports and stations, frequented by travellers on their way to exotic destinations and is planning to open another 90, with 60 this financial year alone.
The brand’s interim results for the six months to the end of February 2025, showed travel revenue was up 6%. This was made up of 7% growth in the UK, 5% in North America and 15% in the rest of the world.
Total travel trading profit was also up 12% to £56 million.
Don’t forget the boom for buses
Ongoing train delays and strikes have benefited coach operator Mobico Group (LSE:MCG) previously known as National Express.
Consumers have also been looking for cheaper alternatives to rail travel as prices increase (both travelling for staycations and to airports to travel further afield), boosting the company’s top and bottom lines in its locations of the UK, Spain and Germany.
Group revenue was up 9% annually during the first quarter of the year, according to the company’s latest results.
But much of this was driven by strong performance from its European arm ALSA, where sales were up 13% annually compared with a 2% drop in the UK.
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