Travel and leisure stocks and the ETFs that invest in them have not performed very well in 2022. Despite the easing of global COVID-19 restrictions, the toxic combination of rising fuel prices, strong , geopolitical tensions and concerns about the global recession continue to cloud the sector’s long-term outlook.
As a result, the indices and have lost around 30% and 24% respectively since the beginning of the year (YTD). Similarly, the Invesco Dynamic Leisure and Entertainment ETF (NYSE:) has lost more than 27% since January.
The fact remains that the demand for travel and leisure, both in the United States and in the rest of the world, is very strong as the summer season approaches.
For example, recent figures from the U.S. Transportation Security Administration (TSA) for checkpoint travel indicate that on June 14, the same weekday, “passenger throughput” was 2,117,726, an increase of more than 26% compared to 1,678,688 in 2021.
According to the Travel 2022 report from the Mastercard (NYSE:) Economics Institute:
“…an estimated 1.5 billion more passengers worldwide will fly in 2022 compared to last year…Travelers are starting to spend again on experiences rather than things. Budgets for travel have shifted to restaurants, bars and recreational activities.”
Today’s article features two travel ETFs that may be of interest to contrarian readers who expect the decline in travel stocks to halt during the summer months.
1. ETF AdvisorShares Hotel
- Current price (closing on 06/16): $19.80
- Range over 52 weeks: $19.80 – 27.80
- Expense ratio: 0.99% per annum
Recent analysis suggests that by 2026, global hospitality revenues are expected to reach $485 billion, up from around $300 billion in 2022. Such an expansion would mean a compound annual growth rate (CAGR) of around 12 .7%. Recent measurements also indicate that:
“80% of total revenue will be generated by online sales by 2026”.
For readers looking for opportunities in the global hospitality segment, the ETF AdvisorShares Hotel (NYSE:) might be of interest. It invests primarily in the hospitality industry and related travel services. The fund was first listed in April 2021, and its net assets do not reach $7.7 million. In other words, it is a relatively new and small ETF.
BEDZ currently holds 28 stocks, of which the top 10 make up about half of the portfolio. Among them is vacation ownership company Bluegreen Vacations. Holding (NYSE:); casino operator Red Rock Resorts (NASDAQ:); Target Hospitality (NASDAQ:), which provides temporary housing to different industries and the government; leading hotel group Marriott International (NASDAQ:); and Golden Entertainment (NASDAQ:).
BEDZ has lost over 25% since the start of the year, hitting a record low yesterday. Readers expecting the hospitality industry to benefit from summer travel might do further research on this ETF.
2. Alps Global Travel Beneficiaries ETF
- Current price (at the close of 06/16): $18.24
- Range over 52 weeks: $18.24 – $27.31
- Expense ratio: 0.65% per year
Our second fund is the ALPS Global Travel Beneficiaries ETF (NYSE:), which invests in global names in the travel industry. This fund was launched in September 2021.
JRNY, which tracks the S-Network Global Travel Index, currently holds 76 stocks. Nearly half of the portfolio is made up of consumer discretionary stocks. This is followed by industrials (28.60%), consumer staples (11.18%) and financials (4.50%), among others.
The top 10 holdings represent approximately 40% of the $8.6 million in net assets. Among them are the travel booking platform Booking (NASDAQ:); Marriott International; French luxury group LVMH (EPA:) Moet Hennessy Louis Vuitton (OTC:); and American Express (NYSE:).
JRNY is down nearly 27% year-to-date and as of this writing is changing hands at record highs. Prospective investors who expect travel companies to look beyond current macroeconomic concerns might consider investing in a thematic name like JRNY.
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2 travel & leisure ETFs to study before the summer season | Investing.com