The Canadian Investor - 10 Travel Stocks and ETFs to Watch

Episode Date: July 4, 2022

In this release of the Canadian Investor Podcast, we cover the following topics: We look at 7 travel stocks to see how their business has evolved since the start of the pandemic Braden looks at how AirBnB started, where its business is at and what the future might hold We finish the episode by looking at 3 thematic ETFs for exposure to the travel and leisure industry Tickers of stocks discussed: ABNB, BKNG, FUN, MTN, AC.TO, CCL, MAR, AWAY, CRUZ, TRVL.TO Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. Check out the Yes We are Open Podcast from sponsor MonerisSee omnystudio.com/listener for privacy information.

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My name is Brayden Dennis, as always joined by the majestic Simon Belanger. Today we're talking travel, man. And this was your idea, and I had an idea to do a deep-ish dive on Airbnb. So the stars have aligned. I think a lot of people just got travel on their mind just in general. So maybe that has something to do with it, but it should be a good one, my man. And we're noticing something very specific when I look at your charts and your segment here is that there is a huge drop-off in revenue in 2020. It looks like the chart is, it looks like the data is broken. Yeah, exactly. The good old lockdowns, right? Exactly. All right. Let's take it away. I guess nothing else really to preface here.

Let's get right into travel. All right, let's take it away. I guess nothing else really to preface here. Let's get right into travel. Yeah, the reason I got the idea, well, first of all, obviously, we're in summer. So that's kind of, that's why it came to mind. But I think we were overdue because we talked a lot about travel when the pandemic started and what the impacts it had on companies like Air Canada. That's one of the ones we talked quite a bit for obvious reasons. You also talked about Vail Resorts quite a bit, mostly in our earnings, right, looking at how it's going. But those are just two companies that may be good companies to keep an

eye on to understand where the travel industry is at, but it's much wider than that. So I decided to look at seven companies that are a bit different in terms of the travel industry just to see how they're faring. Now, the companies in questions, one of them is one that you'll talk about a bit more in detail, Airbnb, take care, A, B, and B. So the return since March 15, 2020 for all these companies, starting with Airbnb, it's minus 27%. Booking Holdings, ticker BKNG, returns of 64%. Cedar Fair, ticker FUN. Great ticker, by the way.

Ticker FUN. That's real? That is real. That is real. Yeah. I love that. Actually, we've talked about this before. We have talked briefly about Cedar Fair.

I remember that. Yeah, it is ticker fun. Yeah, I think it was when they were getting really crushed at the beginning of the pandemic. So they had really the best return out of the group, 132% since, of course, March 2020. Vail Resorts, ticker MTN, returns of 60%. Air Canada, ticker AC.TO, 40%. Carnival Cruises, ticker CCL, probably no surprise to you that it's down 11% since March of 2020. I'm actually surprised that it's only down 11%, I'll be honest here. That's the only one that's down in this group too. Yeah. Yeah. It is the only one. It's definitely the, well, actually Airbnb is down, but Airbnb would only be the return since its IPO in December of 2020. So I forgot to preface that.

And then Marriott, ticker MAR, it's been up 88% since March of 2020. So we've overall, the returns, like you've just mentioned, it's been pretty good% since March of 2020. So we've overall, the returns like you've just mentioned, it's been pretty good here for the travel industry since the pandemic started. And especially considering some of the recent pullback that we've had in the stock markets. Airbnb obviously is the worst performer being down 27%. But I think personally, it's a byproduct of the hype surrounding the Airbnb IPO and how growth stocks have been hammered because Airbnb would definitely be in that category. And it's not necessarily a reflection of the business, but I will be

interested in hearing what you have to say in your semi-deep dive of Airbnb. In terms of Air Canada, we've looked at Air Canada pretty frequently with their earnings release, and they're clearly still not back to their pre-pandemic levels. One of the positives for Air Canada is their air cargo segment that has been steadily increasing since the pandemic started. The same would go for Vail Resorts, which we talked about quite a bit during our earnings episodes. I won't touch on Air Canada and Vail Resorts all that much. I'll just do a quick overview of Airbnb because you'll be going to more detail on them. So let's start here with Marriott. Again, ticker MAR. So Marriott, when we look at their revenues, they're still not back to what their pre-pandemic levels were. So looking at 2019, they're about two thirds, roughly just looking at the chart

that I pulled out from stratosphere.io. However, they have remained free cash flow positive during the pandemic on a full year basis and only had a small loss in 2020. So they really operated quite well. I was surprised to see that when I looked at their financials to see that they remained free cash flow positive during the whole pandemic. I thought they would have been bleeding money for sure. And for those who are not familiar with Marriott as a business, they own more than 8,000 properties worldwide in 139 different countries. I think that combined with their Bonvoy loyalty program, which they launched in 2019, Marriott should do pretty well this year because it's really encouraging people to book directly with them, which allows them to get more revenue than a third party like a Bookings Holding,

Expedia, whichever one you want to think about. They did not offer guidance for 2022. I did look in their year end results for 2021. Usually that's when companies will provide guidance for the upcoming year because they are they're still not sure where it's going in terms of the pandemic. And I actually respect that quite a bit that they would not provide any guidance. If you're not sure and you're just guessing as a management team, I'd rather no guidance. And when you're able to provide it and give investors an actual better picture of what's coming up, then do it. But in my opinion, you don't have to. Yeah, they get a pass there, right? How are they supposed to know?

