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Revenge Travel Is Dead. What Comes Next.

Photograph by Ryan Segedi

Long lines. Crowded attractions. High prices. In a post-Covid world, people were willing to put up with these inconveniences and more, just to be able to explore the world again after a long period of lockdowns. Those days are over.

Take Kathryn Quigley, who has had her fill of bucket-list trips for now. While visiting Europe with her mother and two children for a long-delayed birthday celebration, the professor of journalism at New Jersey’蝉 Rowan University toured all of the Parisian highlights before coming down with a nasty case of Covid-19, despite her best precautions. The illness left her drained and just hanging on until the end of the vacation. The physical—and financial—toll of the trip means she’蝉 not eager to splash out on another dream destination soon: “After that, I told my kids if we do anything this summer, it will just be chill.”

She’蝉 not the only one. This summer, airfares dropped both month over month and year over year. And while some—particularly wealthier—sightseers are still jet-setting internationally, domestic travel has fallen. Yet people are willing to spend for the right trip. A recent PayPal survey found that nearly three-quarters of Americans are willing to change their daily spending so they can afford travel—forgoing things like alcohol, haircuts, and takeout food—and a quarter are willing to trade down to more budget-friendly locations.

The takeaway is obvious. Binge travel is out; bliss travel—meaningful, relaxing, frictionless trips for everyone who was run ragged by revenge vacations—is in.

“Travelers are being very intentional now about planning trips with a specific experience in mind,” says Mike Wagner, industry managing director of consumer brands for Acxiom, Interpublic Group’蝉 (ticker: IPG) data solutions division. “We’re now seeing a much bigger shift toward travelers who want to get to a destination and relax.”?

That makes sense. During lockdown, everyone spent time dreaming up their perfect trip, from big bucket-list blowouts to tropical getaways and exotic overseas adventures. So when restrictions were lifted, they were determined to go to all the previously off-limits places they could as quickly as possible, regardless of high costs, inconvenient delays, and huge crowds of other tourists with the same idea.

Yet that kind of revenge travel has led to plenty of burnout. Now people are looking to make meaningful memories with more intentional itineraries, without the crammed schedules, transit headaches, and overall stress—even when traveling on business. Bliss travel is as convenient, fulfilling, and relaxing as binge travel was frantic and rushed.

And what could be more relaxing than a cruise? The whole industry took a hit when Covid tore through ships and left them unwelcome at ports, and the Big Three— Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), and Royal Caribbean Group (RCL)—took on big debt to rebuild their fleets.

Yet several factors are stacked in cruise lines’ favor: Their prices are significantly lower than hotels and other onshore options, new ships are more efficient and attractive to travelers, and they’re popular for multigenerational trips. What’蝉 more, they allow travelers to relax when they want, see the sights whenever they wish, and not have to worry about the planning once they’re on board the ship. That’蝉 led to an explosion in demand, which in turn has bolstered strong operating cash flows that will help them deleverage. Their shares still haven’t regained prepandemic levels, despite notching big runs in the past year.

Royal Caribbean looks to be the best of the bunch. According to data from SimilarWeb, major cruise lines’ websites saw a 26.5% increase in traffic in July, the most recent month available, with Royal among the fastest-growing brands. The stock trades at a modest 11 times forward earnings despite recent blowout beat-and-raise earnings. Consensus calls for the company to finally return to profitability this year after Covid losses, with a 36% jump in earnings in 2024.?

Royal Caribbean has “a best-in-class portfolio of brands, destinations, [and] ships,” making it the only one of the Big Three worth owning, according to J.P. Morgan analyst Matthew Boss, who thinks it should trade to $139, up 60% from Tuesday’蝉 close of $86.78.?

Landlubbers will need to rest their heads too, and hotels need to be able to offer travelers a place to unwind, not just sleep. That’蝉 true even of business travelers, who are mixing their work and relaxation in a new trend called “bleisure,” made possible by the convergence of prices for both business and leisure stays. Marriott International’蝉 (MAR) investor day demonstrated a lot of what hotels are trying to accomplish. The company emphasized “the importance of a great sleep experience,” while also highlighting brands like Westin and the Design Hotels, which “emphasize lifestyle, wellness, and unique experiences.”

