Travel stocks tumble as airlines cut profit forecasts

Investing.com -- Travel and hospitality stocks are experiencing a significant downturn in Tuesday’s trading session. Industry leaders such as Expedia (NASDAQ:EXPE), Booking (NASDAQ:BKNG), and Airbnb saw their shares fall by 8%, 3%, and 4%, respectively. The downward trend extended to cruise operators with Carnival (NYSE:CCL), Royal Caribbean (NYSE:RCL), Norwegian, and Viking reporting losses between 3.5% and 8.7%. Hotel chains were not spared, as Choice Hotels (NYSE:CHH), Hyatt, and Hilton also witnessed declines ranging from 3.2% to 6%.

The driver behind this broad market sell-off is Delta Air Lines (NYSE:DAL)’ announcement of a significant reduction in its profit guidance, which has been attributed to a decrease in consumer spending amidst heightened economic concerns. Delta’s revised outlook has cast a shadow over the entire travel sector, given that travel demand is a key indicator of consumer confidence and discretionary spending.

Delta’s announcement follows similar moves by American Airlines (NASDAQ:AAL), which now expects a loss of up to 80 cents per share for the first quarter, doubling its previous maximum estimate of a 40-cent loss per share. The company has also adjusted its revenue expectations to flat growth from an initially projected increase of up to 5%. These adjustments reflect the impact of recent aviation incidents, including the January 29th crash involving an American Airlines plane and a military helicopter, and a Delta regional jet’s crash landing in Toronto.

The revised financial forecasts from two of the largest U.S. airlines, alongside cautionary signals from major retailers regarding consumer spending, have contributed to investor concerns over a potential slowdown in the travel industry as it heads into 2025.

As the market reacts to these updates, investors are closely monitoring the situation for further developments that could influence the performance of travel-related stocks.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.