And talking about their profitability during that time, Marriott, I don't know well, but the most or all of these chains run a pretty asset light franchising model of their hotels. So that helps quite a bit for their actual financials. They've kind of pivoted to that model entirely. And it makes them actually a lot better businesses, I think. Yeah, I think so too. I remember reading during the pandemic is they had leaned their staff quite a bit right during the lockdowns, because clearly, they were affected as well. So I think, you know, I don't know the brand or the company all that well, but it really seems like one of the top hotel operators if

you're going to invest in the hotel business. Now moving on to the next name, Cedar Fair of again, ticker fun. Just have to re-say it. It's too good. Oh yeah, Wonderland would be Cedar Fair. That's not Six Flags then. That would be a competitor, right? Yeah. So Six Flags is a competitor. Six Flags actually runs La Ronde in Montreal. Okay.

Yeah. So there is a Canadian tie to both of them. They're both listed in the US. I wanted to take Cedar Fair. I could have taken Six Flags. I think it would have been pretty similar here. But clearly, I wanted to pick businesses that are in the leisure and travel, but a bit different kind of segments, if you'd like, within the leisure and travel space.

And more pure play too, because like Disney, their parks is obviously a competitor too. But that doesn't give you a very clear picture given how diversified their business is. That doesn't give you a very clear picture given how diversified their business is. Exactly. I did think about Disney, but that's the reason I didn't choose them is because Disney has such a more diversified business with Disney Plus. And you also have their movie business. So I figured Cedar Fair was a better indication. And then obviously Carnival for the cruise. I could have used Disney as well for that, but I wanted some more pure plays.

That's what I chose. Yeah, it's hard to say really too, right? Because you look at Disney, unless you break out the segments, but some segments were exploding, including like the streaming services. And then the park business was just nothing. So it's probably, yeah, I was a good call. I like it. Okay, awesome. So, you know, looking at their revenue, Cedar Fares is almost back at pre-pandemic

levels. And their recent quarters are trending really well compared to pre-pandemics in terms of revenue. And to me, that makes a whole lot of sense here that it's the best performing company of the whole bunch. It's in triple digits returns since March of 2020. Because, you know, you think about it, most of their business is actually done outdoors. So aside from the early on kind of panic that happened with the whole stock market in March 2020, I think, you know, most people quickly realized that they would probably bounce back much faster than other businesses in that same space mainly because you know as we got to know COVID-19 a bit better we knew that transmission the outdoors was far far far less a lot less than indoors and obviously

a company like Cedar Fair would make a whole lot of sense here. They got, having said that, they got hammered in 2020 in terms of revenues, but it almost went straight back up to pre-pandemic levels last year. So you have to hand it to them. They've rebounded quite well. Man, Canada's Wonderland is so underrated as like someone who just drives past it all the time. It's like one of those things where it's like the pools in your backyard and you don't want to pool anymore. It is the exact same thing, dude. Some of the best roller coasters are just in Canada's Wonderland. Like some of those are insane roller coasters. That place is highly underrated. I'm not surprised that they're doing well again, like in terms of like Cedar Fair, the whole conglomerate, because people want to go do stuff. And I think it's also something that people can do even when times are tough. Maybe they don't go on a vacation and they bring the whole family to Wonderland. Just as an example.

I'm just thinking out loud here. I don't have any real stats to back that up, but that could be a possibility. Yeah, yeah. That's exactly what I think probably happened for them is even as travel may have been restricted between countries or even between certain provinces and whatnot. I mean, it still remains that local people could have just decided to go there because they wanted to do something with the kids because that trip to Disneyland, for example, was out of the question. So the next best thing is going to Wonderland if you're in the GTA, right?

Yeah, totally. I get that. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep

is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time.

