“Wherever you go becomes a part of you somehow.” ― Anita Desai
Chart of the Day
Good morning!
The travel industry entered the year optimistically, with Deloitte forecasting that “travel demand is expected to remain strong in the year ahead. Yet as we approach Memorial Day and the beginning of the busiest travel season of the year, things have changed. Between stories of tourists getting arrested at the border and President Trump’s trade war (accompanied by antagonistic and, in some cases, even militant rhetoric), the U.S. brand lost some of its luster as the year progressed, and the U.S. itself lost some of its appeal as an international travel destination. In fact, for the first time in decades, the U.S. is projected to run a travel-related trade deficit rather than a surplus, according to a U.S. Travel Association analysis.
At first there was some hope that this was just alarmist thinking: As recently as April 30, analysis by The New York Times suggested that the damage might be minor, pointing out that year-to-date international arrivals at U.S. airports this year were coming in at roughly comparable levels to prior years (though there were some noticeable sharp year-to-year differences when breaking down by country of origin).
Yet amongst industry experts, what little optimism there once was has faded further. There’s still a chance of a turnaround for August (a common travel month for Europeans), as such trips are most frequently booked about nine to 10 weeks ahead of time – that is to say, right around now. But Adam Sacks, president of the research firm Tourism Economics, doesn’t think so. He originally projected a 9% increase in international arrivals to the U.S. but now projects a 9.4% decline. “I expect as we get into May, June and July the effects will be more pronounced,” he told The New York Times. The World Travel & Tourism Council told Bloomberg News earlier this month that U.S. revenue from foreign tourists is now projected to decline $12.5 billion, or 7%, this year. Notably, the U.S. is the only country projected to see declines in international tourist revenue this year.
Glass-half-full industry observers had suggested that domestic demand for travel was rising and strong enough to offset most if not all of the revenue that the U.S. travel and hospitality industry might lose from fewer foreign tourists honoring us with their visits. It does stand to reason that if international demand slackens, providers might lower prices to entice domestic vacationers, and some evidence suggests that this is taking place. The latest CPI data (for April 2025) showed MoM and YoY declines for both the “lodging away from home” (hotels) and “airline fares” components.
But amidst declining consumer sentiment and increased uncertainty, companies in the travel sector aren’t so sure that will be enough. Major hotel chains including Marriott, Hyatt, and Hilton have lowered their revenue outlooks for the year, as have airlines and the travel booking site Expedia.
Still, investors seem to have a less pessimistic view of things – relatively speaking, at least. Airline stocks (JETS 3.51% ), which shortly after “Liberation Day” were down over 25% for the year, have since retraced much of that and are now down only 11% as of this writing. Hotel shares (BEDZ -0.78% ) tell a similar story – at April 8 market lows, they were down 24.75%, but they have partially recovered and are now down about 7%.
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Investors continue to be too cautious, in our view, and this remains the fuel for upside in stocks, or more specifically, this keeps pullbacks shallow.
Technical
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Crypto
Strength in high-yield credit, a steady VIX, a firm SOL/BTC ratio, and a fresh Bitcoin golden cross all suggest bulls are still in control. With deficits back in focus and gold rallying, the macro backdrop remains supportive for crypto, in our view.
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Of Interest
