US Leisure: Mideast Fears Waning; River Levels Worse but Potentially Bottoming

US Leisure: Mideast fears are waning. While conversations around the cruise industry abound, the biggest change to fundamentals is the increasing willingness of consumers to look past or outright ignore Middle East headlines in favor of their vacation plans, driving accelerating 3Q booking trends, particularly for European itineraries. Travel agents report a bounce-back in recent months and a return to growth in 2027-and-beyond bookings versus this time last year. River conditions for VIK remain historically weak, with Citi's Rhine-Danube River Monitor at an all-time low, but BfG forecasts suggest steady improvement over the next two weeks. We view the continued disruption as increasingly baked into expectations and valuation, and are closing our negative catalyst watch on VIK. We are increasingly constructive on RCL, raising our 2026 yield and EPS estimates and closing our positive catalyst watch. NCLH reported 3Q results ahead of expectations and reaffirmed full-year guidance. After