On the whole, the travel and leisure industry in the U.S. has experienced a year of steady growth. However, several factors have weighed down the top line of some of these companies, especially the hoteliers. These include a strong dollar, higher costs entailed on renovation, challenges posed by new technology and detrimental international incidents.

But a resurgence in the U.S. economy means that things are only to get better from now on. A rebound in GDP, a resurgent labor market and encouraging wage growth numbers have helped the Federal Reserve hike its rates following a long hiatus. These have also increased the disposable income of consumers.

Additionally, the promise of emerging markets such as China means that there is a lot of room for growth. U.S. listed companies within that market are already catering successfully to a growing number of domestic customers. Taken together, these factors mean that it may be a good idea to bet on such stocks.

A Year in Retrospect

A stronger economy has benefited the hotel industry which has grown at a steady pace. Also, hoteliers have moved from owning real estate to franchising their brand and services to better counter economic volatility.

International developments and a sluggish economy threatened to upset the apple cart. However, the lodging sector is still expected to grow in 2016 due to an improvement in domestic business as well as encouraging international travel and tourism volumes.

Meanwhile, the cruise industry has surged forward at a furious pace. Companies from the sector have managed to keep up with changing consumer tastes by introducing new attractions and impressive new ships. They have also been aided by the continuing slump in fuel prices, especially on a year-over-year basis.

Outlook for 2016

As wage growth picks up next year, the U.S. consumer will soon have access to more disposable income. This is likely to result in higher levels of discretionary spending. A recent report from Fitch Ratings indicates that leisure companies are set to gain from such a trend as consumers opt for more experiential rather than material purchases.

This is why the ratings firm has said that the outlook for this sector as well as its rating is stable. Cruise lines in particular are expected to have a very good year. Around 24 million passengers are expected to take cruises next year, compared to 15 million a decade ago, according to the Cruise Lines International Association.

Demand from China Picking Up

U.S. cruise line companies are focusing on China’s market in particular because of several reasons. As China’s government attempts to transform its economy into one driven by consumer spending, the outlook for cruise lines will improve. Already, demand for cruise services in China is increasing at a rapid pace.

According to industry estimates, around 4,000 Chinese passengers sailed on cruises six years ago. This is projected to increase to 700,000 next year. Meanwhile, China’s indigenous travel and tourism companies are successfully catering to a growing domestic customer base. Some of them have successfully tapped into the hospitality sector boom of that country.

Our Choices

The leisure and hospitality sector has shown strong growth trends despite a number of challenges. A recovering economy and the promise of new markets means that things are set to improve for the sector next year.

Additionally, some companies in these new growth areas, especially China, are successfully catering to domestic demand. This is why these stocks also deserve your attention. Taken together these stocks are set to deliver strong growth next year. Our selection is also backed by a good Zacks Growth Score and Zacks Rank.

We narrowed down our choices with the help of our new style score system.

Our research shows that stocks with a Growth Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) offer the best investment opportunities in the growth investing space.

Vail Resorts Inc. (MTN - Snapshot Report) is one of the leading resort operators in North America. The company's operations are grouped into two segments, Resort and Real Estate.

Vail Resorts holds a Zacks Rank #1 (Strong Buy) and has a Growth Style Score of ‘B.’ The company has expected earnings growth of 30.5% for the current year. The stock has gained 40.4% year to date. The earnings estimate for the current year has increased by 6.4% over the last 30 days.

Carnival Corporation (CCL - Analyst Report) operates as a cruise and vacation company. As a single economic entity, Carnival Corporation & Carnival plc forms the largest cruise operator in the world.

Carnival holds a Zacks Rank #2 (Buy) and has a Growth Style Score of ‘B.’ The company has expected earnings growth of 23.1% for the current year. The stock has gained 19.4% year to date. The earnings estimate for the current year has increased by 1.5% over the last 30 days.

Royal Caribbean Cruises Ltd. (RCL - Analyst Report) is a cruise company. It has five cruise brands — Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Cruises and CDF Croisières de France.

Royal Caribbean Cruises holds a Zacks Rank #2 and has a Growth Style Score of ‘B.’ The company has expected earnings growth of 41.4% for the current year. The stock has gained 21.2% year to date.

China Lodging Group, Ltd. (HTHT - Snapshot Report) operates and manages a group of hotels under multiple brand names in China.

China Lodging Group holds a Zacks Rank #1 and has a Growth Style Score of ‘B’. The company has expected earnings growth of 30.8% for the current year. The stock has gained 23.5% year to date.