How to profit from the global leisure and travel boom

In March 2020, the global leisure and travel sector spluttered to a sudden halt as the coronavirus pandemic spread around the world. International travel dropped by more than 99% almost overnight; shares plunged and companies rushed to secure cash. The nightmare lasted throughout the rest of the year. Despite some easing of restrictions, activity in the UK and US leisure sectors ended the year down around 50% year on year.

However, while the shutdown initially appeared to be terminal for the sector, the pandemic marked the beginning of a global tourist gold rush. According to Boston Consulting Group (BCG), travel for leisure was worth $4 trillion a year globally in 2019. That number hit $5 trillion in 2024, up 25% in five years despite the pandemic. And growth is not expected to slow. BCG estimates the global market will hit about $8 trillion by the end of the decade and $15 trillion by 2040.

As the leisure and travel market has grown over the past five years, it has also changed dramatically. Pre-pandemic, travel spending followed GDP closely, but the market has since experienced a decoupling as consumers increasingly prioritise “memorable experiences” over material goods. The so-called “experience economy” is now a multi-trillion-dollar industry, with research from Barclays putting the size of the market at $5.2 trillion to $8 trillion, with projections showing it could reach $12 trillion or more by 2028-2035. The “experience economy” is not the same as the global leisure and travel industry, but there's a high level of overlap. It represents a significant shift in consumer spending, where people prioritise unique, shareable “moments” (travel, dining, events) over physical goods, which goes some way to explaining why leisure travel has had such a resurgence.

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Why are leisure and travel becoming so popular?

There are two main tailwinds driving these shifts. The first is the demand for experiences over material goods by the millennial generation. Barclays estimates that roughly three-quarters of millennials want to spend on experiences rather than products, and the income across this group is growing faster than the rest of the economy.

Data compiled by the US Federal Reserve Board's Survey of Consumer Finances, for example, shows that those born in the 1990s saw their median wealth more than quadruple to $41,000 over the three-year period between 2019 and 2022. In 2024, millennials' net worth increased by 12.74% in 2024, while Generation X and Boomer wealth rose by 6.5% and 2.7%, respectively. All told, millennials had accumulated $15.25 trillion as of the second quarter of 2024. That's up significantly from $3.93 trillion just five years earlier. The wealth of Generation Z (born between 1997 and 2012) is growing even faster, up nearly 22% on average in 2024.

These figures are related to the US, where a combination of rising equity markets, property prices and wage growth has helped the two younger cohorts. However, similar trends have been observed around the world, where it's not just the rise of the millennial consumer that's driving growth, but the growth of the middle classes as a whole. According to Oxford Economics, the middle-class population in emerging markets is set to double over the next decade, expanding from 354 million households in 2024 to more than 670 million by 2035.

The World Economic Forum notes that, by 2030, 70% of new middle-class households will be in Asia, with China and India leading the trend, and the number of households with an annual disposable income of $45,000–$100,000 (at purchasing power parity) is rising by 5.6% annually. By 2035, more than a billion additional people will join the global consumer class, with four out of five coming from emerging markets.

K-shaped growth in spending

The second tailwind is the so-called K-shaped growth of consumer spending. The middle classes might be spending more on experiences in aggregate, but it's the rich who are really spending the most on travel and leisure. According to new research from Resonance Consultancy, the top 10% and top 1% of American households now account for more than half of all US consumer spending, and collective leisure expenditure is projected to reach $544 billion in 2026 – a little more than 10% of the total global market.

The top 10% of households by income ($240,000 to $600,000 per year) are expected to take 4.3 leisure trips in 2026 and spend an average of $7,900 per trip, up from $5,100 in 2022. Meanwhile, the top 1% (income of $600,000 plus with a net worth or $13 million or more) are expected to take six trips in 2026 and spend an average of $12,400 per trip, up from $8,400. In contrast, the consultancy estimates the average American consumer takes around 2.8 trips on average per year and spends $3,700.

And it's not just rich Americans that are driving the trend. The global jet-setting class is powering the industry worldwide, driving up demand for high-end travel experiences. What's more, consumers of all income groups seem reluctant to cut spending on travel and leisure, no matter how tough the economic outlook might appear.

A recent survey from ABTA, the travel-trade association, found that travel would be the last area consumers would cut back on due to cost-of-living challenges. Just 32% of respondents said they would reduce holiday spending – a smaller proportion than would cut out gadgets, clothes, eating out or leisure activities such as going to the cinema. The same is true for consumers in the US, where a recent YouGov survey showed that 71% of consumers prioritise travel spending even when cutting back on other discretionary areas such as dining out or fashion.

How can investors profit from the leisure boom?

