Work and Play: Investing in the Rise of Bleisure Travel

Key Points

• The convergence of business and leisure travel is reshaping the industry, creating a significant opportunity for companies that cater to this evolving demand.
• Online booking platforms are poised to thrive by simplifying the planning process for travelers who combine business trips with leisure activities.
• Airlines and hotels are adapting to the Bleisure trend by expanding into new markets and investing in enhanced services that appeal to blended travel needs.

The travel and leisure sectors are undergoing a transformation driven by the rising popularity of Bleisure travel—a blend of "business" and "leisure."

Bleisure travel represents a fundamental shift in how people approach travel. It reflects a broader societal trend where the boundaries between work and personal life are becoming increasingly intertwined. For example, remote work has provided professionals with the flexibility to work from virtually anywhere with an internet connection, making it easier to combine business trips with leisure activities. Combined with an increased emphasis on work-life balance, Bleisure has led individuals to find ways to integrate relaxation into their daily work schedules. 

This new era of travel presents unique opportunities for observant investors. In fact, the global Bleisure travel market is projected to reach an impressive $3.5 trillion by 2033.

Let's look at three stocks set to capitalize on the immense potential of Bleisure travel.

1. JetBlue: Flying High on Bleisure Demand

The airline industry is strategically adapting to the rise of Bleisure, and JetBlue Airways NASDAQ: JBLU provides a compelling example.

JetBlue has undertaken significant initiatives to position itself as a major player in the premium leisure segment, which includes Bleisure travelers. One key element of JetBlue's strategy is network expansion. The airline is strategically adding routes to popular Bleisure destinations, domestically and internationally. 

These expansions cater to the growing demand for travel to destinations that offer business and leisure opportunities. To enhance the travel experience for Bleisure passengers, JetBlue is also investing in product improvements. Starting in 2025, its "Even More Space" offering will be upgraded with new amenities and perks designed to provide extra comfort and convenience. This focus on premium seating aligns with the preferences of Bleisure travelers, who often prioritize comfort during their extended trips.

JetBlue's earnings report for the third quarter of fiscal year 2024 reflects the challenges and opportunities in the current market. While the airline reported a net loss of $60 million, it also saw a revenue increase of 0.5% year-over-year, reaching $2.4 billion. Notably, customer satisfaction increased by double digits, and the company achieved $275 million in incremental top-line benefits from its revenue initiatives. These results suggest that JetBlue's strategic focus on the Bleisure segment is starting to yield positive results. 

As of December 30, 2024, JetBlue's stock is trading at $8.01, reflecting a 44.3% increase year-to-date and hitting a new 12-month high. Despite a consensus Reduce rating from analysts, recent upgrades and increased price targets indicate a growing optimism about the airline's prospects. The opening of a new crew base in San Juan, Puerto Rico, further strengthens JetBlue's position in the Caribbean, a key Bleisure market. This move is expected to enhance operational efficiency and provide greater flexibility in responding to market demands.

2. Hilton: Hosting the Bleisure Revolution

The hotel industry is also making changes to accommodate the needs of Bleisure travelers. Hilton Worldwide Holdings NYSE: HLT is a prime example of a hotelier adapting to this trend. With its diverse portfolio of brands, Hilton caters to a wide range of Bleisure traveler preferences. The addition of Small Luxury Hotels of the World to its portfolio further expands Hilton's reach into unique and desirable destinations.

Hilton's earnings for Q3 FY2024 demonstrate the company's strong performance. Revenue increased by 7.3% year-over-year to $2.867 billion, with net income reaching $344 million. The company achieved a system-wide RevPAR growth of 1.4% and an impressive 7.8% net unit growth. Hilton's development pipeline is healthy, with 492,400 rooms in the works, including the opening of its 8,000th hotel globally. This expansion, including new locations like the Hilton Kyoto, underscores the company's commitment to growth in key international markets.

Hilton's increased stock repurchase authorization, now at approximately $4.8 billion, signals strong confidence in its future performance.

Although the consensus among Hilton's analyst community is currently a Hold rating, there's a shift in sentiment as some begin to reevaluate the stock's potential. This is evident in the upward revision of the target price by three analysts in December, with one setting it as high as $277.00. These adjustments signal continued confidence in Hilton's ability to implement its strategic initiatives successfully. 

3. Booking Holdings: The Digital Gateway to Bleisure

Online booking platforms are crucial in facilitating the Bleisure travel experience, and Booking Holdings NASDAQ: BKNG is a dominant force in this space.

Through its brands, including Booking.com, Priceline, Agoda, KAYAK, and OpenTable, the company offers a comprehensive suite of travel services, from flights and accommodations to car rentals and restaurant reservations. Booking Holdings' platform is particularly well-suited for Bleisure travelers who need to manage the business and leisure aspects of their trips seamlessly.

Booking Holdings' earnings for Q3 FY2024 highlight the company's continued success. Revenue grew by 9% year-over-year to $8.0 billion, with net income reaching $2.5 billion. Room night bookings increased by 8%, and gross travel bookings were up 9% at $43.4 billion.

These figures demonstrate the strong demand for online travel services, driven in part by the Bleisure trend.

The company's mission "to make it easier for everyone to experience the world" aligns perfectly with the desires of Bleisure travelers seeking seamless and efficient booking experiences. 

Riding the Bleisure Wave

The Bleisure travel trend represents a fundamental shift in how people approach travel, blurring the lines between work and leisure. This trend is reshaping the travel industry, creating new opportunities for companies that adapt to travelers' evolving needs. JetBlue, Hilton, and Booking Holdings are examples of companies strategically positioning themselves to benefit from the growing Bleisure trend.