Travel Stocks Are No Ticket to Paradise By Spencer Jakab

After a tech tariff reprieve briefly cheered investors Monday, global auto stocks are shining today on comments from President Trump. But confusion still reigns and futures trading suggests the stock-market rebound may be losing momentum.

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Travel stocks face a triple whammy this year. The bad news has hit their shares, but only a few look tempting.

What's happening? American consumers are nervous, sacrificing wants for needs. We all want a week on the beach but, with sentiment near a multidecade low , a trip closer to home or a shorter stay in more-modest lodgings is a common tradeoff. Anecdotes are piling up.

Employers get nervous too. Combine a hint of corporate thrift with mass federal firings and that important leg of travel is slowing, with worse to come.

And finally, foreign tourists are avoiding the U.S., some due to horror stories about overzealous border agents and others as a form of protest . Some 32% fewer Canadians visited by land and 14% fewer by air last month, according to Oxford Economics. Overseas visitor numbers fell by 11.6%, with European arrivals dropping sharply.

The picture has darkened close enough to the quarterly "quiet period" that many travel-related companies have yet to quantify the impact, but airlines Delta and Frontier pulled financial guidance. All eyes are on United, which reports this afternoon.

With their fixed costs, airline stocks are especially sensitive to sudden drops in demand. Lower oil prices help, but their shares have been hardest-hit, falling nearly 40% on average since Inauguration Day. That comes after hefty gains in the previous year, so no carriers are obvious bargains yet.

Cruise lines, down 31% on average, could be a different story. Like airlines, they benefit from cheaper fuel. Unlike flights, cruises book well in advance, and passengers often prepay for experiences too.

Cruises also have become a relative bargain compared with land-based vacations since Covid-19. And, except for the pandemic itself, a near-death event for the industry, bookings have been surprisingly resilient during recessions. Norwegian told a Truist analyst of "choppiness" in recent weeks, but a nearly one-third-off sale on cruise shares might be enough of a margin of safety.

Timeshare stocks, down by a quarter, are trickier. They depend heavily on sales of prepaid vacations averaging around $24,000. Failing to convince enough people in those 90-minute presentations could hurt them: Industry revenue fell by 35% during the financial crisis, according to Hilton Grand Vacations.

Timeshare operators have diversified revenue sources like resort management fees, financing for those vacation purchases and, going back to their hotel roots, rentals of vacant units.

Hotel stocks themselves have gotten off lightly. Goldman Sachs analysts see pressure on revenue-per-available room from a simultaneous drop in business, government and leisure travel and downgraded Hyatt, Hilton and Marriott shares this week. Most still sport optimistic valuations.

Least-affected so far are online middlemen Expedia, Booking and Airbnb, which makes sense-they're asset light and braced for turbulence. Sadly, the same can't be said for every travel-related stock.

Stocks I'm Watching

Boeing : The aircraft maker's shares are lower in early trading after a report from Bloomberg that China has told its airlines to stop taking deliveries of planes it manufactures.

LVMH : Shares in the luxury bellwether dropped in Paris after its first-quarter sales missed expectations, weighed by trade tensions and faltering Chinese demand . Other luxury stocks also fell in Europe, including Burberry and Gucci owner Kering .

Allegro MicroSystems : Shares in the chip company dropped 12% premarket after On Semiconductor , known as Onsemi, said it was withdrawing its acquisition offer.

Stellantis : Auto stocks rallied in Europe and Asia after President Trump suggested the sector might get tariff reprieves . Stellantis shares advanced roughly 5% in Italy, while Toyota gained 3.7% in Japan.

Citigroup , Bank of America and Johnson & Johnson are due to report quarterly results before markets open. Earnings from United Airlines are scheduled for after the close.

MP Materials : Shares in the rare-earth company added another 5% premarket, after jumping 20% Monday, following a Financial Times report that President Trump plans to stockpile critical metals to counter China.

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About Me

My name is Spencer Jakab and I've been musing about money and markets for more than 30 years, including editing The Wall Street Journal's Heard on the Street column for a decade, writing two investing books and running a team of stock analysts at a global investment bank.

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April 15, 2025 06:52 ET (10:52 GMT)

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