From President Donald Trump's travel restrictions to the United Airlines fiasco, Jim Cramer figured the $250 billion travel industry could be Wall Street's next big short.
"In a market starved for good short-selling ideas, here at last was one with real staying power, and it would take you right through April and May," the "Mad Money" host said.
But that was not the case. Sharply better-than-expected earnings reports started trickling down from the travel cohort, and soon it became clear that those who bet against it were in trouble.
"Take just last night," Cramer said. "First, Marriott reported extremely robust numbers — simply incredible — with management talking about how strong the U.S. and Europe are."
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The hotel giant posted earnings per share of $1.01, beating analyst estimates of 91 cents. Revenues came in at $5.56 billion versus the $4.91 billion expected.
"[Revenue per available room] exceeded our expectations in North America and Europe due to stronger group attendance and higher-rated business transient demand," Marriott International CEO Arne Sorenson said in a press release.
Cramer also noticed that the company shared its plans to build over 400,000 rooms, a promising sign for what seemed to be a strained sector.
"That's hardly what you would do if you were really worried about the possible unconstitutional travel ban crimping your business," he said.
United Airlines' first-quarter revenues were also surprisingly strong, with traffic up 7 percent. The company beat estimates on the top and bottom lines, with earnings per share of 41 cents on revenue of $8.42 billion. Its stock popped 10 percent on the news.
"Yep, travel is so strong that even this widely watched incident meant nothing for the biggest corporate villain of the era," Cramer said.
However, this unexpected strength in travel should not have come as a shock to those who paid close attention to the space, Cramer noted.
Strong earnings reports and forecasts from Wyndham Worldwide, Marriott's timeshare-focused spin-off Marriott Vacations Worldwide, MGM Resorts' business in the United States, or any of the cruise lines could have clued investors in on the sector's true bullishness, he said.
"Now, you could argue that all of this is just pent-up demand after travel did indeed drop briefly when Trump's bans were in effect before the courts halted them," Cramer said.
But the "Mad Money" host believes in the power of experiential spending, and suggested another variable that could be boosting travel's numbers.
"That money may just be coming out of retail," he said. "Remember, travel is as experiential as it gets, meaning it's something you can put on your Facebook page. Retail? It's just a chore made easier by Amazon. No wonder the travel and leisure stocks have been defying the short-sellers. They're the exact right place to be."
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