Even after months of soaring inflation, Americans are still packing their bags and taking trips. With the spring break season fast approaching, that is nice news for travel corporations. “Demand stays strong as passengers return to the skies and industry returns to the long-term trend to GDP, all while supply constraints proceed,” Delta Air Lines CEO Ed Bastian said on the corporate’s fourth-quarter earnings call in January. “I feel our industry will see tens of billions of dollars of incremental demand in the subsequent few years coming out of the pandemic.” And it isn’t just airlines. Last week, Hilton Worldwide CEO Chris Nassetta said, “The demand trends here and now are really strong.” The hotel operator reported better-than-expected earnings and revenue growth within the fourth quarter. In the house-rental space, Airbnb also said it was seeing continued strong demand firstly of 2023. The corporate also reported a fourth-quarter earnings and revenue beat earlier this week. “Global travel has really rallied this yr; it’s outpacing the broader market,” said Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs. The firm has a travel exchange-traded fund (CRUZ) that invests in airline, hotel and cruise stocks. The ETF has a complete return of nearly 21% yr up to now, as of Feb. 16, based on Morningstar. As compared, the S & P 500 has gained about 6% to date this yr. CRUZ YTD mountain CRUZ’s year-to-date performance “The patron continues to be spending, they usually’re spending more in services and experiences than they’re in goods,” Jablonski added. “The inflation can be there. So those corporations are benefiting from having that pricing power and having the patron that may actually spend.” China’s reopening from its Covid lockdown can be helping propel travel demand, in addition to the tick up in business travel, she said. Pricing pressures Yet there are some nuances. Short-term vacation rentals aren’t growing as fast as they once were. Short-term rental analytics site AirDNA is forecasting a 5.5% increase in demand this yr, compared with an estimated 21.1% gain in 2022. Airbnb’s most up-to-date results bear that out. On a constant-currency basis, the corporate’s average day by day rates for the fourth quarter were up 5% yr over yr. That is lower than the 12% third-quarter growth and 20% surge it enjoyed in the identical period the yr prior. “For the rest of the yr, we expect [average daily rates] will face increasing downward pressure from mix shift, in addition to latest and improved pricing and discounting tools,” Airbnb’s management said in its shareholder letter . Several Wall Street analysts voiced some concern concerning the stock. The shares have made impressive gains for the reason that start of this yr, climbing nearly 54%. However the stock pulled back on Friday, dropping 8%. “Risks include competition, slower-than-expected consumer adoption of different accommodations, potential reacceleration in core short- term stays, and faster-than-expected rollout of ancillary revenue streams,” Credit Suisse analyst Stephen Ju wrote in a note Wednesday. JPMorgan analyst Doug Anmuth noted Airbnb’s potential image issues. “Airbnb is built on the concept of trust, so negative behaviors of hosts and/or guests could negatively affect Airbnb’s repute and public perception,” he wrote in a note Wednesday. The easing in price growth can be being seen in Vrbo. Expedia , its parent, said it has seen “somewhat little bit of movement in Vrbo” pricing, despite strength all over the place else. The corporate, which missed on earnings and revenue for the fourth quarter, identified that Vrbo is coming off really high levels. Expedia said its earnings results were affected by cancellations attributable to bad weather, like Hurricane Ian last fall and December’s winter storms. CEO Peter Kern told CNBC’s “Tech Check” last week that the corporate has seen lodging gross bookings grow by 20% in January. “The trends have been really strong since January,” he said. “There’s just been a ton of demand.” A distinct story with hotels At the identical time vacation rentals are seeing pricing pressure, hotel room rates proceed to maneuver higher. “We went from this era of lagging pre-Covid levels and we have seen a fairly drastic and significant acceleration,” said Rene Reyna, head of thematic and specialty product strategy for Invesco. The Invesco Dynamic Leisure and Entertainment ETF (PEJ) is currently composed of about 10% airline stocks, 30% restaurants, 40% hotels, casinos and booking, and 20% entertainment and streaming, he said. Along with Hilton, Hyatt , Wyndham and Marriott all topped Wall Street’s expectations of their most up-to-date financial reports. Hyatt saw its fourth-quarter revenue per available room (RevPAR), a key performance metric, grow by 34.8% from the identical period within the prior yr. It was even higher than pre-pandemic levels, up 2.4% versus the fourth quarter of 2019. On an annual basis, RevPAR rose 60.2% in 2022 compared with 2021, but was down 6.1% for the complete yr compared with 2019. Wyndham’s fourth-quarter global RevPAR grew 15% the year-ago period in constant currency, and was up 20% yr over yr. Meanwhile, Marriott’s worldwide RevPAR grew 5% compared with 2019, driven by a 13% increase in the common day by day rate. “Except Greater China, RevPAR in all regions greater than fully recovered and continued to indicate meaningful advances in occupancy and ADR,” said Marriott CEO Anthony Capuano in an announcement. Defiance’s Jablonski likes Marriott for its strong balance sheet, good management and various properties. “They profit from the whole lot from higher-end, luxury consumers and a few of their more unique properties,” she said. So why the divergence between hotels and short-term vacation rental platforms? A part of the reply could also be that with people re-emerging from Covid isolation, the will to vacation away from crowds could also be fading. “Hotels have been making up ground and I believe we’re attending to a rather more normalized level,” Expedia CEO Kern said. “In omicron, everybody was keenly focused on going away but going somewhere secure. Now individuals are going back to resorts, back to anywhere, back to big cities,” he added. “You are seeing some normalization there, but Vrbo continues to be much stronger than it was in 2019.” Airlines taking off There has also been positive news coming from the airlines. In accordance with the International Air Transport Association, the worldwide airline industry should return to profitability this yr. The group estimates airlines will earn $4.7 billion — the industry’s first profits since 2019, when it earned $26.4 billion. Airlines like Delta, American Airlines and United Airlines cited strong travel demand and better fares for fueling their strong fourth-quarter earnings — in addition to for forecasts for this yr. “We expect a robust demand environment to proceed in 2023 and anticipate further improvement in demand for long-haul international travel this yr,” American Airlines CEO Robert Isom said throughout the earnings conference call in January. For Jablonski, Delta and United stand out as winners. “You’ve gotten strong balance sheets, you could have a reset in like staff and enough airplanes,” she said. DAL YTD mountain Delta’s year-to-date performance Rental automobile corporations, alternatively, have not seen much movement in rates. Last week, Hertz said its revenue per day rose 3% yr over yr, and just 1% within the Americas region. Avis Budget ‘s Americas division saw a 3% yr over yr bump. Looking ahead Investors are actually just watching and waiting to see what the Federal Reserve’s next move is with rates of interest and whether or not the U.S. goes into recession. “Within the near term, we’re seeing very positive results. And so you already know, it’s really the second half of the yr, I believe that is going to be difficult,” said Invesco’s Reyna. If a recession does hit sometime this yr, it’ll impact corporations in another way, he noted. “There’s very various kinds of consumers on the market,” he said. “Depending on what the sweet spot for consumers for a few of these corporations, I believe it’s really going to dictate how much of an impact inflation or recession can have on their businesses.” Those that focus on a higher-end consumer may not feel much pain, he said. “In a difficult economic backdrop, this segment tends to be somewhat more resilient,” he said. —CNBC’s Robert Hum, Seema Mody and Michael Bloom contributed reporting.