Demand for leisure products and services usually rises when the economy is healthy, unemployment is low, and disposable income is high. That demand also wanes when the opposite is true. Let's take a look at two leading stocks in this sector -- cruise line Royal Caribbean Cruises (NYSE:RCL)and travel booking site Expedia (NASDAQ:EXPE).

Battle on the high seas
Cruise Market Watch expects 22.2 million passengers worldwide to take a cruise this year, a 3.2% increase from 2014. Total revenue across the industry is expected to rise 6.9% to $39.6 billion. Royal Caribbean serves 23% of all passengers worldwide, while its competitor, Carnival (NYSE:CCL), serves 48%.

Source: Royal Caribbean

During the third quarter, the larger Carnival saw revenue slip 1% annually to $4.9 billion, beating estimates by $80 million. Lower revenue from ticket purchases were partially offset by higher "onboard and other" revenue like food, drinks, and services. Non-GAAP earnings rose 11% to $1.75 and beat estimates by $0.13. Lower fuel costs, which dropped 33% during the quarter, contributed heavily to that gain.

By comparison, Royal Caribbean revenue rose 5% annually to $2.5 billion last quarter, coming in $20 million below estimates. However, its adjusted earnings per share rose 29% to $2.84, which exceeded expectations by $0.13. Royal Caribbean's bottom line was also boosted by a 13% decline in fuel costs. But unlike Carnival, Royal posted positive growth in both ticket purchases and onboard revenue. Both Carnival and Royal raised their full-year earnings guidance last quarter. Carnival expects earnings to rise up to 35%, while Royal anticipates 42% growth. Both companies are also expanding their fleets in China to capitalize on the spike in Chinese tourism.

Carnival and Royal Caribbean might seem fundamentally similar, and both stocks trade at around 16 times forward earnings. But in my opinion, Royal Caribbean is a better pick -- it has better top and bottom line growth, ticket and onboard revenue are rising simultaneously, and it expects stronger earnings growth for the full year.

A more diversified leisure play
As the world's largest online travel agency, Expedia represents a diversified way to invest in worldwide travel. Thanks to its recent merger with Orbitz Worldwide, Expedia now controls over two-thirds of all online travel bookings in the U.S. Last quarter, Expedia revenue rose 13.5% annually to $1.94 billion but came in $20 million below estimates. Excluding the stake in Chinese travel site eLong that it sold earlier this year, gross bookings rose 21%, up from 20% in the second quarter.

Expedia's mobile app. Source: iTunes

Expedia's room night growth climbed 36% annually, with 25% domestic and 50% international growth. Some of those gains were offset by a 15% decline in average revenue per night. Likewise, airline tickets sold surged 31%, but average revenue per ticket slipped 9%. Foreign exchange impacts further reduced international revenue, which accounted for nearly half of the company's top line, by a whopping 18 percentage points.

Despite those challenges, Expedia's adjusted EBITDA rose 13% to $469 million, boosting its adjusted earnings per share 6% to $2.07 and beating estimates by five cents. Expedia also raised its full-year adjusted EBITDA growth forecast, excluding eLong, to 12% (including Orbitz) to 15% (excluding Orbitz). Expedia's bottom line beat and rosy guidance caused its stock to jump nearly 10% after releasing earnings.

Expedia's only meaningful competitor is Priceline(NASDAQ:BKNG), which acquired rival booking, car rental, and restaurant reservation sites over the past decade to keep up. Together, the two companies now control over 90% of the U.S. online travel market. Shares of Expedia have rallied about 60% year-to-date, compared to Priceline's 30% gain. But even after that rally, Expedia trades at 21 times earnings, considerably lower than Priceline at 33 times, although that might change after Priceline reports earnings on Nov. 9.

The good times can't last forever
Royal Caribbean and Expedia are outperforming the market now, but investors should remember that they perform poorly during economic downturns. Both stocks will continue to benefit from lower fuel costs and higher travel rates, but those tailwinds will not last forever.