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Hedge funds have lost more than $6 billion this year betting against cruise lines and hotels, after underestimating the resilience of consumers globally. The sharp rally in cruise lines like Carnival (CCL) and Royal Caribbean (RCL) and other travel-related firms, such as hotels, has left them sitting on $6.4 billion of mark-to-market losses as of the beginning of August, according to data from S3 Partners.
Many of these U.S.-based hedge funds started the year expecting an impending recession that has yet to arrive. This outlook encouraged them to short sectors that would be exposed to a downturn in consumer spending. However, economic growth has remained resilient, despite higher interest rates.