There are multiple ways for investors to ride the trend. The first is to buy in to the airline sector, which is not for the faint of heart. Airlines are highly competitive, operating on razor-thin profit margins. Rising fuel costs or fare wars can wipe margins out overnight, leaving carriers desperate for income to cover aircraft lease costs or with debt built up from acquiring fleets. Independent carriers also have to contend with state-backed players, which can afford to run routes at a loss. While some airlines, such as easyJet, Jet2 and British Airways (owned by FTSE 100 group IAG) have managed to diversify their income streams by expanding into the package holiday market, it's not enough to remove the risks outlined above. In my view, Tui also falls into this market.

In many respects, the global cruise industry has to deal with the same headwinds. The likes of Carnival Corporation (NYSE: CCL), Royal Caribbean Group (NYSE: RCL) and Norwegian Cruise Line Holdings (NYSE: NCLH) all operate in a highly competitive market and there are ongoing issues with capacity. Fuel costs are also a major headache. Carnival recently said its fuel costs could rise by 40% in the current quarter, and despite a record number of bookings, it has had to cut its outlook as a result. Like airlines, cruise firms also tend to carry a lot of debt in order to build the massive vessels required to operate in the business.

The one exception to this rule is Lindblad Expeditions Holdings (Nasdaq: LIND). This company is best known for its long-standing strategic partnership with National Geographic, which gives it access to some of the world's most exclusive travel experiences. It maintains a fleet of 23 owned and chartered vessels, including state-of-the-art polar ships such as the National Geographic Endurance and National Geographic Resolution, some of the only vessels in the world to have the rights to explore regions of the world such as the North and South Poles and the Galapagos Islands. It has also inked a strategic partnership agreement with Disney, and sales via this channel grew 35% in the last quarter.

Lindblad has tapped into the high-end experience market with its unique offering and it shows in the numbers. In the fourth quarter of last year, the firm reported net yields of $1,279 per guest per night, up 11%. That compares with a yield of around $190 per night for Carnival cruise customers (the firms use different metrics to report these numbers, so they are not direct like-for-like comparisons).

Park your profits in the hotel industry

One of the most attractive segments of the industry is the hotel market. This is dominated by the likes of Marriott International (NYSE: MAR), Hilton Worldwide Holdings (NYSE: HLT), Hyatt Hotels Corporation (NYSE: H) and InterContinental Hotels Group (LSE: IHG). All of these companies have developed an asset-light, fee-driven business model in which they outsource hotel purchases to operators who manage the hotels under something akin to a franchise agreement. The financial results of this model have been outstanding. Over the past 15 years, Marriott has compounded at 15.7% per annum on a total-return basis. In 2025, Marriott reported revenue of just over $26 billion, with an operating margin of 15.8% and a return on capital invested – a measure of profit for every dollar invested in the business – of nearly 25%.

As the business required little capital investment to open new hotels, most of its operating cash flow was returned to shareholders. It generated $3.2 billion in operating cash flow and reinvested $1 billion into the business. It then returned $4 billion to investors through share buybacks and dividends, using debt to bridge the gap between cash flow and shareholder returns. That's been the approach for most of the past five years. Globally, the firm reported gross room additions of 100,000 units in 2025 and has a record pipeline of about 4,100 properties and nearly 610,000 rooms. The company is leaning into all-inclusive and ultra-luxury segments, targeting the high-spending cohorts of the market and the experience economy.

The same is true at Hyatt Hotels. The hotel group ended 2025 with comparable system-wide revenue per available room, (or RevPAR, a key hotel metric) growth of 4%. More importantly, all-inclusive resorts' RevPAR for packages was 8.3%, driven by strong demand. The firm is also leaning into the luxury and all-inclusive trends with the purchase of three Alua resorts for $140 million last year. It also bought Playa Hotels & Resorts in 2025, bringing 15 all-inclusive resorts across Jamaica, the Dominican Republic and Mexico to its all-inclusive portfolio. A few months later, it sold the portfolio to Tortuga Resorts, a real-estate and asset-management platform, for $2 billion, retaining a 50-year management agreement for 13 of the 15 resorts in the portfolio (as well as other incentives) as part of its asset-light structure.

IHG, one of the few London-listed players, is leaning into the growth of the middle class in emerging markets. In 2025, the group opened a record 443 hotels and added another 694 to its pipeline, including the highest-ever hotel openings and signings in Greater China. It has 6,900 open hotels and a further 2,300 in the pipeline, roughly a third of its existing estate.. Unsurprisingly, it's also leaning into luxury. Last year, it launched its Noted Collection, “curated for distinct points of view and cultural relevance”. This will sit alongside other IHG premium brands such as Vignette, Voco, Garner and Ruby, which launched last year.

