Consumers have the travel bug again

Summary

Marketplace Morning Report Summary
Episode: Consumers Have the Travel Bug Again
Release Date: February 21, 2025

In this episode of the Marketplace Morning Report, host Sabri Benishour delves into the resurgence of consumer enthusiasm for travel, highlighting significant developments within the travel and gambling industries. The episode is structured into two main segments: the thriving travel sector and the evolution of gambling in Massachusetts.

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1. Travel Industry's Robust Comeback

a. Surge in Travel Company Profits

The episode opens with Sabri Benishour reporting on the impressive financial performance of major travel companies. Notably, Booking Holdings, the parent company of Booking.com, Priceline, and Kayak, announced a 50% increase in profits last quarter compared to the previous year. This substantial growth has led to a noticeable uptick in Booking Holdings' stock prices.

Sabri Benishour [00:01]:
"Shares of Booking holdings are popping this morning. Booking holdings is the company behind booking.com, priceline, Kayak, a bunch of other travel and leisure sites. The company announced yesterday that profits were up almost 50% last quarter compared to a year earlier."

b. Industry-Wide Growth Among Competitors

Nova Sappho, Marketplace’s correspondent, provides a comprehensive overview of the broader travel industry's positive trajectory. Airbnb, Expedia, and other platforms are also reporting strong sales figures, with revenue increases of 14%, 10%, and 12% respectively compared to the previous year. This growth is largely attributed to affluent households, particularly those earning over $100,000 annually, who continue to prioritize travel despite economic fluctuations.

Nova Sappho [00:40]:
"Consumers are paying more everywhere. It's been pretty much the same story throughout the travel industry. We've heard from Airbnb, Expedia all reporting strong sales."

c. Airlines' Strategic Positioning

The discussion shifts to the airline industry, where major U.S. and European carriers are forecasting better financial results for the current year. This optimism is driven by sustained high demand and limited aircraft capacity, resulting in higher ticket prices. Unlike last year, when airlines faced capacity surpluses leading to price wars and diminished profits, this year’s disciplined capacity management is proving beneficial.

Nova Sappho [01:14]:
"All of a sudden they were in a price war. And that hurt their profits. Not this time. And that means higher ticket prices."

Furthermore, ticket sales through travel agencies have surged by 17% compared to December of the previous year, indicating a robust consumer intent to spend on travel services.

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2. Financial Markets and Gambling Innovations

a. Market Brief and Elon Musk's Remarks

Transitioning from travel, Sabri Benishour provides a brief overview of the financial markets, noting that Dow, S&P, and NASDAQ futures are all slightly up. Additionally, he highlights a noteworthy statement by Elon Musk, who, during the Conservative Political Action Conference, suggested auditing the Federal Reserve to verify gold reserves at Fort Knox.

Sabri Benishour [02:05]:
"Speaking at the annual Conservative Political Action Conference, billionaire and doge head Elon Musk said he's thinking about auditing the Federal Reserve and verifying whether there's still gold at Fort Knox."

b. Massachusetts: A Hub for Gambling Innovation

The episode then shifts focus to Massachusetts, spotlighting the state's pivotal role in the evolution of gambling and lotteries. Sabri introduces the "Scratch and Win" podcast from GBH News, hosted by Ian Coss, which explores the proliferation of gambling opportunities available today.

Sabri Benishour [02:07]:
"Scratch and Win is a new podcast from Boston based GBH News about how we got to this place of ubiquitous gaming, gambling."

c. Historical Context and Personal Stories

In a detailed conversation with David Brancaccio, hosted by Ian Coss, the podcast delves into the history of Massachusetts' lottery system. Unlike the conservative beginnings of lotteries in the 1960s and 70s, Massachusetts embraced innovation under the leadership of Treasurer Bob Crane, whose flamboyant personality infused the state lottery with creativity and entertainment.

David Brancaccio [04:02]:
"He had this whole group called the Treasury Notes that used to go around and perform. You can see how the culture in Massachusetts around innovation, experimentation, and really entertainment was very different from the start."

