Restaurants, Travel and Leisure

Restaurants, Travel and Leisure Strategy

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Thesis

Why this sector matters to investors right now. Structural, not market timing.

Restaurants, lodging, cruise, gaming, and online travel agencies sit on one page because they all sell discretionary time and spend. They do not share one P&L. McDonald's 2025 GAAP revenue was $26.9 billion against $139.4 billion of systemwide sales (McDonald's 2025 Form 10-K). Marriott's 2025 GAAP revenue was $26.2 billion, of which $19.2 billion was cost reimbursement from hotel owners (Marriott 2025 earnings release). Booking Holdings took $26.9 billion of revenue on $186.1 billion of gross bookings (Booking Holdings 2025 Form 10-K). Carnival, an owner-operator, booked $26.6 billion of cruise revenue on 13.6 million passengers (Carnival 2025 annual report). The investible question is which cash-flow engine you are underwriting: franchise royalties, management fees, owned-resort EBITDA, or take-rate on bookings.

The 2025 scoreboard was mixed, not a single cycle. Chipotle comparable restaurant sales fell 1.7% while revenue rose 5.4% on new units (Chipotle 2025 results). Hilton system-wide comparable RevPAR rose 0.4% and Marriott worldwide RevPAR rose 2.0% (Hilton and Marriott 2025 releases). Las Vegas visitor volume fell 7.5% to 38.5 million while Macau gaming revenue rose to $30.9 billion (Wynn 2025 Form 10-K, citing LVCVA and Macau Statistical Information). That split is the page: US restaurants and hotels are unit-and-fee machines, cruise is capacity and occupancy above 100%, and gaming is Macau and Singapore more than the Strip.

Structural drivers

Forces that shape long-run demand and economics. Each driver is sourced.
  • •Franchise and management fees let restaurant and hotel brands grow rooms and restaurants without owning the real estate. McDonald's ended 2025 with 45,356 system restaurants, 43,317 of them franchised. Yum! was 97% franchised across 63,285 units. Marriott ended 2025 with 1,779,936 system rooms and $5.44 billion of gross fee revenue. Hilton ended 2025 with 1,351,351 rooms, 8,239 of them franchised. Sources: McDonald's, Yum!, Marriott, and Hilton 2025 filings.
  • •System sales and gross bookings are the top of the funnel even when they are not GAAP revenue. McDonald's systemwide sales were $139.4 billion. Yum! system sales were $68.3 billion. Domino's global retail sales were $20.1 billion. Booking Holdings gross bookings were $186.1 billion. Expedia Group gross bookings were $119.6 billion. Airbnb gross booking value was $91.3 billion. Sources: each company's 2025 10-K or earnings release.
  • •Cruise economics are occupancy and onboard spend on an owned fleet. Carnival occupancy was 105% on 96.5 million ALBDs. Royal Caribbean occupancy was 109.7% on 53.3 million available passenger cruise days. Norwegian occupancy was 103.5% on 24.4 million capacity days. All three ran above 100% because cabins hold more than two guests. Sources: Carnival, Royal Caribbean, and Norwegian 2025 Form 10-K filings.
  • •Macau and Singapore, not Las Vegas, are the growth engines for the three gaming names. Las Vegas Sands 2025 net revenue was $13.0 billion: $7.47 billion Macao and $5.59 billion Marina Bay Sands. Wynn Macau operations were $3.72 billion of $7.14 billion group revenue. MGM China was $4.46 billion of $17.54 billion group net revenue. Macau annual gaming revenue was $30.9 billion in 2025. Sources: LVS 2025 results, Wynn and MGM 2025 Form 10-K filings.
  • •Unit growth still compounds even when comps are flat. Chipotle opened 334 company-owned restaurants in 2025 and ended with 4,056 restaurants after a 1.7% comparable-sales decline. Hilton added 97,000 room openings and 6.7% net unit growth. Marriott added about 73,600 net rooms, over 4.3% net rooms growth. Domino's added 776 net stores to 22,142. Sources: Chipotle, Hilton, Marriott, and Domino's 2025 results.
  • •Digital ordering is now a base load, not a pandemic spike. Chipotle digital sales were 36.7% of 2025 food and beverage revenue. Domino's generated more than 85% of US retail sales via digital channels. Yum! digital system sales approached $40 billion and 60% of system sales. McDonald's tracks systemwide sales to loyalty members across 70 markets. Sources: Chipotle, Domino's, Yum!, and McDonald's 2025 disclosures.
  • •OTA take-rates sit on a larger booking pool than any hotel brand's fee line. Booking Holdings 2025 revenue of $26.9 billion was 13% of $186.1 billion of gross bookings. Expedia Group revenue of $14.7 billion was 12% of $119.6 billion of gross bookings. Airbnb revenue of $12.2 billion was 13% of $91.3 billion of GBV. Room-night scale is also not one number: Booking 1,235 million room nights, Airbnb 533.0 million nights and seats, Expedia 415.4 million booked room nights. Sources: Booking, Expedia, and Airbnb 2025 results.

