What a “Normal” Economy Could Mean for These 3 Travel Stocks

Key Points

• Travel and leisure stocks could benefit from a “normal” economy as sector rotation puts an emphasis back on companies with solid fundamentals.
• Carnival, Booking Holdings, and Marriott show improving earnings trajectories and potential upside into 2026.
• Analysts forecast earnings growth above historical averages, signaling renewed confidence in consumer travel demand.

What would a “normal” economy look like in 2026? For starters, many investors would like to see the recent sector rotation continue. That would allow growth to expand beyond the tech sector, and specifically, beyond stocks that are part of the artificial intelligence (AI) trade. 

It's been a fun ride for the most part. However, putting the Magnificent 7 stocks aside, many of these stocks weren’t trading on fundamentals. In too many cases, profitability is years away, if it ever happens, and many of these companies are generating little to no revenue. 

Sector rotation will put fundamentals back on the front burner. In that case, one sector that is likely to be under scrutiny is travel and leisure. 

Despite concerns about consumer health, travel demand has remained strong. This could tie in nicely to the idea that many of these stocks will revert to their historical averages in terms of earnings growth. 

Earnings growth is the single best predictor of stock price growth. But with the economy being anything but normal in the last five years, it’s been difficult for buy-and-hold investors to stick with companies in a mature growth phase. It’s also been difficult for traders to stay long in stocks. 

However, a more normal outlook for earnings could change that risk dynamic for investors and traders alike. Here are three names to watch.

Carnival Cruise Lines: Normalization Could Drive Earnings Recovery

If you owned shares of Carnival Corporation NYSE: CCL five years ago, you would be thrilled to have achieved a share price gain of over 41%. CCL stock cratered in 2020. Then, its revenge travel rebound was halted by consumers facing pressure from inflation and interest rates. 

The stock is still down sharply from its pre-pandemic levels, but earnings growth is a key reason to believe that the turnaround has legs. Over the last five years, Carnival has posted negative average annual earnings per share (EPS) growth of about 19%. 

But 2024 marked a return to profitability, and the company ended the year with a full-year record for net income and a 20-year high in return on invested capital (ROIC). Carnival has also taken significant strides in paying down the massive debt it took on in 2020, and recently reinstated its dividend. 

Adding to the bullish sentiment, analysts forecast earnings growth of about 18% in 2026 based on strong bookings. That's significantly higher than the company’s 10-year average, which is flat to slightly negative. 

But it’s important to note that the last five years have been a matter of extremes. A return to normal would be something for Carnival and its shareholders to cheer.

Booking Holdings: AI-Enhanced Efficiency Supports Steady Growth

Booking Holdings Inc. NASDAQ: BKNG has rewarded shareholders with a gain of over 140% in the last five years. This has been fueled by strong earnings growth that has averaged over 83% in the last three years.

However, normalized earnings growth in 2025 is the key reason why BKNG stock was “only” up about 7.7% in 2025. There’s nothing wrong with the company’s business model, which is being enhanced by AI tools to add even more efficiency.

2026 is likely to be another year where earnings are the story behind BKNG stock. As the calendar closed on 2025, analysts gave the stock a consensus price target of $6,149.93, a 14.8% gain, backed by expected earnings growth of over 18%. That's over 20% higher than its average EPS growth over the last 10 years of around 14%. 

Booking Holdings stock is not for every investor. The price per share may be off-putting to many. Plus, it’s trading at a price-to-earnings (P/E) ratio of around 34x, which is a slight premium to its historical average. Furthermore, the company has said it has no intention to split its stock. However, that’s because it wants the focus to be on long-term investors, and it has proven to be a solid compounder for those with the appetite for the stock.

Marriott: Luxury Positioning May Anchor Demand in 2026

Even an 18.5% rally in the last three months of the year wasn’t enough to keep Marriott International NASDAQ: MAR from lagging the market. Shareholders still got 11% share price growth to go along with a dividend that yields 0.83% at the end of the year.

A key reason for the company’s ongoing growth is its positioning, which increasingly is focused on a higher-end, luxury consumer. These travelers are usually less price sensitive and will continue to prioritize travel.

However, the 11% gain is far below the average gain of about 27% over the last five years. Once again, this is an earnings story. Marriott saw its average EPS growth soar to around 36% in the last three years as demand for travel continued to surge. A more “normal” look at earnings would be around 12% growth over the last 10 years.

Analysts project EPS growth of around 15.8% in 2026, and sentiment is generally bullish. As a mature company, MAR stock is one to own and not to trade. That said, it’s trading at a slight premium, which may cause investors to look for a better entry point. Marriott reports Q4 fiscal year 2025 earnings in February, which will give investors a better outlook for the company’s earnings expectations for 2026.