Summer Travel Industry: Financial Impacts and Economic Insights
Summer is a key period for the travel industry and for various destinations around the United States. Summer is a time when many families travel with their children being off from school. It is also a great time to visit a number of destinations that might be less desirable in the cold weather of the fall or winter months.
Travel Trends 2024
According to research recently released by the World Travel and Tourism Council (WTTC), a record $11.1 is expected to be spent on global travel in 2024. About 1 in 10 people are employed in jobs that are related to tourism.1
According to data from Bank of America, about 70% of the respondents to their summer travel survey indicated they were planning summer travel for 2024. The data also shows that younger generations (Millennials and Gen Z) are planning longer trips and plan to spend more on summer travel than in prior years.2
There is a gap between the travel plans of higher and lower income families. According to the Bank of America’s survey, a higher percentage of households with incomes under $75,000 said that they did not have travel plans for 2024 than in prior years.
Travel Spending and Local Economies
Travel spending, especially seasonal travel spending like the summer travel season, can have a huge impact on the economies of certain areas whose overall economy is tied to or greatly influenced by summer travel spending. This might include areas with a preponderance of summer homes where families will go to spend time away from home for a weekend or an extended period. Resort or tourism areas can also be impacted. The Wisconsin Dells area of Wisconsin are prime examples.
Certain specific events can be impacted by travel plans. For example, the Republican and Democratic conventions will be held this summer in Milwaukee and Chicago respectively. The impact of spending by attendees at the conventions and the press covering the conventions will have a favorable impact on the economies of these two cities.
One note that can impact the broader national economy, a Bankrate survey indicated that about one-third of travelers are planning to use debt to cover their travel costs in 2024.3 This might help the finances of the various credit card issuers, but it could have an adverse impact on the finances of the individual travelers if they end up with more debt than they can handle.
Travel Spending and the Stock Market
There are a number of stocks that are impacted by travel spending and certainly favorable spending in the travel sector. Travel stocks are generally a part of the S&P’s consumer discretionary sector and play a relatively small role in the overall index and the markets.
Certainly, unfavorable trends in travel spending can have a negative impact on the broader market, but spending in this category is generally not as significant to the markets as say consumer spending on autos, housing food and other staples. Industrial spending also plays a significant role in the economy and the markets as well.
Ways to Invest in Travel Stocks
For those investors interested in investing in the travel industry there are a number of ways to do so.
There are several categories in travel industry, some of them include:
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There are also ETFs that allow different and broader exposure to cover multiple areas of the travel industry. For example, we have ETFs that are diversified across over 30 travel companies in different segments of the travel industry, and we also have others that focus on specific parts, like airlines.
Summer travel spending can reveal a lot about the mindset of consumers which can reflect on other aspects of the economy, and ultimately the markets. For more on how to look at summer travel spending in terms of your portfolio contact your Wedbush financial advisor.
3: Bank Rate
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