Structural risks

Forces that could compress demand, change economics, or break the thesis.
  • •Same-store sales can go negative while the unit machine still prints revenue. Chipotle 2025 comparable restaurant sales were down 1.7% on 2.9% fewer transactions. Starbucks closed 627 company-operated stores in Q4 FY2025 under its Back to Starbucks plan and ended the year with 40,990 stores. A long period of traffic declines would change the restaurant compounding story. Sources: Chipotle 2025 results; Starbucks FY2025 Form 10-K.
  • •US lodging RevPAR is already slow. Hilton full-year 2025 system-wide comparable RevPAR rose 0.4%. Marriott worldwide RevPAR rose 2.0%, with US and Canada up 0.7%. Both companies guided 2026 RevPAR only 1.0% to 2.5%. Fee growth is now more rooms than rate. Sources: Hilton and Marriott 2025 earnings releases.
  • •Las Vegas visitation and Strip rooms are softer than Macau. LVCVA visitor volume was 38.5 million in 2025, down 7.5% from 41.7 million. Strip occupancy was 83.2% versus 86.4% in 2024. Nevada Gaming Control Board Strip gaming win was $8.8 billion in both years. MGM Las Vegas Strip Resorts net revenue fell 4% to $8.44 billion. Sources: Wynn 2025 Form 10-K (LVCVA and NGCB); MGM 2025 Form 10-K.
  • •Cruise is capital intensive and fuel sensitive. Norwegian said fuel cost net of swaps was about 6.4% of Royal Caribbean's 2025 revenue in Royal's 10-K (Royal Caribbean fuel was 6.4% of revenue). Carnival consumed 2.8 million metric tons of fuel. A demand shock or a newbuild pause would hit owner-operators harder than fee brands. Sources: Carnival and Royal Caribbean 2025 Form 10-K filings.
  • •Macau policy and concession risk is concentrated. Wynn holds one of six Macau gaming concessions through 31 December 2032. MGM owns about 56% of MGM China. LVS is Macao plus Singapore only after exiting Las Vegas. A change in visa policy, tables, or tax would move more of the gaming roster than a Strip weekend. Sources: Wynn, MGM, and LVS 2025 filings.
  • •OTA mix is merchant versus agency, and mix changes the P&L. Booking Holdings merchant gross bookings rose to $130.0 billion in 2025 while agency fell to $56.1 billion. That shift helps reported revenue and working capital and also raises fulfillment risk. Regulatory pressure on ranking, payments, and short-term rentals is ongoing in the EU and US cities. Source: Booking Holdings 2025 earnings release and Form 10-K.
  • •GAAP revenue is a poor cross-sector scoreboard if you ignore mix. Marriott cost reimbursement was $19.2 billion of $26.2 billion. Domino's supply chain was $2.99 billion of $4.94 billion. Comparing those lines to Chipotle restaurant sales or Carnival ticket revenue without the footnote will mis-rank the roster. Sources: Marriott 2025 release; Domino's 2025 annual report.

Competitive landscape

How to think about the players. Framing along axes (pure play vs diversified, incumbent vs challenger, etc). Not stock picking.

Five archetypes, not one GICS bucket.

1. Asset-light franchise restaurants (McDonald's, Yum!, Domino's). Royalties on system sales. Company restaurants are a small slice (McDonald's 2,039 of 45,356; Domino's 262 of 22,142; Yum! 97% franchised).

2. Company-operated restaurants (Chipotle, Darden, most of Starbucks). Chipotle is 4,042 company-owned of 4,056. Darden owned 2,202 US restaurants in FY2026. Starbucks company-operated stores were 52% of units and 83% of FY2025 revenue.

3. Asset-light lodging brands (Marriott, Hilton). Fees plus cost reimbursement. Owned rooms are a rounding error at Hilton (46 hotels, 15,287 rooms) and less than one percent of Marriott's system.

4. Owner-operators: cruise (Carnival, Royal Caribbean, Norwegian) and integrated resorts (Las Vegas Sands, MGM, Wynn). Ships and casino resorts sit on the balance sheet. Occupancy, hold, and onboard or non-gaming mix drive the year.

5. Online travel platforms (Booking Holdings, Expedia Group, Airbnb). Take-rate on gross bookings. Airbnb is a host marketplace, not a hotel franchisor. Booking.com is the room-night scale leader on this roster.

Airline operations live on Transport and Diversified Industrials. Host Hotels and Vici live on REITs. Airframers live on Aerospace.

