It’s almost time for backyard barbecues, lounging at the pool, and — of course — vacation season.

Between Memorial Day and Labor Day last year, the U.S. Transportation Security Administration (TSA) screened 227.5 million airport passengers — about 2.5 million per day.

At this point, we can stop comparing flight volume numbers to 2019’s pre-pandemic levels. Last summer was the busiest ever for domestic air travel. Period.

The question is: How long will that record last?

Probably not too long.

As we speak, tens of millions of folks are actively making plans for their next getaway. And we’re not just talking about short weekend road trips, either.

Just last week, an annual survey commissioned by NerdWallet and conducted by The Harris Poll found that summer travelers expect to spend $3,594 on average — for an aggregate total of $424 billion.

Travel guide service Vacationer conducted a similar survey and found that more than three-quarters (82%) of U.S. adults have big travel plans this summer. Nearly one-quarter of the respondents are jetting off to international destinations, such as the upcoming Paris Olympics.

These figures echo the findings from a similar survey by Forbes that revealed that 92% of Americans plan to travel either the same or more in 2024 than they did in 2023. A scant 8% expect to travel less (most cite inflation as the culprit).

Many will make some concessions to save money, such as traveling at non-peak times and/or booking cheaper accommodations. Still, the Millennial and Gen Z crowds (which have the highest travel convictions) have budgeted more than $4,000 in average travel expenses this year.

The majority plan to cover at least part of the cost via credit card. Many will be cashing in frequent-flyer miles or utilizing other travel reward card benefits. Both Visa (NYSE: V) and Mastercard (NYSE: MA) will likely see the impact in the coming months.

With more people taking to the skies, domestic airlines have hired and trained 24,000 pilots over the past 24 months. Globally, the International Air Transport Association (IATA) is forecasting 4.7 billion people to board a flight this year, smashing the previous traffic record.

Needless to say, all of this bodes well for Southwest Airlines (NYSE: LUV), one of our newest portfolio holdings. After boarding 45 million passengers last quarter, the company is ramping up its capacity and adding about 10 billion available seat miles (ASMs) this year to accommodate growing demand.

I still like the macro view from 30,000 feet. But today, we’ll be exploring this resurgent trend from sea level.

Consumers Opt for Experiences Over “Things”

Listen to enough quarterly conference calls and you start to hear the same refrain from big S&P companies.

Sometimes, executives complain about the headwinds from negative foreign currency translation overseas (and provide adjusted figures to illustrate how much better earnings would have been in constant dollar terms). At other times, they howl about supply chain disruptions, interest rates, or even the financial impact of adverse weather conditions.

Until recently, inflation has been the dominant topic of conversation. According to transcript reviews by FactSet, approximately 330 companies mentioned the word “inflation” at least once in the third quarter of 2022. But usage of the term has fallen off in recent quarters.

The observation du jour among corporate America now involves discretionary spending on big-ticket items — specifically, the lack thereof.

While consumers are still spending, they are reluctant to pull the trigger on larger purchases such as furniture, appliances, and new vehicles. That’s partly because many families have depleted their surplus savings and are now sticking to the basic essentials.

But this is also reflective of the continued prioritization of experiences over things and services over goods. Consumers are willing to splurge on weekend spa retreats and Taylor Swift tickets; that new patio furniture will have to wait.

Needless to say, this reluctance is hampering sales at many top retailers. And they are quick to point the finger of blame.

I’ll give you a few examples.

There is a consumer propensity to spend on services like concerts and vacations in lieu of goods, which has remained sticky even as the prices there too have inflated. — Best Buy (NYSE: BBY)

We saw a continuation of a trend that we have been observing throughout the year, with softness in certain big-ticket, discretionary-type purchases. Our customers continue to take on smaller projects, while still deferring larger projects. — Home Depot (NYSE: HD)

Consumers continue to rebalance their spending between goods and experiences and make tough choices in the face of persistent inflation. — Target (NYSE: TGT)

The Commerce Department will tell you that domestic retail sales rose by a tepid 0.6% last month. But half of that came from higher gas prices. Department stores, clothing outlets, and home furnishings all registered negative growth.

Meanwhile, Hilton Hotels (NYSE: HLT) stock just hit a new all-time high.

This behavioral shift has often been attributed to the COVID lockdowns. But it started long before that, whenever it became trendy to share videos and pictures on social media. Nothing inspires the urge to roam quite like seeing friends and co-workers relaxing in a tropical lagoon.

Or touring Mayan ruins.

Or traipsing through Sicilian vineyards.

That may explain why 78% of younger consumers are more interested in getting out of the house than accumulating physical stuff to clutter it. Live music, scuba lessons, and cooking classes are in. Expensive luxuries are out.

Of course, that’s a broad generalization — Tiffany still has its share of affluent clientele.

But when you’re talking about $15 trillion or so in annual consumer spending, even modest shifts can push or pull hundreds of billions in revenues in certain directions.

On balance, that’s bad news for non-essential brands such as Nike (NYSE: NKE) — which I unloaded a few months ago — but a welcome tailwind for entertainers like Walt Disney (NYSE: DIS).

And that’s just the start.

Lodging stands to be a key beneficiary. And every time a plane disgorges a couple hundred passengers, most will need to arrange ground transportation to get to their room.

Despite being upended by ride-sharing services like Uber, the rental car counters are busier than ever (particularly for luggage-laden families hitting the open road).

I could make a strong argument for Avis Budget (NSDQ: CAR), which has 690,000 vehicles for hire across 10,000-plus locations worldwide. With the strongest rental volume in company history, revenues soared to a record-high $12 billion last year. Yet the bargain-bin stock is trading at just 3 times earnings.

I’m also bullish on Expedia (NSDQ: EXPE), which also just posted record revenues and earnings. The company booked 77.4 million hotel room nights last quarter — an increase of 7 million from a year ago.

And if recent flight searches are any indication, business should remain on the upswing.

You could even apply some of the same arguments to Duolingo (NSDQ: DUOL), whose interactive lessons help travelers confidently learn a foreign language. With a growing base of active users, the stock has shot up more than 50% over the past 12 months.

I’ll be digging deeper into the travel ecosystem in the months ahead for readers of my Capital Wealth Letter. In the meantime, if you want to find out about one $5 play that could turn into gains of up to 1,342%, click here.