ETF of the Week: Direxion Daily Travel & Vacation Bull 2X Shares (OOTO)


ETF Trends CEO Tom Lydon discussed the Direxion Daily Travel & Vacation Bull 2X Shares (OOTO) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.

The Direxion Daily Travel & Vacation Bull 2X Shares seeks daily investment results, before fees and expenses, of 200% of the performance of the BlueStar Travel and Vacation Index. The BlueStar Travel and Vacation Index is comprised of US-listed stocks, including depository receipts, of companies that are Travel and Vacation companies.

OOTO is an excellent play for traders with a high conviction on the recovery in the leisure and travel industry, especially as we head into the holiday season. If you really want to make a bet on the next eight weeks through the travel season, OOTO (aka out of the office) would be the way to do it. The trans-Atlantic travel corridor is set to re-open for COVID-19 vaccinated tourists, and airlines anticipate robust holiday travel demand after over a year of travelers being stuck at home.

Recent earnings results reveal how the travel/leisure industry has rebounded from the coronavirus pandemic. Despite continued volatility in the travel recovery, Expedia Group’s net income and adjusted Ebitda for the quarter nearly matched Q3 2019 levels driven by the superior performance from Vrbo and domestic travel along with improvements across virtually all lines of business.

Airbnb showed strong third-quarter profit growth, and a beat on revenue estimates as the company recovers from the COVID-19 fallout and travel returns with the increased vaccination drives. The company revealed 79.7 million nights and experiences booked in the third quarter, up 29% year over year. Airbnb also enjoyed its highest-ever revenue and net income for the third quarter, despite urban and cross-border travel not bouncing completely back to pre-pandemic levels. Looking to 2022, vaccination progress and the recovery of international travel in Q4 2021 will be key themes for growth heading into the new year.

Travel is Back on the Menu

Data is backing travelers’ intent to travel despite the infection risks. According to a survey of more than 5,000 travelers by vacation rental site Evolve. 32% of travelers are not factoring the Delta variant into their travel plans at all. Of the travelers who are, 46.5% won’t consider canceling their plans because of it ‘until much closer to the trip dates.’

Market experts are also seeing that activity reflect itself in online searches. Overall, the trend is lower than pre-pandemic times but still heading towards the upside compared to a docile 2020. They are seeing significant momentum around international and domestic flight searches compared to 2020, up 155 percent and 212 percent, respectively. When compared to 2019, however, both international and domestic flight searches are down, 52 percent and 43 percent, respectively. So, there’s still a lot of room for improvement.

Additionally, the rebound in the hotel/restaurant industry reflects the growing demand for leisure. With the forthcoming holiday season, vigorous hiring at restaurants and bars again helped the leisure and hospitality sector spearhead the month’s employment figures. Employers added almost 120,000 cooks, waitstaff, and other restaurant workers to help push the entire leisure sector up 164,000 for the month. Employment in the leisure and hospitality sector has advanced by 2.4 million in 2021, though it’s still down 1.4 million, or 8.2%, since February 2020, the start of the pandemic.

Listen to the full podcast episode on OOTO:

For more podcast episodes featuring Tom Lydon, visit our podcasts category.