And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Now, the next one here is Booking Holdings. So Booking Holdings

is still lagging their pre-pandemic revenues levels by actually a pretty decent amount. I would say it's about two thirds now of what they had pre-pandemic. Booking Holdings, for those who are not familiar with them, they own some of the world's biggest travel agency brands, including Booking.com, Priceline, Kayak, Open Table, and Agoda. Obviously, Open Table, I think, and Open Table is for booking some reservations that I'm familiar with. Agoda, I think, might be similar to that. Are you familiar with that one? Gonna say no while Brayden is having some technical difficulties here but booking holdings is a bit of a question mark for me because the competition has changed a lot of their bookings have historically been hotels but how much of that revenue will or won't come back to booking holdings

and will go to an Airbnb for example remains to be seen Or even in the case of Marriott that we just talked about, they are pushing their customers to book directly with them with their rewards program. So like I mentioned earlier, Bonvoy was launched in 2019. That's Marriott's rewards program. So it's relatively new. It was just before the pandemic. So it just had launched. So it's hard to say the early impact it had. But if you have Marriott pushing their customers to go and book directly with them if they want those rewards points, well, they're bypassing a bookings.com. And that's a loss in revenue. And Marriott is a massive hotel chain. So I think that's something to keep in mind.

I don't know bookings extremely well, but I've been reading a bit more on it. And that tends to be the bear case here for booking holding is that we don't really know where the business will be trending going forward. There's a lot of uncertainty. Okay, Yes, I am back. You know, when you try to take a sweater off and your arm gets caught and you decide to unplug your entire podcast setup. Yeah, that's what happened to me, Simon. But I am back. I have used Agoda to answer your question. Agoda is really popular in Southeast Asia. So I used it quite extensively when I was traveling in Thailand. Think of Expedia. It is identical, but in terms of like for like competitor, but it's very popular in Southeast Asia. Now with booking holdings, if you look, yeah, I'm looking right on their revenue graph on stratosphere.io from 2012 to 2021. And it's not back like the rest of travel is.

And it's really a tough scene because there's just so much competition. Now, if you look from a domain authority perspective, and what I mean by that, I just mean how high people rank for certain search terms on Google. Google Flights, for an example, would be a direct competitor to Booking Holdings Asset Kayak. Most of these digital booking experiences, no pun intended, originate from Google. And if you have to compete with Google yourself, that is not a good look for the biz because I believe that most of these digital experiences do start on Google. And there is so much new introduced competition for these assets. I think it's an uphill battle for them. There are no switching costs. I can't think of any sort of switching

costs. It feels completely commoditized, these types of digital booking experiences. They are all competing on price. It's the problem with investing in many travel businesses. And this one is no different. Yeah. And then you add in the fact like a Marriott, like I just talked about, where they put in these rewards program to create loyalty and really pushing their customers to come back and book directly with them to get those points but also get better pricing and especially as we see inflation ticked up if people can get better pricing by booking directly with the Marriott or Hilton or whatever chain you're looking at why wouldn't you do it I know I've been looking whenever now we've been thinking of traveling I always check if I book directly with Air Canada or directly with the

hotel to see if I'll actually get a better price. If I do, I will go directly with them. Yeah, makes sense. Building loyalty in this business is everything. From a margin perspective, take rate perspective, you don't have to pay for those expensive Google clicks when they come direct traffic. It's so important for the business from a unit economic perspective and the actual like top line sales perspective, but it's hard. It's really damn hard. It's really hard. It's not something I would have any sort of insight on how to do better. It's a tough business. Yeah. But at least Emeria, they have the assets, right? It's not like a commodity like you just mentioned. So they are able to try and push that. Will it work? I don't know, but they actually have that option

where I think it's not as sticky. I mean, whether I go to Bookings or Expedia, I don't really care, right? That's the one that will give me the best price. Yep, makes sense. Now the next one, another one that's been hit really hard is Carnival Cruises. So this was clearly the hardest hit industry in the travel and leisure sector. They are about at 33% of their revenue compared to pre-pandemic levels. Their debt has tripled since the start of the pandemic. Honestly, it's hard to blame them here since they needed an infusion of capital to be able to stay afloat while their business was essentially shut down. And if I remember correctly, I didn't do the research here for that, but we had talked about

it when the pandemic started. I'm pretty sure the debt, even though the interest rates were super low at the time in general, the debt that they got was high single digits, if I remember correctly, because the risk was so high. You remember that? They took on a credit facility that was extremely spooky. Yeah. But they, I mean, you can't, again, you can't blame them because they really. I mean, get what you can get, right? They didn't really have a choice.

So the good news here is that Carnival's revenues increased 50% in the second quarter of 2020 on a sequential basis, which is showing that things are improving. Here, you really want to look at a sequential basis or pre-pandemic levels. If you're trying to evaluate the business how it's doing it will give you absolutely nothing good if you're looking compared to last year 2020 occupancy is trending up as well 69 in the second quarter compared to 54 in q1 customer deposits increased 38 between May 31st and February 28th. And 90% of their fleet is now in service. The last thing I saw on their website when I was doing this segment is that they are offering bookings with like something like $1 deposit, something like that. I've seen this. Yeah. Okay. So they've done this for a while though. They've done stuff like this.

