In the aftermath of border closures and pandemic-related restrictions introduced back in 2020, there has been a surge in consumer travel demand. Travel spending totaled $93 billion in February—5% above 2019 levels and 9% above 2022 levels. However, the question remains: how are travel and leisure ETFs and stocks performing in the post-pandemic era?
Sea travel is making waves again 🛳️
Since the announcement of the end of the Covid Public Health Emergency in January 2023, cruising companies such as Carnival (CCL) and Royal Caribbean (RCL) have seen a surge in their stocks. Both companies have outperformed the S&P 500, with Carnival's stock growing by 10.4% and Royal Caribbean's stock growing by 16.4%, compared to SPY's growth of 5.2% since January. Although there is currently no ETF specifically targeting cruise liners, it is possible to create and invest in your own cruise line ETF using Share Invest.
Airbnb and hotels are on a roll 🛏️
Airbnb and hotels have been performing impressively, with Airbnb's stock (ABNB) surging by 38%, and Hyatt (H), Marriott (MAR), and Hilton (HLT) also experiencing gains of 16%, 9%, and 9%, respectively, since January. The ETFMG Travel Tech ETF (AWAY), a travel and leisure etf that focuses on travel and accommodation technology and includes top holdings such as Airbnb, Expedia, and Trip.com, currently manages assets worth $149 million, with a -1.7% change observed since January.
Turbulent weather for airliners ✈️
Airliners are still flying through a bit of turbulence. Airlines such as Alaska Air (ALK), Delta Airlines (DAL), and Southwest Airlines (LUV) have experienced a stumble in their stocks, with changes of -10%, -6%, and -5%, respectively. Several factors, including higher fuel costs, a shortage of qualified flight crew, and weather-related challenges, present unique challenges to the industry. The U.S. Global Jets ETF (JETS) is a popular travel and leisure ETF that tracks the airline industry, has seen a -0.71% change since January.
AWAY restricts you to the airline stocks selected by the fund manager, whereas Share enables you to handpick travel and hospitality stocks for your portfolio and exclude airlines entirely, if desired.
Invest in travel and leisure using dollar cost averaging
Investors can consider dollar cost averaging as an alternative to investing in travel and leisure ETFs. By investing as little as $5 a week, investors can spread out their investments in a basket of travel and leisure stocks, thereby mitigating risks associated with market volatility while retaining control over the composition of their portfolio.
Take, for example, a basket of travel and leisure stocks including Airbnb, Southwest, and Disney. An investment of $20 a week, evenly allocated, over 5 years would have yielded a total investment of $5,220, with a current value of $5,067.
It's important to note that investing always carries risks, and past performance is not indicative of future results.