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As the new year approaches, many travelers are eager to make plans for upcoming business trips and leisure travel. The months leading to January often see a travel surge, driven by New Year's celebrations, winter holidays and the desire for winter getaways.
This allows investors to capitalize on the growing demand for travel-related services. Historically, the period between the end of the holiday season and the beginning of the new year has been one of the busiest times for airlines, hotels and travel agencies, making it an ideal window to focus on stocks poised to benefit from the uptick.
After years of navigating challenges from pandemic-related disruptions to geopolitical tensions, the sector is now on firmer ground. Rising disposable incomes, particularly in emerging markets, are enabling more people to travel, whereas a shift in consumer preferences toward experiential spending is fueling the demand for leisure and adventure travel.
Americans Plan to Spend More on Travel in 2025
The latest Portrait of American Travelers report by MMGY reveals a growing willingness among U.S. adults to prioritize vacations in the coming 12 months. According to the winter edition of the report, nearly 80% of Americans plan to go on at least one vacation in 2025, marking a 7% rise from that recorded in winter 2023.
In addition to the growing number of travelers, Americans are preparing to allocate significantly larger travel budgets. The average vacation spending is projected to reach $5,051 per traveler, reflecting the willingness to indulge in more elaborate travel experiences.
The report also highlights a trend toward more frequent travel in 2025. On average, Americans are expected to take more than four trips per person, signaling a robust recovery in the travel sector, and an enduring desire for exploration and leisure.
As we approach 2025, investors seeking to capitalize on this momentum can look toward key travel stocks that stand to benefit from these trends. Companies like Trip.com Group Limited TCOM, Royal Caribbean Cruises Ltd. RCL, Carnival Corporation & plc CCL and Southwest Airlines Co. LUV are better positioned to gain from the aforementioned factors.
Image Source: Zacks Investment Research
4 Travel Stocks Worth Considering
Trip.com Group: The company is benefiting from robust domestic and international travel growth. With rising consumer confidence and a stronger enthusiasm for travel, TCOM remains optimistic about sustained growth of the travel industry. It believes that advancements in AI-driven technologies will significantly influence and redefine the future of the global travel landscape.
TCOM, currently flaunting a Zacks Rank #1 (Strong Buy), has gained 117.9% in the past year. The company’s 2025 earnings per share (EPS) estimates have risen to $3.98 from $3.77 over the past 30 days. Earnings for 2025 are expected to grow 7.3%. Then again, sales in 2025 are likely to witness year-over-year growth of 15.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Southwest Airlines: The rising demand for air travel is a positive driver for the company's revenue growth. It is trading under the ticker LUV and is leveraging its revenue-management initiatives, including network optimization, capacity moderation, and advancements in marketing and distribution. These measures are expected to enhance yields on its top-performing routes. Southwest is also focusing on operational efficiency through strategies such as minimizing hiring, optimizing scheduling, improving corporate processes and seizing supply-chain opportunities.
Shares of the company have gained 11.1% in the past year. LUV sports a Zacks Rank #1 at present. The company’s 2025 EPS estimates have increased to $1.60 from $1.55 over the past 30 days. Earnings for 2025 are expected to surge 107.4%.
Royal Caribbean: The company is benefiting from strong cruising demand from new and loyal guests, and robust booking trends. Also, strong onboard and pre-cruise spending by consumers bode well. Going forward, the company emphasized investing in a modern digital travel platform to streamline the vacation booking process for customers and expand wallet share.
RCL is highly optimistic about the demand and pricing landscape for 2025. The company's flexible sourcing model, AI-driven yield management tools and brand appeal enable it to attract a wide array of guests, including younger demographics and higher-yielding customers. As of Sept. 30, 2024, Royal Caribbean had $5.32 billion in customer deposits compared with $5.31 billion in the prior-year period.
RCL currently carries a Zacks Rank #2. It has gained 95.4% in the past year. The 2025 EPS estimate has increased to $14.42 from $14.18 over the past 30 days. Earnings for 2025 are expected to grow 23.8%. Sales are likely to witness year-over-year growth of 9.5% in 2025.
Carnival: Sustained demand strength, increased booking volumes at significantly higher prices and the base loading strategy continues to drive the company’s performance. In third-quarter fiscal 2024, Carnival reported a solid booked position for the remainder of the year, with pricing and occupancy considerably higher than the 2023 reported level. Also, the focus on marketing campaign efforts bodes well. Going forward, the company plans to make investments in fleet modernization to drive growth.
Shares of the company have risen 37.5% in the past year. CCL currently carries a Zacks Rank #2. The 2025 EPS estimate has increased to $1.74 from $1.66 over the past 30 days. Earnings for 2025 are expected to grow 29.5%.