After years of lockdowns, not even excessive inflation and a raging war can keep us from traveling. Travel demand is rising and airlines are seeing record bookings — but travel stocks are struggling to take off.

Travel bookings defy gravity

Since Mar. 7, the US Global Jets ETF is back up 21% after a near 30% fall since the invasion — as booking demand hits new records:

• Delta airlines had its highest sales day in its 100-year history.
• “Bookings across most of the network are at normal levels” — per United Airlines CEO.

Also rising are ticket prices, which is up 36% in 2022 — back to their 2019 levels — with demand looking strong for the rest of 2022:

• In 2022, the chief economist at National Retail Federation expects spending to shift from goods to services.
• Spending among those 65+ is also rising after falling behind other age groups for two years.

Their extra spending could strengthen the economy in coming months (per WSJ) — traveling topping to-do lists.

Stocks are moving, but not in a straight line

Before the invasion, travel stocks were one of the few sectors up in 2022. A Russian invasion quickly changed that — leading to travel sectors losing nearly a third of its value.

Despite demand surging, travel stocks are still at the mercy of COVID and rising fuel costs.

• Airlines’ rising sales are met with a 45% rise in jet fuel costs — which make up 20-25% of airline operating expenses.
• Cruise operators are also impacted by rising fuel costs and COVID.
• Hotels are competing against emerging home-sharing services like Airbnb (NASDAQ:ABNB) and VRBO — Expedia (NASDAQ:EXPE) owned .

Many travel firms are also exposed to Europe. 31% of Airbnb‘s 2021 bookings were from Europe, the Middle East and Africa — and its valuation isn’t shouting ‘buy’.

Investors: Cruises gets a lifeline

Cruiser operators are still majorly down from their pre-pandemic levels — but a change in their COVID risk rating could give them a push. Last week, the CDC changed their assessment on cruises to level 2 (moderate COVID risk) — which was at level 4 (high risk) back in December.

• Best of the bunch: Morgan Stanley sees potential in Norwegian Cruise Line (NYSE:NCLH) to outperform compared to other cruise operators.
• But MS cautions: NCLH could be impacted from having greater exposure to Europe, higher oil prices and COVID resurgences.