After surging late last fall on encouraging Covid vaccine news, many travel and leisure stocks in recent months have taken a trip to the land of negative returns.

Travel-related stocks from casino operators like

MGM Resorts International

(ticker: MGM), to hotel chains like

Marriott International

(MAR), to cruise operators like Caribbean Group (RCL) have all lagged behind the market since the end of February, with the latter two posting negative returns.

Avis Budget Group

(CAR) is down some 25% off its highs in mid-June, despite a shortage of rental cars.

On Thursday, these trends continued as the sector fell more than the broader market; the

Defiance Hotel Airline & Cruz ETF

(CRUZ), for instance, was down 1.35% Thursday versus a 0.9% decline in the S&P 500.

One concern weighing on these stocks: the fast-spreading Delta variant, another reminder that the battle against Covid isn’t over.

Still, “the fact that it’s been a very broad-based selloff from the highs tells me there are multiple factors,” says Chris Woronka, a leisure and hotel analyst at Deutsche Bank. 

Woronka and others point to a host of potential factors, among them the notion that many of these stocks got ahead of themselves as recovery plays and became too pricey.

Royal Caribbean’s Celebrity Edge embarked from Fort Lauderdale, Fla., on June 26, the first departure from a U.S. port among the three big cruise operators since March 2020 due to the pandemic. 

There were no reported Covid incidents during that cruise or several subsequent voyages for the company, but its stock is down about 10% since the day before the first Edge cruise departed.

“We are watching everything and we’re really being very careful,” Royal Caribbean CEO Richard Fain told Barron’s in an interview on June 29, three days after that maiden U.S. voyage’s departure. “While I understand nervousness on the part of Wall Street, that doesn’t seem to be news to the people booking cruises.” The company’s Florida sailings for July and August are sold out.

Another potential worry for travel and leisure stocks: There is “this realization that this is as good as it gets,” as Woronka puts it.

He adds: “My No. 1 question for next year is are people still going to be willing to pay $250 a day for a rental car and $500 a night for a hotel” in certain markets?

Meanwhile, hotel companies have had a nice rebound in their leisure business, but business travel remains well below prepandemic levels, weighing on their share prices.

Hilton Worldwide Holdings

’ (HLT) stock is flattish since the end of February and down about 4% over the past month.

“Investors are trying to assess the net impact of how severe business travel’s impact will be, combined with this remarkable strength in leisure travel,” says Michael Knott, head of U.S. REIT research at research firm Green Street. 

However, the market also has been tough on travel companies that don’t have business customers, as evidenced by the recent pressure on cruise stocks. Another example is timeshare firms, which rely entirely on leisure customers, many of them domestic.

The shares of one of those companies,

Marriott Vacations Worldwide

(VAC), are about 13% lower over the past month.

It’s yet another example of the many crosscurrents roiling these sectors.

Last Week

Jitters Come and Go

Oil prices soared and stocks opened mixed. Minutes from the last Federal Reserve policy meeting showed a split over inflation. Treasury yields slid and jitters returned. Thursday was bad: Junk-bond yields fell below inflation, and Covid variants, higher jobless claims, and growth fears sank stocks, which rallied on Friday. On the short week, the Dow Jones Industrial Average rose 0.2%, to 34,870.16; the S&P 500 gained 0.4%, to 4369.55; and the Nasdaq Composite rose 0.4%, to 14,701.92.

Pfizer’s Booster

Pfizer said it would seek approval of a booster for its Covid vaccine to combat variants, and would begin trials of a new vaccine in August. Pfizer shares rose, then fell after health officials played down the need for a booster.

China Reels in Tech

Chinese regulators broadened inquiries into tech companies in what looks like a growing crackdown on U.S. listings.

Tensions in the Gulf

Oil prices rose to highs last seen in 2018 after a meeting between the United Arab Emirates and Saudi Arabia was canceled. With economies growing, the broader OPEC+ has been moving to boost production, but not as fast as U.A.E. wants. The U.A.E. has recently sparred with Saudi Arabia, pulling out of Yemen, signing a peace deal with Israel, and squabbling over Qatar.

An Antitrust Rethink

President Biden signed an executive order of 72 initiatives to restore competition in the U.S. economy, focusing on tech and pharma, but also including hearing aids and net neutrality. Meanwhile, 36 states and D.C. sued Google over its mobile app store. And former President Trump sued social media giants over “censorship.”

The End of JEDI

The Defense Department killed the $10 billion cloud-computing contract, JEDI, that was mired in a suit brought by, which cried foul after losing the deal to Microsoft. Amazon argued that Trump had pushed the deal to Microsoft because of his unhappiness at Amazon’s then-CEO Jeff Bezos.More RansomwareA ransomware attack orchestrated by a Russian-language gang, REvil, hit thousands of companies in 30 countries, including the U.S. A second attack, on a contractor working with the Republican National Committee, appeared to come from Russian security forces.

Annals of Deal Making

A group of infrastructure investors offered $17 billion (U.S.) to buy the Sydney airport…Investors led by Fortress, a unit of SoftBank Group, reached a 6.3 billion pound sterling ($8.7 billion) deal to buy U.K. grocer Wm Morrison. The company had rebuffed an offer from Clayton Dubilier & Rice…A SPAC headed by former Barclays chief Bob Diamond agreed to merge with digital-currency company Circle, at a $4.5 billion enterprise value.

Write to Lawrence C. Strauss at [email protected]