Travel and leisure stocks are gaining support from strong cruise demand, improving recreational trends and continued growth in online betting. An analyst says multiple segments are showing signs of recovery and expansion.
BNN Bloomberg spoke with James Hardiman, analyst, U.S. leisure and travel at Citi, about why Carnival, Brunswick and DraftKings stand out as key beneficiaries of these trends.
Key Takeaways
- Cruise demand remains resilient despite geopolitical concerns, supporting revenue growth and pricing strength.
- Higher fuel costs have weighed on cruise operators, but strong demand and updated guidance point to continued momentum.
- Recreational boating shows early signs of recovery after years of pressure from inflation and high interest rates.
- Online sports betting continues to expand, with growth driven by new markets and evolving product offerings.
- Prediction markets could reshape the industry, offering both competitive pressure and new growth opportunities.
Read the full transcript below:
ANDREW: On Hot Picks today, we are talking travel and leisure. Our guest has a cruise line as his top idea. He says the industry is showing strong momentum and that Carnival stands out from its peers. Let’s get more from James Hardiman, analyst, U.S. leisure and travel at Citi. Thanks very much for joining us, James. Carnival — what attracts you to this stock?
JAMES: We’ve been big believers in the secular opportunity for the cruise industry for some time. We can talk about that, but in the near term, this is an industry and a company that have been hit hard as a result of the Middle East conflict.
I think that’s for two reasons. One is the cost side. Fuel is one of the biggest, if not the biggest, expense line items for cruise companies, and Carnival in particular is unhedged, so it has been impacted by higher fuel prices.
The second is the demand side — the belief that travel could be negatively affected by the conflict. We’re still working through the first issue, and on a day like today, it’s hard to say we’ve found a ceiling for fuel prices. But demand has been very strong.
In fact, the company raised its revenue guidance when it reported about a week and a half ago. On top of that, it’s a strong capital return story. The company has outlined about $14 billion in shareholder returns through buybacks and dividends over the next few years.
It has also opened a new private island, Celebration Key, and 2026 will be the first full year of benefit from that. If we take a step back and assume some of the geopolitical pressures ease, the rest of the business is performing very well. Higher fuel costs are already reflected in estimates, and we think the outlook remains positive.
ANDREW: You’ve probably heard the old joke — a boat makes you happy on only two days: the day you buy it and the day you sell it. They are expensive to run. But you also like Brunswick, a major seller of marine recreation products.
JAMES: I do. It’s been a difficult three to four years for the company. Inflation in boat prices and higher-for-longer interest rates have weighed on demand.
We entered 2025 expecting a rebound, and it looked like it was heading that way. Then “Liberation Day” happened, which had a negative impact on demand. The second quarter saw double-digit declines in retail.
Since the second half of last year, things have stabilized. In the first quarter of this year, we’ve started to see some growth — mid-single-digit growth. As we move through the year and lap the earlier declines, there is potential for meaningful upside if demand continues to improve.
Ultimately, the investment case is that we may have finally reached a bottom after several challenging years.
ANDREW: And finally, DraftKings, a major player in sports betting.
JAMES: Online gambling, and specifically online sports betting, remains a growth industry. We think DraftKings is one of the best-positioned companies globally to capitalize on that.
What has been overlooked recently is the rise of prediction markets. The bear case is that these platforms will take market share from traditional sportsbooks like DraftKings and FanDuel. The bull case is that sportsbooks offer superior products and will maintain their position.
Our view is more nuanced. We expect some cannibalization in existing regulated markets, which represent about 60 per cent of the U.S. population. However, there is a larger opportunity in unregulated states, where about 40 per cent of the population still does not have access to online sports betting.
Prediction markets could act as an entry point into those markets. There are also legal challenges developing, but we believe the major operators are well positioned regardless of how regulation evolves.
ANDREW: It’s remarkable, isn’t it? We’re almost out of time, but the growth in gambling and prediction markets raises concerns about social harm.
JAMES: It does. Some consumers are overextending themselves. Prediction markets are still in early stages and largely unregulated.
We’ve spent years putting safeguards in place around traditional gambling and online sports betting. Now there’s a new category that, for many purposes, functions like gambling but lacks those protections.
There’s clearly more work to be done to ensure appropriate safeguards are in place.
ANDREW: Thanks, James. James Hardiman, analyst, U.S. leisure and travel at Citi.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CCL NYSE | N | N | Y |
| BC NYSE | N | N | Y |
| DKNG NASDAQ | N | N | Y |
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This BNN Bloomberg summary and transcript of the April 7, 2026 interview with James Hardiman are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
