Hospitality company Travel + Leisure (NYSE:TNL) fell short of analysts' expectations in Q4 FY2023, with revenue up 4% year on year to $935 million. It made a non-GAAP profit of $1.98 per share, improving from its profit of $1.30 per share in the same quarter last year.

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Travel + Leisure (TNL) Q4 FY2023 Highlights:

• Revenue: $935 million vs analyst estimates of $944 million (1% miss)

• EPS (non-GAAP): $1.98 vs analyst estimates of $1.37 (44.1% beat)

• Free Cash Flow of $298 million, up from $74 million in the previous quarter

• Gross Margin (GAAP): 53.6%, up from 49.2% in the same quarter last year

• Tours: 172,000

• Market Capitalization: $2.99 billion

“Our team produced strong year-over-year growth in revenue, vacation ownership sales and adjusted EBITDA, enabling us to return $443 million in capital to shareholders through dividends and stock buybacks," said Michael D. Brown, President and CEO.

Formerly known as Wyndham Destinations, Travel + Leisure (NYSE:TNL) is a global vacation company that provides travelers with vacation ownership, exchange, and travel services.

Hotels, Resorts and Cruise Lines

Hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.

Sales Growth

Reviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Travel + Leisure's revenue was flat over the last five years.

Within consumer discretionary, a long-term historical view may miss a company riding a successful new property or emerging trend. That's why we also follow short-term performance. Travel + Leisure's annualized revenue growth of 9.4% over the last two years is above its five-year trend, suggesting some bright spots.

We can dig even further into the company's revenue dynamics by analyzing its number of tours, which reached 172,000 in the latest quarter. Over the last two years, Travel + Leisure's tours averaged 22.5% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see the company's average selling price has fallen.