The discussion highlights the introduction of scratch tickets in 1974, a game-changer that transformed lotteries into a ubiquitous industry. Scratch tickets now account for approximately two-thirds of all lottery sales, representing a $100 billion industry nationwide.

A poignant anecdote is shared about an unnamed mechanic from Quincy, Massachusetts, who spends $50 daily on scratch tickets in hopes of a big win to secure his retirement. This story underscores the accessibility and addictive nature of instant gambling opportunities.

Unnamed Mechanic [05:08]:
"I play $50 every day. Have you won yet? Right there. So far I already spent 300 bucks on the bucket. There's nothing."
"I'm dreaming to get that big one so I can retire. I'm 75 years old. I don't have money in retirement. Too late to start now because I already spent so much money. So maybe this one. But end up getting broke and broke."

David Brancaccio [05:16]:
"Snippet on how scratch tickets symbolize the shift of gambling from the shadows to mainstream acceptance, paving the way for further expansions into casinos and sports betting."

The segment concludes by emphasizing how statewide lotteries have played a crucial role in legitimizing gambling, moving it away from associations with organized crime and into regulated, state-sanctioned activities.

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Conclusion

The episode of Marketplace Morning Report effectively highlights the renewed vigor in the travel industry, driven by increased consumer spending and strategic business practices. Simultaneously, it sheds light on the deep-rooted innovations in Massachusetts' gambling landscape, illustrating the state's influence on the national acceptance and expansion of gambling activities. Through engaging discussions and real-life stories, the podcast provides listeners with a comprehensive understanding of these dynamic economic sectors.

Transcript

[Sabri Benishour]

Consumers have the travel bug again. For a marketplace, I'm Sabri Benishour in for David Brancaccio. Shares of Booking holdings are popping this morning. Booking holdings is the company behind booking.com, priceline, Kayak, a bunch of other travel and leisure sites. The company announced yesterday that profits were up almost 50% last quarter compared to a year earlier. Lots of companies in the travel industry are reporting better profit margins, which is another way of saying that consumers are paying more. Marketplaces. Nova Sappho is here with the details. Hi, Nova.

[Nova Sappho]

Good morning, Sabri.

[Sabri Benishour]

So bookings doing well. What do we know about how other travel companies are doing well?

[Nova Sappho]

Consumers are paying more everywhere. It's been pretty much the same story throughout the travel industry. We've heard from Airbnb, Expedia all reporting strong sales. Overseas travel is doing particularly well. Travel in Europe, the Asia Pacific region. Bookings saw revenue up 14% compared to a year ago. Expedia previously reported a 10% increase. Airbnb is up 12%. Exp. And all of this because households with $100,000 or more in income, which make up a vast majority of travelers, are still doing well in this economy. Sabri. And they want to travel.

[Sabri Benishour]

How are airlines doing?

[Nova Sappho]

Well, we've heard from all the major US Carriers and European ones, and they're predicting better results this year compared to last. And that's because of both the strong demand out there and also limited capacity. Now, that's an additional issue over at the airlines. They don't have enough planes. That's not changing anytime soon. Both Airbus and Boeing are behind in their deliveries. The airlines also have been generally more disciplined about increasing capacity this year compared to last. Last year, carriers found themselves with just too many seats to sell, and all of a sudden they were in a price war. And that hurt their profits. Not this time. And that means higher ticket prices. People are feeling that already. By one estimate, tickets sold through travel agencies were up 17% this year compared to last. That, that was around December. So that's a huge increase. Sabri.

[Sabri Benishour]

Yeah, yeah. All right, Marketplaces, Nova Sappho, thank you so much.

[Nova Sappho]

You're welcome.