But this is showing that they're really trying to encourage people. But I guess any way you can do it. But again, it just... And they do things like 20 bucks and you can stay on the boat for another week. Yeah. Because they just want to fill occupancy like last minute. And they know that those people will spend money on the boat. That's it.

Yeah, exactly. But it just shows. I mean, obviously, they have to try things to get things back to normal, but it will also kind of fluctuate a bit more on their expected revenues. Obviously, this was just a high level of the recent result. I encourage anyone interested in Carnival Cruises to have a look.

One of the things that jumps out is how the comparable year over year are completely useless. They had almost zero revenues like I mentioned last year. Carnival still has a long way to go here and I think it would apply to any of the other cruise companies when it comes to the pandemic and comfort level. I think that is one thing being on a ship. People are still not to the same level when it comes to being around other people indoors. Some are very comfortable. I don't have any issues, but I know people that do, right? And this is clearly one where it's going to take a while, in my opinion, where the masses

are really comfortable and really drives their revenue close to pre-pandemic level because everyone's different. I know the mask mandates are no longer on, but there's still quite a few people that will wear masks. So you have to keep that in mind. Whereas some of the other travel and leisure plays, and I'm thinking here, Cedar Fair, they don't have that issue, right? Most of their activities are outside. whereas you have a cruise company where you're on a boat with someone. Yes, there's a deck you can go outside, but for the most part, you'll be spending time inside. So I think it's going to take some time here for them to see a pickup in their revenues again. Yeah, good point. And you and I have no real take on how people are acting here in 2022 from a perspective, mask, no mask.

I know you and I don't really care at all, but many people do. And that's the way you got to think about the business, right? Exactly, that's it. It's not if you or I care about if people are wearing masks or not. I personally wouldn't wear one for one second on a cruise ship, but that's just me. And a lot of people care about that stuff still. So you got to think of it as the business and an investor. Exactly.

That's the reality, right? That's it. And the point was not saying like, you know, is it, should you wear a mask or not? That was besides the point. And don't hear what- That's a venture we don't want to go down on this podcast. No, exactly. So don't hear what we're not saying is really from a business standpoint, the reality is

some people are still not comfortable going on a cruise that would have been pre-pandemic. I think that was my main point. Right. Yeah. And I hear you. I know you. But just to really iterate how this affects the business because it's a goofy world. All right.

Shall we go to Airbnb? Yeah, let's do it. I have a semi deep dive on Airbnb. Is it a shallow? We have a shallow dive. It's like a dive into like the pool where it says, don't dive. You're at the Marriott Hotel. It's like, don't dive. But you're like, I'm still going to dive to the six foot pool. You might break your head, but it's been talked about so much because it's so different and scrappy, but that's why it's a good story. And that's why people talk about it a lot. So I'm going to talk about it now.

Now, Brian Chesky, who is the current CEO of the business and Joe Gebbia had the idea of putting air mattresses in their place for some extra cash because they were broke. They moved to SF, they moved to San Francisco to try to make the tech entrepreneur dream come alive. And SF is an expensive area, man. I think Toronto's expensive. Hell no. SF's way more expensive. And they knew a conference was coming. So to get some extra cash, coming. So to get some extra cash, they posted that you could stay on air mattresses in their place. And they had two people go. They had two people stay there for 80 bucks each, which seems like a lot. That seems like quite a bit of money, 2008 USD. But hotels in SF are hundreds of dollars, sometimes thousand plus near the convention center.

This is not a cheap place. And so there they were, they were live as airbedandbreakfast.com, which is such a long and shitty domain name. Airbedandbreakfast.com, not called the company we know as Airbnb just yet. Now they brought on a third founder, Nathan. Do you have any idea how to save this name? Nathan Blecharsk. Oh my gosh. You're like looking at me, you're like, don't make me say this. Don't ask me, especially while my dog is barking. He might be trying to say the name. The dog saying it in the back here. Just say the name. Yeah.

The dog saying it in the back here. So Nathan, Nathan comes on and they worked on a roommate matching app. It was like Tinder for roommates and that failed. So back to work on airbedandbreakfast.com. And at this point, no one's using it. Like they've launched three times. They can't raise any money and things aren't looking good. Now, a fourth convention is coming and it is the 2008 Democratic Convention Center. And they made Obama O's and Captain McCain's cereal.

You can look up the boxes. They're actually pretty clever. So for the Democratic Convention, they made Obama O's and Captain McCain's cereal. Oh, yeah. Cereal. I guess McCain was running against Obama at that point, right? Yeah. Oh, wow. That's a long time ago.