Key metrics to watch

The operational and financial metrics that matter most in this sector. Each one names its source and update cadence.
MetricSourceFrequencyWhy it matters
Systemwide or global retail sales (restaurants)Company 10-K and earnings releases (McDonald's, Yum!, Domino's)quarterlyGAAP revenue is royalties plus a thin company-store slice. System sales are what franchise fees are paid on.
Comparable restaurant sales and trafficCompany earnings releases (Chipotle, Darden, McDonald's, Starbucks, Domino's)quarterlySeparates price from traffic. Chipotle 2025 comps were minus 1.7% on minus 2.9% transactions.
System rooms, net unit growth, and RevPARMarriott and Hilton quarterly releasesquarterlyFee growth is rooms times RevPAR times royalty rate. 2025 RevPAR was already low-single-digit.
Gross fee revenue versus cost reimbursementMarriott and Hilton income statementsquarterlyReimbursement inflates GAAP revenue. Fees are the brand P&L.
Cruise occupancy, ALBD or APCD, and onboard mixCarnival, Royal Caribbean, and Norwegian 10-K statistical tablesquarterlyOccupancy above 100% is the industry convention. Ticket versus onboard mix is the margin mix.
Macau GGR and property-level net revenueMacau Statistics via company 10-Ks; LVS, Wynn, and MGM segment notesmonthly GGR, quarterly company2025 Macau gaming revenue was $30.9 billion. LVS, Wynn, and MGM China are levered to that print.
OTA gross bookings, room nights, and take-rateBooking, Expedia, and Airbnb earnings releasesquarterlyRevenue over bookings is the take-rate. Room-night definitions are not identical across the three.

Catalysts and milestones

Known upcoming events that could move the sector. Dated where possible.
  • •Hilton 2026 system-wide RevPAR guide is 1.0% to 2.0%. Marriott 2026 worldwide RevPAR guide is 1.5% to 2.5%. First-half 2026 prints will show whether US lodging stayed stuck.
  • •Chipotle 2026 guide: comparable sales about flat and 350 to 370 new restaurants. A second year of negative traffic would be a thesis change for company-operated fast casual.
  • •Darden FY2027 outlook (issued with FY2026 results): sales $13.60 to $13.75 billion and 75 to 80 new restaurants. Olive Garden and LongHorn are the volume brands to watch.
  • •Norwegian has 17 ships on order from 2026 through 2037, including Prima, Sonata, and Prestige classes. Delivery dates and financing conditions are in the 2025 Form 10-K.
  • •Wynn Al Marjan Island in Ras Al Khaimah is expected to open in 2027 (Wynn 2025 Form 10-K). That is a new geography, not a Macau increment.
  • •MGM agreed in October 2025 to sell MGM Northfield Park operations for $546 million, with a VICI master-lease rent cut, expected first half 2026 (MGM 2025 Form 10-K).
  • •Booking Holdings board approved a 25-to-1 stock split effective 2 April 2026 (Booking 2025 earnings release). Cosmetic for the multiple, useful for the share-count series.
  • •Macau monthly gross gaming revenue prints remain the highest-frequency read for LVS, Wynn, and MGM China.

What would change the view

Conditions or evidence that would invalidate the thesis or materially shift the risk picture.
  • •US lodging RevPAR turns negative for a full year at both Hilton and Marriott, which would mean fee growth is only rooms and mix.
  • •Chipotle or Starbucks comparable transactions fall for another full year after 2025, which would say the company-operated restaurant model is losing traffic, not just cycling price.
  • •Macau annual gaming revenue falls materially below the $30.9 billion 2025 print cited in Wynn's 10-K, or a concession term is reopened before 2032.
  • •Cruise occupancy falls back through 100% for a full year at Carnival or Royal Caribbean, which would unwind the post-restart yield story.
  • •OTA room nights stall while marketing as a share of bookings rises from Booking's 4.4% of 2025 gross bookings.
  • •A live Sterling sector (Aerospace, Transport, or REITs) can honestly hold these names without stretching its thesis. That would be a roster error, not a demand error.

What we are not covering

Sub-areas, technologies, or companies we are deliberately excluding from the analysis, and why.
  • •Airline operations (DAL, UAL, AAL, LUV, ALK, and the rest). Those names live on Transport and Diversified Industrials.
  • •Airframers and engine makers (BA, AIR.PA, GE, RTX, SPR). Those names live on Aerospace.
  • •Hotel REITs (HST, VICI, and peers). Those names live on REITs. Marriott and Hilton are the brand and fee companies.
  • •Private restaurant brands, European luxury travel, theme parks (DIS parks sit in Media), and timeshare developers except as a Marriott or Hilton license line.
  • •Custom per-company KPI floors. Deferred on purpose for this roster.
  • •Modeled TAM or Circana restaurant share. If it is not in a filing, it is not on this page.

Sources

Primary sources cited in this analysis. Links open in a new tab.

Audit trail

Record of the last review and what changed. Required on every refresh.
Last reviewed: 2026-08-25
Change log
  • 2026-08-25Replaced the scaffold strategy with sourced copy from 2025 and FY2026 primary filings. Charts and company blurbs use the same figures. Airlines and hotel REITs stay off this page.
Unresolved questions
  • •Starbucks does not publish McDonald's-style systemwide sales. Should Overview keep comparing GAAP revenue only, or drop Starbucks from the system-sales chart?
  • •Marriott and Hilton GAAP revenue is mostly reimbursement. Is a fee-only roster bar less misleading than GAAP for lodging?
  • •Airbnb nights and seats are not the same statistic as Booking room nights. Keep them on one chart with the caveat, or split?
  • •Darden FY2026 had 53 weeks. Do we annotate every Darden bar, or only the growth rate?
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Restaurants, Travel and Leisure Strategy: Market Data | Sterling