Data Reveals Major Travel Leader

A key trend is emerging in travel.

Momentum is fading among the populace at large, but one segment is bolstering profits for a handful of players: premium travelers.

We saw this in action from Delta (DAL) last week when it reported Q4 earnings. Its stock popped nearly 10%, one of the strongest single day performances for the airline in months.

Delta called out 2 very valuable nuggets:

• Business travel is back -- and growing. Corporate sales increased by +10% YoY in the quarter and they see this trend continuing, noting, "We surveyed the corporate traveler every year, the corporate travel managers. I think the number was 90% expected to exceed or meet last year's spend." Business travelers bleed into the premium travel mix.

• Premium travelers are seriously boosting margins. Premium revenue outpaced main cabin performance throughout the year, up +8% YoY. As Delta increases capacity 3% to 4% in 2025, 85% of those seats will be in premium cabins. In its latest earnings report, Delta reported operating margins of 12%, benefiting from the higher yields generated by premium cabin demand and other efficiency measures.

With this knowledge, we pulled data for booking sites and lodging companies next to answer an important question -- does this premiumization theme spill into the lodging segment as well?

Indeed it does -- check out the YoY change in web visits over the last month.

Hyatt (H) is logging the strongest forward-looking booking demand vs. peers as its bet on premium travelers pays off.

At the end of 2023, approximately 70% of its rooms were categorized as "luxury and upper upscale" and this high-end focus continues.

Hyatt has plans to expand its luxury footprint with more than 50 openings globally by 2026, leveraging acquisitions, high-value destinations, and exclusive amenities to cater to premium travelers seeking personalized experiences. Details below.

• Expansion of Luxury Properties: Hyatt is adding over 50 luxury and lifestyle hotels globally by 2026, with growth focused on high-demand leisure markets like Portugal, Mexico, and the Caribbean, appealing to affluent travelers.

• Acquisition-Fueled Growth: Recent additions like Mr & Mrs Smith and Dream Hotel Group bring boutique and luxury properties into Hyatt’s portfolio, increasing its presence in exclusive destinations and offering travelers unique, premium experiences.

• Asset-Light Model: Hyatt is focusing on management and franchise agreements instead of direct property ownership. This approach has doubled its luxury rooms and tripled its resort offerings since 2017, scaling operations while reducing capital intensity.

• Luxury Amenities Driving Demand: Hyatt’s offerings include private villa accommodations, bespoke dining experiences, and high-end spa facilities, catering to travelers seeking exclusivity and personalized service. Programs like private culinary classes and immersive cultural activities further enhance appeal.

Bottom line: Hyatt’s focus on luxury properties and exclusive offerings aligns with growing global demand for high-margin, premium travel experiences.

We group H in an elite bucket with other players, like DAL and UAL and even AXP who can be expected to benefit from the premiumization of their brands looking ahead.

If other brands CAN'T capitilize on "premium" offerings -- we may see some near-term turbulence ahead.