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Key Travel Industry Trends: Tariffs, Economic Shifts, and Changing Consumer Preferences
Travel demand returns to normal amid a more cautious consumer spending environment.

Key Takeaways
Consumer Sentiment Decreases, Stoked by Fears of a Trump Recession.
Leisure Trips Continue at a Solid Cadence, While Interest in Business Travel Is Starting to Languish.
Advance Ticket Sales at Cruise Lines Remain Elevated, Providing Visibility on Interest in Leisure Travel.
The travel industry continues to benefit from consumers’ ingrained desire to travel, with remote work flexibility and the ongoing recovery in international and business travel. These factors have sustained robust travel spending, even as broader economic pressures loom.
Our latest Q1 2025 Travel Services Pulse provides an analysis of US travel industry trends, future outlooks, and more. Download now to uncover travel stocks in this evolving sector.
Discretionary spending on goods and services has largely balanced out over the past year, impacting travel-related spending growth. Over the last three months, real services spending has grown at an average rate of 2.9%, while real goods spending has risen by 3.4%.
Trump's tariff war is feeding rising inflation expectations, leading to moderating service spending growth
While inflation has remained stable, expectations for consumer price increases have risen in recent months and remain above the Federal Reserve’s 2% target. The Consumer Price Index, a key measure of inflation, stood at 2.8% in February, within its 2.4% to 3.0% range over the past nine months. However, consumer expectations for price increases surged to 4.9% in March, up from below 3% during the last six months of 2024.
Amid rising macroeconomic and geopolitical uncertainty, consumers have been saving more. The personal savings rate as a percentage of disposable income climbed to 4.6% in January, up from 3.8% in the prior three months. Personal savings totaled $1.01 trillion in January, a sharp increase from $767 billion in December.

Divergent trends in leisure and business travel sectors
During the last six quarters, consumers' intent to take vacations has been relatively consistent. In December 2024, 26% of consumers surveyed planned to buy a vacation in the next four months. This is in line with the 26% reported in December 2023. Support for leisure demand stands to benefit hotel, online travel, and cruise operators.

Source: Federal Reserve Bank of New York. Data of as March 2025.
Business conditions are expected to worsen over the next year, as shown in the University of Michigan index, which was at 84 in January 2025, down from 104 in January 2024. This could hurt firms with business exposure, like Sabre, Amadeus, and many of the hotel operators.

Source: University of Michigan. Data of as March 2025.
Advance ticket sales at cruise lines remain elevated
North American travelers often commit to cruising six months or longer in advance, providing cruise operators with near-term visibility on demand. The total deposits of four publicly traded cruise operators were more than $15 billion in the fourth quarter, which was up 4% over the prior year. This figure conveys a higher commitment to cruising than before the coronavirus pandemic (fourth quarter of 2019), when the four operators below held $10 billion in advance ticket sales.

Selective investment opportunities in travel stocks
EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization, is a key financial metric banks and investors use to assess a business’s performance. It provides a clearer picture of a company’s profitability by excluding non-operating expenses and accounting factors. Often used as an alternative to earnings, revenue, or income, EBITDA helps evaluate a company’s financial health and operational efficiency.
While Tripadvisor (TRIP) faces intense metasearch competition from Google and AI models, we believe this is already reflected in its valuation. We expect its metasearch revenue to stay below 2019 levels through 2034. However, Tripadvisor remains a leader in experiences and dining, where we forecast 10% annual revenue growth through 2034.
Carnival (CUKPF) also stands to benefit from sustained travel demand and pricing strength, with nearly two-thirds of 2025 already booked at historically high occupancy and pricing levels as of December 2024. Limited new ship deployments—one each in 2025, 2027, and 2028—should help manage capital expenditures, which we estimate will average $2.9 billion annually over the next decade. This should support new builds, refurbishments, and customer experience investments such as Celebration Key. Longer term, Carnival’s profit margins should improve through increased scale, targeted marketing, and a stronger brand mix, pushing adjusted EBITDA margins to 29% by the end of our forecast, above the 27% average from 2015-19.
Advisors can adopt a targeted approach, focusing on companies poised to benefit from sustained travel demand. Additionally, emerging markets and niche segments—such as adventure tourism—may offer untapped potential for diversification within investment strategies. Download the full report to discover our other top travel stock picks.
Positioning for growth in the travel and tourism sector
The travel industry is poised for steady growth in 2025, with key segments benefiting from rising demand and strategic tailwinds. Hotel sales are set to climb 5% on average, fueled by a rebound in group and international travel that supports stronger operator performance. Global distribution systems are expected to see 9% sales growth, driven by pricing gains and the continued recovery of business travel.
Online travel agencies should see sales increase by an average of 7%, supported by greater mobile adoption and the expansion of alternative accommodation options. The cruise industry is also on track for 7% sales growth, lifted by new capacity additions that reinforce the sector’s post-pandemic resurgence. As travel demand accelerates, these segments stand to benefit from shifting consumer preferences and industry-wide recovery trends.
Travel industry forecast
The Q1 2025 Travel Services Pulse provides critical insights for financial advisors navigating a recovering yet complex travel industry. Luxury hotels are thriving, air passenger counts are lagging retail sales growth in recent months, and selective stock opportunities require strategic evaluation. By aligning investment strategies with these trends, financial professionals can guide their clients toward promising avenues for growth in a rapidly evolving market.
Dive deeper into the Q1 2025 Travel Services Pulse to uncover strategic opportunities in niche travel markets, emerging trends, and the latest data shaping the travel and tourism sector.