“We are leaning into products that help address the demand for blending work and leisure travel,” Julius Robinson, Marriott’蝉 chief sales and marketing officer for the U.S. and Canada, tells Barron’蝉. He notes the company has success attracting this cohort, as evidenced by “shoulder night” bookings on Sundays and Thursdays—before and after work commitments—as well as sleep tourism, which focuses on “rejuvenating sleep experiences” for overstressed guests.

Marriott’蝉 recent investor day was so good it even blew away skeptical analysts. J.P. Morgan’蝉 Joseph Greff said he came away “impressed” with everything from Marriott’蝉 benefits of scale to room growth, and “its [meaningful] ability to return capital to shareholders.” BMO Capital Markets’ Ari Klein noted that “optimism reigned” at the presentation, which offered a “largely upbeat outlook for global travel, delivering upside across most metrics through 2025.”?

Both analysts are sidelined on the stock, and Marriott remains out of favor on the Street, but analysts’ earnings estimates for 2023 and 2024 have been climbing over the past one, three, and six months, according to FactSet, and the consensus now calls for double-digit earnings per share growth this year and next.

“We have not seen signs of a lodging demand slowdown [amid] a continued want from consumers to spend on experiences,” says Marriott’蝉 Robinson, who notes guests are interested in personal, in-room pools and bespoke private dining.

Even large groups, whether business or otherwise, are looking for comfort and convenience when traveling. That has been a boon for Ryman Hospitality Properties (RHP), which owns the Grand Ole Opry and other assets in the tourist magnet of Nashville, as well as the Gaylord Rockies property in Colorado, popular with conventions and leisure travelers alike. Deutsche Bank analyst Chris Woronka believes the Colorado property will be “a key driver of Ryman’蝉 growth profile for years to come.” Truist Securities analyst C. Patrick Scholes named the stock a top pick as well.

Not only are Ryman’蝉 assets well known, but they also have pricing power, and the company is just starting to benefit from higher room rates that already cycled through much of the industry. Moreover, “there is a minimal number of large convention hotels,” says Scholes, “so Ryman doesn’t have to worry about new industry supply” driving down room prices.?

Yet despite these tailwinds, the shares’ price to funds from operations—a key metric for real estate stocks that accounts for factors like depreciation and dividend payouts—stands at just over 11 times, a fraction of its historical average.?

Airlines are the one area that can still separate travelers—and investors—from their bliss. The stocks rebounded quickly in late 2020 and 2021, but the big three— American Airlines Group (AAL), Delta Air Lines (DAL), and United Airlines Holdings (UAL)—are still trading below prepandemic levels. They have fallen on hard times recently, as jet fuel prices have risen and increased capacity has helped to push down fares. While other companies have been seeking to build loyalty, airlines seem to be devaluing it. Recent changes to Delta’蝉 SkyMiles medallion qualifications have made some fliers so angry it has been dubbed Skypocalypse, with conciliatory promises by management met with relative coolness. A Delta spokesperson says the company is constantly listening to customer feedback about potential changes, and noted its CEO recently made a statement to that effect.

For airlines, the key is to offer more than just points. That could be exclusive experiences or partnerships with other brands across the travel ecosystem: for example, a vacationer getting rewards for both the flight and hotel they booked, without the hassle of chasing down credit for each one separately.

That’蝉 especially crucial now, as “loyalty has dramatically changed,” says Acxiom’蝉 Wagner. “Before, brands counted heavily on people being invested in their accumulated status and points; they were complacent. Everything reset during the pandemic and now they have to re-earn that loyalty.”

Airline stocks have never earned that loyalty from investors—and it isn’t time to start giving it to them now.

Write to Teresa Rivas at [email protected]