Cruising brightens travel demand

Overall travel demand peaked post-election in December 2024 and slowed dramatically by March 2025. Uncertainty following Liberation Day tariffs slowed vacation planning, with both leisure and corporate bookings taking a big pause. Airlines were forced to withdraw full-year earnings outlooks back in April while hotel companies lowered revenue guidance. As uncertainty has eased, early summer activity showed some green shoots with improvement in the BAC aggregated debit and credit card airline spend data and an acceleration in the number of travelers passing through airport security checkpoints. Meanwhile, international travel is still hot, especially in Asia Pacific ex-China and Europe, where there are some signs that outbound travelers are staying closer to home, even while well-heeled U.S. travelers continue to travel abroad. 

We are seeing a clear pattern across travel categories of elevated spend for higher-income consumers and premium price points but some weakness at the low end. For airlines, premium revenue growth is meaningfully outpacing the main cabin, while in hotels 4- and 5-star luxury properties are still seeing growth, even while drive-to-leisure-focused motels are under pressure. We expect corporate and group activity to accelerate in the fall as macro uncertainty subsides, but low-end travel still has some headwinds, with hotels facing tough comps as we lap hurricane and post-election demand from last fall.  

Two places consumers may be finding some value are cruise lines and regional gaming. The all-inclusive experience, pricing certainty and broader demographics continue to drive strength in cruise lines, which have seen the best growth of all the travel verticals within our BAC debit and credit card data in 2025. We believe cruising offers a good value relative to other vacation options, which should be able to drive low- to mid-single-digit pricing power the next few years and support solid earnings growth. After a tough 2024, regional gaming has also been relatively resilient, possibly indicating a preference for staying closer to home. But one place where value might be fading is Las Vegas, where after several years of outsized strength, we are seeing signs of fatigue through declining visits and pressure on room rates.