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UBS dug into the benefits for certain travel and leisure companies from China reopening and moving away from a zero-tolerance COVID policy. The most obvious picks are Las Vegas Sands (NYSE:LVS) and Wynn Resorts (WYNN) with casino traffic expected to pop.
Looking outside of Macau, analyst Robyn Farley noted that while China represents a similar amount of exposure for the U.S.-listed names in both the hotel and cruise line sectors, the firm thinks hotels companies like Marriott International (MAR) and Hilton Worldwide (HLT) could see benefits from domestic travel within China, while the cruise line operators will need outbound travel to recover in addition to ports to be open to international cruise ships in mainland China. The takeaway is that hotel stocks may see recovery help to the profit and loss lines more quickly, although both sectors are moving in the right direction.
UBS prefers HLT in the lodging space because of its net unit growth outlook. Meanwhile, the preference with cruise line stocks is Royal Caribbean (RCL). The view is that Carnival (CCL) will also benefit in China, while Norwegian Cruise Line Holdings (NCLH) exited the market before the pandemic and will miss out.
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