Despite the economic and geopolitical uncertainties, the travel industry’s long-term prospects look bright, thanks to pent-up demand for leisure travel. Amid this backdrop, investors could watch travel stocks Royal Caribbean Cruises Ltd. (RCL – Get Rating), Carnival Corporation & plc (CCL – Get Rating), and Norwegian Cruise Line Holdings Ltd. (NCLH – Get Rating) witnessing surprising growth and momentum.

With the easing of pandemic travel restrictions, the travel industry has experienced a steady rebound in performance. Pent-up demand for leisure travel created a wave of demand for hotels, airlines, and cruise lines throughout 2021 and most of 2022.

According to the World Travel & Tourism Council (WTTC), the travel and tourism sector grew 22% year-on-year to reach $7.7 trillion last year despite the economic and geopolitical headwinds. This recovery represented nearly 7.6% of the global economy in 2022, the highest industry contribution since 2019. In 2021, the sector rose 24.7% year-over-year.

Moreover, WTTC’s 2023 Economic Impact Research (EIR) shows the global travel sector this year is projected to reach $9.5 trillion, merely 5% below 2019 pre-pandemic levels when travel was at its highest. Moreover, 34 countries have already exceeded 2019 levels. The Chinese government’s decision to reopen its borders will propel the sector’s growth.

“By the end of the year, the sector’s contribution will be within touching distance of the 2019 peak. We expect 2024 to exceed 2019. Travel & Tourism will be a growth sector over the next ten years,” said Julia Simpson, WTTC President & CEO.

Demand for leisure travel is on the rise as it enhances the physical, mental, and emotional well-being of individuals. As per a report by IMARC Group, the global leisure travel market size is expected to reach $1.33 trillion by 2028, exhibiting a CAGR of 8.1%. Improved lifestyle standards are providing an impetus to the market.

Furthermore, the growing integration of AI, IoT, and big data analytics in the tourism industry is expanding the leisure travel market. Moreover, with the ever increasing penetration of social media among millennials, leisure travel has become a sign of social status, resulting in increased spending on leisure travel activities.

Other factors, including government initiatives like America’s Outdoor Recreation Act of 2023 and the widespread awareness regarding accessible online booking services, must contribute to the travel sector’s growth.

The cruise industry continues to be one of the fastest-growing travel and tourism sectors. Based on the Cruise Lines International Association’s (CLIA) 2023 State of the cruise industry report, cruise tourism is projected to reach 106% of 2019 levels in 2023, with 31.5 million passengers sailing. The number is expected to jump to 36 million by 2024, 37.2 million by 2025, and 39.5 million by 2027.

Meanwhile, according to a report by Market.Us, the global cruise market size is estimated to reach $22.80 billion by 2032, growing at a CAGR of 11.5%.

Given the industry’s bright growth prospects, travel stocks RCL, CCL, and NCLH, with solid growth and momentum attributes, could be ideal additions to one’s watchlist.

Let’s discuss the fundamentals of these stocks in detail:

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