As analysts expect Thanksgiving travel to topple records, the industry as a whole is toppling records. 

Millions of Americans flew somewhere for Thanksgiving. The U.S. Global Jets ETF (NYSEARCA: JETS) has rallied 12.53% in November after three months of declines, in line with the broader market. 

The ETF’s top components are American Airlines Group Inc. (NASDAQ; AAL), Delta Airlines Inc. (NYSE: DAL), United Airlines Holdings Inc. (NASDAQ; UAL) and Southwest Airlines Co. (NYSE: LUV).

Those airline stocks have all traded higher in recent weeks, but are still underperforming the broader market in the medium term. 

Other sectors of the travel industry have also traded higher. The hotel industry, as a whole, has been moving up in the past month, outpacing the SPDR S&P 500 ETF Trust (NYSEARCA: SPY). 

Hotel stocks check in with strong returns

The largest hotel stocks are Marriott International Inc. (NASDAQ: MAR) and Hilton Worldwide Holdings Inc. (NYSE: HLT). Both of those are outperforming the S&P 500 in November. 

But softening demand for travel in the U.S. has already put a dent in travel stocks, which skidded in the past three months. Rising costs also hurt the outlook for travel stocks. 

As demand for domestic leisure travel is waning as the “revenge travel” wave subsides, holiday-season travel assumes a new importance as a driver of revenue and earnings.

With the busiest holiday season travel still to come in December, investors are clearly encouraged about the potential for travel demand. 

The Transportation Security Administration anticipates screening 30 million passengers in the days between Nov. 17 and Nov. 28. 

TSA expects busiest holiday season ever

In a statement, TSA Administrator David Pekoske said, "We expect this holiday season to be our busiest ever. In 2023, we have already seen seven of the top 10 busiest travel days in TSA’s history.”’

The data for the part of that period that’s already passed indicate that the forecast may come to pass. 

But there are mixed signals.

For example, Marriott Vacations Worldwide (NYSE: VAC) has seen slowing earnings and revenue growth. Analysts expect the company to earn $7.51 a share this year, a decrease of 27%.

MarketBeat’s Marriott Vacations Worldwide analyst forecasts show that Bank of America downgraded the stock on November 17, and lowered its price target to $65 from $125. 

Two days earlier, Truist Financial slashed its price target to $149 from $187. 

Disappointing earnings from timeshare company

In its report, Bank of America cited disappointing third-quarter earnings for Marriott Vacations, which is a completely separate entity from the Marriott Hotel chain. Marriott Vacations is a timeshare company that was split off from Marriott International in 2011. 

Bank of America analysts said vacation ownership outside of Maui has been struggling, credit delinquencies are weighing on margins, rentals are facing higher costs from double-digit homeowners association fees, and other costs, including financing costs, are rising.  

Analysts see those issues continuing into 2024.

While vacationers may be tightening the purse strings, there are signals that corporate travel appears to be making a comeback. 

Business travel to surpass pre-pandemic levels

According to the Global Business Travel Association’s most recent forecast, “The industry has rebounded at a more accelerated rate than expected just a year ago and is now expected to surpass its pre-pandemic spending level of $1.4 trillion in 2024 and grow to nearly $1.8 trillion by 2027.”

In 2022, global business travel spending rose 47% to $1.03 trillion, with strong gains continuing and 32% growth expected in 2023. 

The association cited “recession risks that have yet to happen” among factors driving the growth, but economic weakness could, of course, put the kibosh on much of the planned travel. 

Airline and hotel stocks would be the main beneficiaries of a business travel revival. Hotel chains such as Marriott, Hilton, Hyatt Hotels Corp. (NYSE: H) and InterContinental Hotels Group (NYSE: IHG) with loyalty programs aimed at business travelers should attract those customers hitting the road again.