Despite widespread global inflation, consumers have yet to materially pull back on overall spending, lifting global travel ETFs.
SS&C ALPS Advisors wrote in a December 5 insight that global travel continues to have its pulse on the state of the consumer with strong travel spending expected to persist into 2023, affirmed by Thanksgiving weekend seeing the highest foot traffic across US airports since the pandemic began, per the US Transportation Security Administration.
A rise in wages and lower unemployment across developed markets, coupled with lower gas prices over the month of November, may have provided the jolt global travel spending needed through the holidays, thwarting recessionary trends, according to ALPS.
U.S. consumers shelled out a record $11.3 billion on Cyber Monday, and there is a spending rise of +5.8% from last year as of the end of November, according to Adobe Analytics.
“In the face of global central banks continuing to hike interest rates to curb inflation, the resiliency of the global consumer has been remarkable as unemployment across developed and emerging economies remains near record lows,” ALPS wrote.
Key indicators of global travel and leisure spending have also provided optimistic data points in recent history. Nevada (Las Vegas) gaming revenues surpassed COVID-19 levels by a shocking +20% in October, while Chinese gambling hub Macau received a bullish note from JPMorgan, stating they expect “up to 50% additional capacity” of casinos and hotels to drive a return to pre-COVID-19 earnings by 2024, according to ALPS.
“Furthermore, global air traffic and flights booked are expected to continue to increase as the International Air Transportation Association reported total airport traffic spiked +44.6% year-over-year in October of 2022,” ALPS wrote.
Per Bloomberg, global scheduled flights are 3 times that of the pandemic lows, with the week of Thanksgiving in 2022 recording over 605,000 flights, globally.
The ALPS Global Travel Beneficiaries ETF (JRNY) provides global exposure, intended to capture the increasing travel trends in developed and emerging markets with diversification across various travel segments and beneficiaries.
Over 32% of JRNY’s holdings are domiciled outside of the U.S., compared to less than 25% in the U.S. Global Jets ETF (JETS) and less than 13% in the AdvisorShares Hotel ETF (BEDZ).
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