This study examines the influence of innovative business strategies on corporate profitability and valuation in the travel and leisure industry. Following the theoretical framework developed by Miles and Snow (1978) to measure business strategy and using a sample of 791 firm-year observations for 138 publicly listed international companies from 2014 to 2021, we find that more innovative business strategies are associated with lower profitability but higher market valuations. Moreover, the negative association of innovation with profitability reversed during COVID-19. Our paper provides insights into the short-term consequences of innovation and how investors perceive innovative companies. Managers and investors may use our results to better understand the key factors affecting corporate performance and value in the travel and leisure industry.