It's 08, right? Yeah. And so they sold $30,000 worth of cereal boxes, like pure profit to pay off the company credit card, get some more money to keep bootstrapping airbedandbreakfast.com. Now this scrappy move, the scrappy do things that don't scale, figure it out mentality, got the attention of Paul Graham. Do you know who Paul Graham is? No, I don't. No. If you're not in startup world, you probably don't know who he is. But if you are, everyone knows who he is. He's the founder of Y Combinator. And Y Combinator is the most well-known

startup incubator in the world. They help startups go from zero to one in Silicon Valley and help them get initial investment. And now they're around the whole world, but like everything out there started in the Valley. I've heard Paul Graham talk about them and saying like, they were just scrappy enough and they were just nuts enough. They were just insane enough to think that other people staying in other people's house, like people staying in strangers' homes was like just insane enough that it might work. And so in 2009, they became Airbnb. They secured 600K from Sequoia Capital. And if you can get money from Sequoia, you're going to get some resources not only to grow

financially, but also the right mentorship, the right people involved. Fast forward a bunch. So I'm moving 2009 all the way to 2020. The IPO, the market cap hits like $100 billion at one point. Today, the market cap is $60 billion. So it's a big, big publicly traded company today. It was bigger, but everything tech got super priced up and Airbnb is slipping since then. Now, I'm going to talk about the business a little bit now.

Any comments here on this hilariously ridiculous story and just insane enough that it might work type mentality? No, no. You reflected exactly what I mentioned when you were having a little bit of technical issues. And I gave a brief overview of Airbnb and why they were probably down 27% more than Carnival Cruises because I think there was a lot of hype around their IPO in December of 2020. And then you add that with the whole tech pullback that we're seeing right now. I mean, you know probably the business better than I do, but I don't think it's necessarily a reflection

of the business. It's probably more a reflection of the current environment. Yeah. It's valuations, factors, and stuff like that. Yep. Agreed. All right. So I'm going to bring up some facts, data points, and research on Airbnb on stratosphere.io, which we released last week for subscribers. So if you type in ABNB on stratosphere.io, you'll get this. So today, 4 million hosts who have seen over 1 billion guest arrivals in 100,000 different cities and towns around the world is a sense of the scale of what they've achieved. Trailing 12 months, they've had 338 million nights booked on the platform, which has finally surpassed that 2019 number in terms of nights booked. Gross booking volume, which I believe

is their most important key performance indicator or KPI over the past trailing 12 months is 53 billion. For some context, that has 10x since 2014. Now, two really unique trends that we track on Stratosphere for Airbnb is average daily booking rate, which has increased significantly since 2019. I wonder if this normalizes in a recessionary environment, people have less money to spend on vacations, but this just means that average night booked on the platform has been creeping up and up and up. I think that's host flexing pricing power. I think it's people have lots of excess cash. It's probably a bit of both. Now, competitive advantages. They have three main competitive advantages that I can think of right now, which is unique experiences. You can't get a glamping or some cabin in the woods type

experience from a hotel. It's just really, that's not an option. So if you want something unique, you go to Airbnb. And I say you go to Airbnb because they are the brand name. I don't care what kind of goodwill they throw on their balance sheet. I believe it, right? Like this is such a household name. It has become a verb. They have just the largest network. And that brings you to network effects. They just have so much inventory for travelers to choose from. And that network effect has created a really robust rating system and just a brand you can trust, even though you could have a bad experience. It doesn't necessarily mean you're going to go off the platform. In terms of competitors, Expedia has VRBO that has the most annoying commercials on TV I've ever

seen, but they're the most formidable competitor. Do you know the stupid commercials you're watching hockey? I've seen a few, but I haven't watched hockey all that much. This playoff, just the last couple of games. No Habs. Yeah, no Habs. No Habs, no hockey. No Habs, no hockey, but no, I'm definitely familiar with VRBO,

and that's why I know they have slightly different business models when it comes to Expedia versus if we look at booking holdings. But that's why I would personally prefer Expedia because it has VRBO within its brand. Yeah. And I believe it's the most formidable competitor, but it's not Airbnb from a brand perspective, from a mindshare perspective. Now, opportunities. Moving forward, experiences is a secular trend. And that doesn't even necessarily mean getting on a flight and flying to Greece for some Mykonos drunk for 14 days experience. It can be driving an hour and a half to a really unique stay in an Airbnb. That is a secular trend that people are willing to spend money on.

Now, another secular trend is people working from anywhere. It's not like work from home, it's work from anywhere. Say you do want to work from Greece, you can. And so they are noticing and Brian always calls it out on the calls, which is people are living on Airbnb all around the world. And that is skewing in a major way, the average night stayed in a booking. Because some people will just book for three months and be like, all right, I'm going to go live in Scottsdale, Arizona for three months, work in golf every day. Or for you, you're going to go out West and you're going to mountain bike every day and work from anywhere. This is happening. It's happening all over the place.

