Adventure Awaits: Ride the Tourism Wave With These ETFs
Moderating inflation levels and rising expectations of the Fed cutting interest rates three times in 2024 paint a favorable picture for the tourism industry.
Additionally, projections for an increase in international travel and an uptick in global passenger traffic surpassing the pre-pandemic levels propel the prospects of the industry.
Falling Interest Rates to Boost Consumer Spending
According to the CME FedWatch Tool, the interest rate may fall to 5-5.25% in June, supported by a likelihood of 65.8%. Further, the rates are estimated to fall to 4.25-4.5%, boosted by a probability of 30.3%. A fall in the interest rate may lead to increased discretionary spending by consumers, thereby bolstering the tourism industry.
Global Air Traffic Set to Surpass Pre-Pandemic Peaks
According to the World Airport Traffic Forecasts’ 2023-2052 report, as quoted on the Business Traveller, global air passenger traffic is anticipated to achieve a milestone by the end of 2024, reaching 9.7 billion and surpassing the pre-pandemic levels.
The forecast indicates a doubling of the global air passenger traffic by 2042, with domestic numbers expected to reach 10.6 billion and international traffic to reach 8.7 billion.
According to ACI World director, General Luis Felipe de Oliveira, as quoted on ACI, with global passenger traffic reaching 9.7 billion by the close of 2024, the forecast suggests a doubling by 2042 and a remarkable 2.5-fold increase by 2052.
Surging Revenues to Spark Growth
Per Statista, the global travel & tourism market is poised for substantial revenue growth in the upcoming years, with revenues anticipated to surge to $927.30 billion. The market is expected to expand at a yearly pace of 3.47%, leading to a market size of $1.06 trillion by 2028.
Among the sectors driving this growth, the hotels market stands out as the largest, which is forecast to reach a market volume of $446.50 billion by 2024. The hotels market is anticipated to witness a surge in users to 1,397.00 million by 2028.
Per CBRE, revPAR is anticipated to achieve 3% year-over-year growth, propelled by the sustained recovery in inbound international travel, a robust performance in the meetings and group events sector, and persistent demand from leisure travelers.
Moreover, the trend of upscale hotel outperformance is predicted to persist in 2024, with luxury and upper-upscale RevPAR projected to escalate 3.8% and 3.7% year over year, respectively.
ETFs in Focus
According to Moodie Davitt Report, a doubling of global passenger traffic within the next two decades is estimated, marking a milestone, wherein China is anticipated to supersede the United States as the leading aviation market.
Furthermore, emerging economies like Indonesia, Turkey and Thailand are positioned for substantial growth, reflecting their rising significance in the global aviation landscape.
Below, we highlight a few ETFs for investors to increase their exposure to the tourism market.
Amplify Travel Tech ETF (AWAY)
Amplify Travel Tech ETF seeks to track the performance of Prime Travel Technology Index NTR with a basket of 33 securities. The fund has gathered an asset base of $89.4 million and charges an annual fee of 0.75%.
Amplify Travel Tech ETF has major allocations to the United States (37.6%), followed by Australia (11.9%) and China (10.8%). The fund has gained 998% over the past three months and 7.12% over the past year.
Defiance Hotel Airline and Cruise ETF (CRUZ)
Defiance Hotel Airline and Cruise ETF seeks to track the performance of the BlueStar Global Hotels, Airlines, and Cruises Index with a basket of 62 securities. The fund has gathered an asset base of $35.1 million and charges an annual fee of 0.45%.
Defiance Hotel Airline and Cruise ETF has major exposure to the United States (61.98%), followed by the U.K. (8.84%) and Japan (5.14%). The fund has gained 13.52% over the past three months and 18.21% over the past year.
ALPS Global Travel Beneficiaries ETF (JRNY)
ALPS Global Travel Beneficiaries ETF seeks to track the performance of the S-Network Global Travel Index with a basket of 77 securities. The fund has gathered an asset base of $6.3 million and charges an annual fee of 0.65%.
ALPS Global Travel Beneficiaries ETF has major exposure to the United States (65.63%), followed by France (10.95%) and Japan (7.42%). The fund has gained 14.71% over the past three months and 12.18% over the past year.
AdvisorShares Hotel ETF (BEDZ)
AdvisorShares Hotel ETF employs an active strategy, seeking to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenues from the hotel business. The fund has a basket of 27 securities and has amassed an asset base of $4.1 million. BEDZ charges an annual fee of 1%.
AdvisorShares Hotel ETF has major exposure to the United States (82.57%), followed by China (10.02%). The fund has gained 12.99% over the past three months and 17.16% over the past year.
U.S. Global Jets ETF (JETS)
U.S. Global Jets ETF seeks to track the performance of the U.S. Global Jets Index tracks with a basket of 51 securities. The fund has gathered an asset base of $1.28 billion and charges an annual fee of 0.60%.
U.S. Global Jets ETF has major exposure to the United States (73.46%), followed by Canada (5.42%) and Japan (2.62%). The fund has gained 20.07% over the past three months and 2.19% over the past year.
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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Amplify Travel Tech ETF (AWAY): ETF Research Reports
U.S. Global Jets ETF (JETS): ETF Research Reports
AdvisorShares Hotel ETF (BEDZ): ETF Research Reports
Defiance Hotel, Airline, and Cruise ETF (CRUZ): ETF Research Reports
ALPS Global Travel Beneficiaries ETF (JRNY): ETF Research Reports