[Sabri Benishour]

All right, let's do the numbers. Dow S&P and NASDAQ futures are all up barely just about a tenth of a percent. Dow futures up 48 points. The yield on the 10 year treasury is 4.489%. Speaking at the annual Conservative Political Action Conference, billionaire and doge head Elon Musk said he's thinking about auditing the Federal Reserve and verifying whether there's still gold at Fort Knox. The Federal Reserve is audited every year and posts the results. Fort Knox also audited every year. You can gamble at convenience stores. You can gamble on your smartphone, online, on sports, on really anything. At this point, you can credit or blame Massachusetts for that. Scratch and Win is a new podcast from Boston based GBH News about how we got to this place of ubiquitous gaming, gambling. The host is Ian Koss, and he spoke with my colleague David Brancaccio.

[Ian Coss]

Sounds like the Bay State was. What should we call it? A cauldron of innovation when it comes to gambling and lotteries.

[David Brancaccio]

Yeah, I think that's fair to say. A really important thing to understand is that early on, when the state lotteries got rolling in the 60s and 70s, these were incredibly conservative agencies. They were terrified of, you know, breaking the public's trust, of, you know, getting infiltrated by the mob. So they did not try a lot of new things. What happens in Massachusetts is that the state lottery winds up in the hands of this state treasurer, who was kind of a vaudeville guy. He'd literally grown up the son of a vaudeville stagehand. He loved to sing. He had this sort of showman personality.

[Unnamed Mechanic]

Please don't talk about me when I.

[David Brancaccio]

Gone the treasurer, Bob Crane, singing at a nursing home back in the 1970s. He had this whole group called the Treasury Notes that used to go around and perform. You can see how the culture in Massachusetts around innovation, experimentation, and really entertainment was very different from the start.

[Ian Coss]

All right. We think of like drawing ping pong balls in a random drawing when you think of the lottery. But of course, another part of it is the scratch ticket.

[David Brancaccio]

Scratch tickets are the bread and butter game of all state lotteries. That's not just Massachusetts. It's something like 2/3 of all lottery sales. And that's $100 billion industry, if you want to call it an industry. And scratch tickets start in Massachusetts. It really is the first and most important of the innovations that happened here. And I spent some time at a convenience store in Quincy, Mass. I met this man who's a mechanic who did not want to share his name, but. But would come there every day on his lunch break and spend literally hundreds of dollars. So what are you playing right now?

[Unnamed Mechanic]

I play $50 every day.

[David Brancaccio]

Have you won yet?

[Unnamed Mechanic]

Right there. So far I already spent 300 bucks on the bucket. There's nothing.

[David Brancaccio]

So why do you keep playing?

[Unnamed Mechanic]

I'm dreaming to get that big one so I can retire. I'm 75 years old. I don't have money in retirement. Too late to start now because I already spent so much money. So maybe this one. But end up getting broke and broke.

[David Brancaccio]

And that's really, I mean, the scratch ticket, if you think about it, that is instant gambling. Anywhere, anytime, in the palm of your hand. Started in 1974 in Massachusetts.

[Ian Coss]

Yeah. Instant gratification. And how does that vignette help us understand where we are today?

[David Brancaccio]

Nationwide lotteries, they kind of did the political work and a lot of the cultural work of bringing gambling out of the shadows of society and into the open. You know, back in the 60s, gambling was something you associated either with Las Vegas or the mob. And lotteries, by taking this thing that was vice that was in the shadows, putting the state's stamp of approval on it, it really brings it out into the open. And that's what sets the stage for casino expansion in the 1990s, for states to get into sports betting and really everything that we're living in today.

[Ian Coss]

Ian Coss is the host of Scratch and Win, a podcast from GBH News. You can find it wherever you get your podcasts. Ian, thank you so much.

[David Brancaccio]

Thanks for having me.

[Sabri Benishour]

Ian was speaking there with Marketplace's David Brancaccio, our executive producers, Kelly Silvera, our digital producers, Dylan Mietanen. Our engineers are Brian Allison and John Brewington. And I'm Sabri Benishore with the Marketplace morning report from apm, American Public Media.