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Sydney Airport Holdings Ltd soars on tourism boom: what other stocks will benefit?

The tailwinds supporting the share price of Australia’s largest airport operator show no sign of abating with Sydney Airport Holdings Ltd (ASX: SYD) jumping to fresh record highs this morning.

The stock’s 1.7% jump to $6.34 looks even more impressive given that the Big Banks and giant resource stocks are trading in the red with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) falling 0.3%.

Sydney Airport gave investors reason to cheer after it reported a 5.2% jump in international visitors flowing through its terminal in the month of September, while domestic passenger numbers increased 3.3%.

This means the total number of passengers increased by 3.9% last month and the boom in inbound tourism shows no sign in letting up with Chinese and Indian nationals continuing to register strong growth.

The number of visitors from China is up 13.5% in September and 15.8% since the start of the year, while Indian travelers increased by 11.2% and 16.1% over the same periods, respectively.

The lower Australian dollar is making our country an attractive tourism destination and the Aussie is likely to remain on the back foot over the medium term due to our deteriorating terms of trade.

The low oil price is also helping to keep airfares affordable and the glut in supply means low prices are likely to persist well into 2016.

The big drop in the oil price in overnight trade is one factor that’s supporting Qantas Airways Limited (ASX: QAN) with the airline climbing 2.5% to $3.97. Qantas is the best performer on the ASX 200 this morning.

There is another factor that will support traffic growth through Sydney Airport – rising capacity. Airlines have been adding seats in response to the anticipated higher demand for travel to and from Australia and Qatar Airways is the latest to announce that it will commerce flights to Sydney from Doha come March next year.

Qatar Airways will fly daily between the two destinations and that has the potential to add 245,000 seats annually.

What’s more, average international load factors (airline capacity) improved by 3.8% and Indonesia’s AirAsia X started flying five times a week between Sydney and Bali on October 17.

But Sydney Airport and Qantas aren’t the only ones to benefit from the boom in tourism. My colleague Tom Richardson highlights four other stocks that are well placed to profit from this thematic.

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Motley Fool contributor Brendon Lau has no position in any stocks mentioned.

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Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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