I know people who live on Airbnb.. I know people who live on Airbnb. I know several people who live on Airbnb. So yeah, I think that that's an interesting trend. Not only just from a business perspective, but just as my own curiosity perspective. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help

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Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the

community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Now, last one, the company identified a $3 trillion total addressable market. Like over what time period? Like a year? Yeah. Yeah. No, no. I hope not. Yeah. I know. These TAMs get a bit ridiculous, but they do have a large TAM, total addressable market,

which includes $1.8 trillion in short-term stays and $210 in long-term stays and 210 in long-term stays and another 1.4 in experiences. I don't know what that experiences segment means, but I believe the long-term stay and disrupting the longer-term rental market is totally in the realm of possibilities for Airbnb. There needs to be that network effects type platform that has just rentals for long-term stays in general, because right now it's pretty fragmented. Yeah. And I'm sure they're, Tam, they're really looking at gross volumes, right? That's right. Yeah. They're looking at GBV. Yeah. Exactly. Yeah. And I think this is a good thing just to put a kind of little asterisk here is

when you ever look at companies and they have their total addressable markets, I always personally take that with a grain of salt just because oftentimes the companies will be very generous in their total addressable market. And it's also very difficult to identify for the most part. We can just go back to the whole cannabis space that we talked a bit recently. I think, you know, the total addressable market was wide ranging from one expert or one company to another. So just keep that in mind.

I always take that with a grain of salt. Yeah, guessing an illegal market turning legal. It's just a guess. Yeah. That's a good point. Right. And also a good point that it's gross booking volumes. So they would take a take rate of that. It would not be their top line revenue. Now risks. I mean, there is always bad experiences that can happen on Airbnb. So people might leave. It's uniquely managed from hosts. So it's like this aggregator that people can have a bad time. There's the nightmare stories that people have heard about booking an Airbnb, not only from hosts, but also guests. And now switching costs is I think the

biggest risk among all travel businesses. I think you probably agree with that. Yeah. What's the stickiness, right? Maybe the network effect, but that doesn't make it enough of a headache to switch. No. And I think VRBO is big enough that you can make a case that it may not have the same network effects, but it still has some. It's not like you're going to, if you're comparing to VRBO, where you're going to a platform that has zero options. They do have a decent amount of options on VRBO, not as many as Airbnb, but it's not like you would go to a Facebook

competitor and it's like, okay, I have two friends on here and I have 500 on Facebook, right? It's not that. So I think that's a good point. And switching costs, the risk of people switching to a book by direct model as well, right? It's not just switch to another platform. It's screw this. I'm making a website. I'm going to market it myself and I'm going to keep Airbnb out of the equation. They're not going to get their take rate. I'm not going to have to have them take a bunch of margin

out. And maybe the unit economics of your entire rental business changes entirely, right? Like with those take rates. And so that's another trend that I'm seeing ongoing from people who are in the rental short-term vacation stays business is they love direct bookings because Airbnb doesn't get their take or VRBO or whatever company it is that gets their take. A couple of notes here that you'll probably find funny. So back in 2013, I went to Scandinavian Europe, if you'd like, mostly in Sweden. We stayed at an Airbnb in Sweden and I was there with a buddy of mine and we flipped a coin to see who would get the bed and who would sleep on the kind of couch that, you know, was able to become a bed as well. And I lost, so I got the couch.

But I actually came out a winner because the previous guests that had stayed at the airbnb oh no they had partied and they broke the bed one of the i guess legs of the bed frame yeah yeah it was like three quarters broken okay so my buddy that was sleeping on there i think it was just on an angle no a week in the bed just like went just collapsed just collapsed like while he's sleeping i would be a heart attack yeah so while he was sleeping so the owner was nice enough so super nice guy and he came the next day and fixed it because he obviously didn't know the guest just kind of it was like hanging on the

limb and the guests were able to put it there. But that's just one of the things is you never know what you're going to get sometimes in terms of quality. Whereas, you know, a big hotel chain, that's usually the biggest advantage is, you know, there's consistency there. So that's probably one of the downsides. The other thing to what you mentioned is we've booked a cottage a couple years ago using airbnb and we booked it for like a week but then we towards the end of the week wanted to stay a couple extra days so we just went to the owner we're like oh you give us five percent off we'll book an extra yeah two days we'll enter a key transfer no problem so i can see the owners trying to

do that, especially if they have repeat customers say, hey, you are a good guest. I know I won't have the insurance associated with Airbnb, but I know you're a good guest. I'll give you 5% off or whatever it is, if you book directly with me, kind of win-win situation and probably the last risk i would add here is regulation because we've seen a lot of regulation as mostly on a municipal level but i think on a provincial or state level as well there can be some really quick changes when it comes to short-term rentals for local regulation and that can definitely impact the number of listing that would go on Airbnb and VRBO, right? VRBO would not be exempt either. And from a company perspective, like from a corporation perspective,

