Time for Reopening-Friendly Travel & Leisure ETFs?


As the pandemic is slowly turning into an endemic, economic-reopening-friendly stocks, like leisure stocks, have flied higher. Airlines, hotels and resultants stocks caught attention in recent trading as U.S. Global Jets ETF JETS and SonicShares Airlines, Hotels, Cruise Lines ETF TRYP are up 8.1% and 2.6%, this year, respectively against a 6.4% decline in the S&P 500.

“This pent-up demand is also evident in the surge of new business openings in nightlife, beauty, and travel and hotels, which all increased from the 2021 levels in Q1. Consumer behavior and business activity suggested favorable economic conditions for local businesses in the first quarter,” said Pria Mudan, data science leader at Yelp, as quoted on Yahoo Finance.

And why not? There has been widespread vaccination globally. Moderna MRNA said trial results suggest redesigned vaccines can better protect against variants. Novavax NVAX indicated that vaccine targeting Covid and flu delivered upbeat results in early data. Pfizer-BioNTech COVID-19 vaccine booster too created strong immune response in kids of 5–11 years.

No wonder, travel and leisure stocks have gained momentum in the past month and outdid the broder market.

Airlines Taking Speed

Airlines such as United (UAL) and American AAL predict reaching profitability amid strong demand in the latest earnings release. A stronger fare environment to keep pace with the surge in fuel costs is another plus for the companies.

Investors should note that for the second quarter of this year, United Airlines is forecasting a 10% operating margin, and the highest quarterly sales in its history, with revenue per passenger mile up 17% over 2019, as higher fares offset a spike in expenses. There was a rise in bookings (both Spring Breaks and business travel) for airlines in March.

Luxury Hotels Look Grand Again

The U.S. hotel industry reported revenue per available room (RevPAR) in 2021 that was 83.2% of the pre-pandemic comparable, according to the latest data from STR, pointing to the recovery. Thanks to Spring Break travel, the U.S. hotel industry reported 4% increase in RevPAR in March from March 2019. Average daily rate (ADR) was 10.9% in the month from the similar index while occupancy was off 6.2%, per str.com. Luxury hotel operator Marriott International (MAR) has been hitting new highs recently. The stock is up 13% year-to-date.

Restaurant Industry Looks Yummy Too

The foodservice industry is forecast to touch $898 billion in sales in 2022, returning to pre-COVID pandemic trajectory, the National Restaurant Association said. Pent-up demand for restaurant dining has also increased. Fast food chain giant McDonalds (MCD) is up 8.7% past month. Brinker International has gained 7.9% while Dave and Buster’s (PLAY) is up 11.7%.

Against this backdrop, below we highlight a few travel and leisure ETFs that beat the S&P 500 (down 1.5%) past month.

Reopening-Friendly ETFs in Focus

U.S. Global Jets ETF (JETS) – Up 10.3% Past Month

Defiance Hotel Airline and Cruise ETF CRUZ – Up 8.4% Past Month

SonicShares Airlines, Hotels, Cruise Lines ETF (TRYP) – Up 8.4% Past Month

AdvisorShares Hotel ETF BEDZ – Up 3.4% Past Month

ALPS Global Travel Beneficiaries ETF JRNY – Up 2.7% Past Month

AdvisorShares Restaurant ETF EATZ – Down 0.8% Past Month

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Moderna, Inc. (MRNA) : Free Stock Analysis Report
 
Novavax, Inc. (NVAX) : Free Stock Analysis Report
 
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
U.S. Global Jets ETF (JETS): ETF Research Reports
 
AdvisorShares Restaurant ETF (EATZ): ETF Research Reports
 
AdvisorShares Hotel ETF (BEDZ): ETF Research Reports
 
SonicShares Airlines, Hotels, Cruise Lines ETF (TRYP): ETF Research Reports
 
Defiance Hotel, Airline, and Cruise ETF (CRUZ): ETF Research Reports
 
ALPS Global Travel Beneficiaries ETF (JRNY): ETF Research Reports
 
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