While inflation is at decades-high levels, driving costs higher, traveling isn’t seeing any pullback in demand.
The ALPS Global Travel Beneficiaries ETF (JRNY) outperformed developed market indexes last week on positive earnings reports and global travel data.
Despite news last week of the first quarterly decline in U.S. GDP since the first half of 2020, travel data points to a healthy global consumer and increasing travel demand, according to ALPS.
According to Los Angeles International Airport (LAX), the airport saw over five million travelers pass through its gates in March, representing a 27.5% increase month-over-month with a 53% jump in international travelers.
“A resilient consumer and positive earnings outlooks for discretionary spending names have led JRNY to outperform global markets, as represented by the Morningstar Global Markets Index, by 420bps year-to-date,” ALPS writes.
U.S. personal income rose 0.5% in March and drove U.S. personal spending to increase 1.1%, implying that wage inflation is trending higher with price inflation. Despite elevated fuel prices leading to increased travel prices, consumer spending and travel booking data remain strong, according to ALPS.
Six in 10 Americans are planning at least one summer trip in 2022. Despite higher gas prices, 35% of those Americans planning vacations expect to travel more this summer than last year, according to USTravel.org.
Leisure booking intentions hit a pandemic period high in March 2022, suggesting the influence of COVID-19 on purchase decisions continues to wane, per Deloitte, ALPS writes.
“Travel and entertainment spending was up 121% globally year-over-year, driven by strong growth in consumer travel spending. We have to realize people have not been traveling for probably two years and there is a tremendous pent-up demand for travel,” CEO Steve Squeri of American Express (AXP, 4.52% weight*) says during the firm’s Q1 earnings conference call.
Other ETFs that offer broad exposure to the rebounding travel industry include the SonicShares Airlines, Hotels, Cruis Lines ETF (TRYP) and the Defiance Hotel Airline and Cruise ETF (CRUZ).
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