managing those local laws around the world when your footprint has become global is really hard. And it's why it took so long for Uber to get in every place and break ground. I think they actually did such a good job of it, despite how much I dunk on that company. It's really hard to manage a bunch of different local regulation. It's not just a one size fits all. And that makes it really difficult to navigate your company. Yeah, exactly. And I'm sure there's, I'm not a lawyer, but I'm sure there's also legal implications for Airbnb if they operate in markets that they're not supposed to. So yeah, it could be really tricky definitely when it comes to that, because there's more and more places where I know certain buildings in Montreal, I think right next to the Bell Center is pretty well known that like half of the units of a condo building is basically all Airbnbs. All Airbnbs.

Yeah. So the actual owners that live there oftentimes are not a fan of it exactly because you have a big turnaround, you have parties and stuff like that. So just something to keep in mind for those interested in Airbnb. of it exactly because you have a big turnaround, you have parties and stuff like that. So, just something to keep in mind for those interested in Airbnb. And My Lake's a perfect example as I'm looking at it right now. People do do Airbnb like for their cottage, but technically the ratepayers association says you're not allowed to. So, I don't know the laws on that. Like, What do you get? A slap on the wrist? A fine? You're not going to jail. I have no idea what the implications are, but there's a perfect example of some small lake that says you can't do it here, but some people still do. But I know

that a lot of people have stopped doing it because of it. Yeah, I think the enforcement will vary from municipality to municipality. And I think that's, it just gives a good example of the risk. You just don't really know what you're going to expect, which kind of sucks too, if you're the owner and you may want to use a cottage, for example, half of the summer rented out the other half. For those who don't want to invest in Airbnb, but want to get a rental property like that, a short term or vacation rental, make sure you do your research with the municipality because the regulation will vary widely. Yeah, it's also risk is like a host perspective, if you want to invest in making your own Airbnb, all of a sudden the rules change. You've dumped two and a half mil capex into this extravagant Airbnb property. Then what? Oh God, that would suck. Oh yeah, exactly.

Happens all the time, I bet too. Yeah, I'm sure. I mean, laws change and that's reality. So it's just something to keep in mind. I'm not an expert, but yeah, I've read enough on it to know that's a real risk. All right. We've talked about Airbnb enough here. Do you want to just rifle off your last little segment here on thematic travel if you want to get long travel? Yeah, yeah. So we don't talk, we talk about ETFs every now and then. We do have definitely a bias that's favorable towards index broad based index ETFs. But I know some people, you know, we've been people reach out to us and they will ask about thematic ETFs. And there are some for so many different teams. The one thing before I talk

about these three ETFs is keep in mind, whenever you're looking at a more thematic ETF, you'll typically look at higher management expense ratios or fees for the fund. So you'll see the ones I'll talk about, they're higher than fees that you'd see with like a S&P 500 index fund, for example. It's not that they're necessarily high in context. You have to keep in mind that thematic CTF, there is just usually a bit more active management involved in higher fees. That's normal. I would still say, you know, you want to probably avoid if that's something that interests you. Anything above 70 basis points, I would probably stay away from. And there are there is one here that's above that amount but I wanted to provide a few options so the first one here is ETFMG Travel Tech ETF the ticker is away it's listed in the US

and this one has its top 10 holding it's interesting you have a pretty good wide variety and it's really focused on technology travel related. So you have names like Airbnb, Uber, Booking Holdings, Expedia, TripAdvisor, some of the other names I'm not super familiar with but it just gives you that exposure to more the technology aspect. The management expense ratio is not low, but it is interesting for someone who may not have sufficient funds to invest in even the top names of this company. And I think that's where thematic CTFs can become very attractive is when someone has smaller sums of money and it gives them the option to get exposure to a wider theme without having to buy each individual company, which could take them years if they only have smaller funds.

Yeah, that's a good point. I'm surprised Live Nation's not in that. And I know it's not necessarily travel pure play because concerts can be local as well, but it just seems like something so experience driven and it's a tech company. I'm just surprised. I thought it would be in there. Yeah, no, no, that's a good point. I'm a bit surprised too, now that you mentioned it. The next one is Defiance Cruise ETF, ticker Cruise, C-R-U-Z. This one has a management expense ratio of 45 basis points and this one is definitely different it's a travel reopening trade type of deal that they say on their fun facts it invests in cruise lines airlines and hotels so if you that's what you're looking for this is the thematic ETF for you some of the names pretty

obvious Norwegian Cruise Line Royal Caribbean Carnival Carnival, Marriott, Hilton, Delta Airlines, Southwest, Intercontinental, United Airlines, and American Airlines. So this is definitely a play you don't want lockdowns to happen again because this one is going to be affected the most. But if you're looking to get exposure to kind of that theme I could be interesting and then the last one here harvest travel and leisure index ETF this is the only one that's listed in Toronto has a management expense ratio of 67 basis points and this one I think is the one that I like the most in terms of diversity of holdings so it really gives you a nice exposure to travel and leisure as a whole. It's not as specific as either the tech one or the hotel, airlines, and cruises.