Accor (Paris: AC), which owns 5,800 hotels, has long promoted luxury experiences for guests and this is now paying off handsomely. In 2025, RevPAR grew just 2.4% in constant currency terms at its mid-market brands, but its luxury and lifestyle division (around half the size) reported growth of 9.8%. Resort hotels remained a key contributor to growth, particularly in Turkey, Egypt and the United Arab Emirates, while its “Lifestyle Collective” hotels recorded record growth. Its brands recorded recurring growth in earnings before interest, taxes, depreciation, amortisation (Ebitda) of 20%.

Buy into the resort market

The other exciting segment of the market is the resort market, and I've saved the best until last. Vail Resorts (NYSE: MTN) and Compagnie des Alpes (Paris: CDA) are the US and European leaders respectively of the global skiing market. Vail is the largest ski resort operator in the world. It owns legendary spots such as Vail, Beaver Creek, Whistler Blackcomb and Park City, operated on multi-decade leases with some of the best skiing real estate in the world. What's attractive about both of these firms is their unique selling point – mountain leases. More importantly, they own the rights to restaurants, hotels and shops around the slopes. Vail has been able to capitalise on its position in the market among a core group of customers with its Epic Pass, which provides a stable income in what can be a cyclical industry. It has grown revenue from this pass at a 15% compound annual growth rate since its inception in 2008 to more than $1 billion.

The Epic Pass, like most other resort passes, is based on the one offered by Disney. The company that pioneered the theme parks we know today, the Walt Disney Company (NYSE: DIS) introduced the first park pass in the 1950s, with physical coupon books. These then became unlimited “passports” and then the FastPass system launched in 1999 to reduce waiting times, evolving into digital FastPass+ in 2014, and finally the paid “Lightning Lane” systems. Disney pioneered the theme park, but today, its theme-park business is buried within the Disney company, alongside a bunch of other not-so-attractive assets, such as the tough streaming business. Capital spending commitments of $60 billion to expand its cruise and parks offer could weigh on earnings for the foreseeable future.

Instead, investors should take a look at Japan's Oriental Land Co. (Tokyo: 4661). This company operates Tokyo Disney Resort, one of the most profitable theme-park operations globally. It also owns the exclusive licence for Disney intellectual property in Japan until 2076. Sales at theme parks and its hotels business recently hit all-time records, and it's planning to introduce more rides and flexible tickets over the coming years to capitalise on the experience economy.

Six Flags Entertainment (NYSE: FUN) is one of the largest theme-park operators in the US, but is struggling to return to growth due to operational issues. Following its merger with Cedar Fair and an attempt to go upmarket, coupled with a hike in ticket prices, attendance slumped by 13%. With a mountain of debt to deal with from the merger, Six Flags has resorted to cost-cutting, further alienating customers. It's a case study in what can go wrong in this market.

Other ways to invest in the leisure sector

Elsewhere, it could be worth looking at Banyan Tree (Singapore: B58), one of the world's leading independent, multi-brand hospitality groups centred on stewardship and wellbeing. It has a portfolio of 100 high-end hotels, resorts, spas, galleries, golf courses and residences, and last year revenue jumped more than 25% year on year, with core operating profit up 59%.

MGM Resorts International (NYSE: MGM), Las Vegas Sands (NYSE: LVS), Wynn Resorts (Nasdaq: WYNN) and Galaxy Entertainment (Hong Kong: 0027) are all players in the casino and luxury resort markets. Wynn is the leader at the luxury end of the market – indeed, the company calls itself the “world's only global luxury integrated resort developer and operator”. In its core Las Vegas market, Wynn's RevPAR is roughly 2.3 times the industry average and has grown 118% since 2019. Management is quite comfortable with its offering being the most expensive on the strip. The company has indicated a strategy of maintaining premium brand positioning and rates rather than granting discounts during weaker market periods. It's also been able to tie customers down with the Wynn Rewards loyalty scheme, which makes it less attractive for customers to switch brands. The system offers customers benefits if they stay and spend, encouraging repeat business.

Las Vegas is, however, no longer the group's largest market. That crown has recently gone to China's Macau, which is now roughly 15% bigger for the group in terms of earnings before interest, taxes, depreciation, amortisation and restructuring (Ebitdar). Wynn is also opening a new resort in the UAE, Wynn Al Margan Island, the region's first integrated resort, which could add $345 million of Ebitdar in Wynn's “base case” scenario (compared with $1.1 billion for Macau) or as much as $460 million in the “high case”. Wynn is currently spending heavily on capital projects, but it's still highly cash-generative and has retired 12% of its shares over the past three years through share buybacks. With the completion of Al Margan just around the corner, there's scope for cash flow and returns to jump in the coming years.

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