So this one, the top 10 holdings, Airbnb at 10%, booking holdings at 10% as well, Marriott, Hilton, Southwest Airlines, Delta Airlines, Caesar Entertainment, one that we haven't seen in the other ones, Expedia Group, Carnival, and Royal Caribbean Cruises. So it gives you, I think, some good mix of kind of tech play. You know, you have some cruises in there, some airlines. Again, really, if you're looking to get exposure, I'm not saying go ahead and buy these as just some example of ETFs for those looking to bet on the travel and leisure sector. Something to consider here. Obviously, always your due diligence whenever you look at stocks to invest in or even ETFs. Just make sure that you know what you invest in. But there's some interesting ones here. Again, no Live Nation, which is very surprising. Yeah. This one, I'm surprised it's

not in there. Maybe it is in there and it's just not in the top 10. Not in the top 10. Yeah. Yeah. And usually these things are somewhat correlated to market cap. And so it's just surprising. Yeah. Because Live Nation is not a small company either, right? It would be the biggest one on this entire list in terms of market cap, right? LYV, I think, is the ticker. 20 billion, no. Oh, it's only 20 billion market cap. Yeah, Airbnb is definitely bigger.

But the top 10 holdings here, for those wondering, it's 63% of their portfolio. So these make up two-thirds pretty much of the portfolio. So this is up two thirds pretty much of the portfolio. So this is what will give you the most exposure. Yeah. Yeah, no, it's weird because Monopoly on Ticketmaster, which is like Monopoly, sorry, they own Ticketmaster, which is Monopoly on concerts, all major sports leagues.

Like a lot of people do that stuff when they travel. Yeah, oh yeah. All right, this was awesome. Thanks so much for listening. My last thought here is, if you're investing in ETFs, I always say the best thing to do is go broad-based index ETFs, buy the S&P 500, TSX 60, whatever global ETF, pay next to no fees, and then you're off to the races. next to no fees, and then you're off to the races. But sometimes you want to just run with some specific secular trend. And I get that. I know people that do that for instance, cybersecurity. I knew you were going to mention that. They're like, I, they go, there's no way I ever get to a point where I know what CrowdStrike does.

Explain it to me 4 million times and I still don't know what CrowdStrike does. Explain it to me 4 million times and I still don't know what CrowdStrike does. And even me, I study the business relentlessly sometimes. And sometimes I catch, this is so confusing. It's because it is confusing. Cybersecurity is confusing. And so I totally get that because you don't have to pick a name and try to run with it. Other than that, it's goofy though. Yeah, and you could do too like something just food for thought. Maybe you just don't want to invest in individual companies as a whole. So you do like Braden, you put most of it in broad-based index funds

and then you leave let's say 10-15% where you'll allocate more to thematic CTFs. So there's something, you know, there's different ways to do it. It's more of a, obviously personal preference. If you want more exposure to a specific sector or theme, these ETFs are good for that. But again, keep an eye on those fees. Yeah, no, the fees are, you got to watch for those. All right. Thanks for listening. Thank you so much. We really appreciate you. We got some new podcast artwork coming out. You'll see a version of our faces.

I think it looks quite like you. I don't know. I'm not sold on if it looks like you have like a huge bottom lip for some reason. Like twice the size of normal humans yeah it was kind of funny before so we got some new artwork done but uh there was a bit of rework that we asked and originally our lips looked like we had lipstick like deep red lipstick on yeah oh god the first run I looked very tanned. Yeah. Yeah, you did.

Like I tanned well in the summer and I'm like, I've got some color going right now, but I'm white. And it looked like you dyed your eyebrows black. Unmistakably a white guy. Remember your eyebrows looked like they were dyed black. Oh, yeah. Yeah. So we've made some changes. It's not perfect, but we're at a point where we're happy with it now. A couple of fun little revisions, to say the least. But I appreciate listening to the podcast. We've got some exciting news coming as well. Check out stratosphere.io. It is the all-in-one data platform for researching stocks. I've been just grinding on it lately. I hope you check it out. It is stratosphere.io. Go ahead,

leave the show review too as well. We don't ask that often for reviews, especially if you're on Apple Podcasts because that's where the reviews really come in. Apple Podcasts. If you're on that, leave us a nice review. We really appreciate you. Episodes are Mondays and Thursdays. We'll see you in a few days. Take care. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.