While travel-related companies are demonstrating improved fundamentals, the ETFs providing exposure have not garnered much investor attention. This could change as Americans gear up for summer vacation and/or return to making business trips only to realize that booking prices are notably higher than before
“Hotels, for instance, can price hotel rooms continuously in response to occupancy levels,” said Roxanna Islam, associate director of research at Alerian S-Netwoks Global Indexes. Islam noted that Marriot International (MAR) was able to raise its average daily rate from 3% in January 2022 to 12% in March 2022, compared to the same month pre-pandemic in 2019, according to Hopper.
Meanwhile, airlines hiked fares to price levels 34% higher this summer relative to three years ago. Naturally, many of the related companies, such as Booking Holdings (BKNG), Expedia Group (EXPE), and Uber Technologies (UBER) should be beneficiaries of the increased travel for family vacations or in-person meetings.
There are five non-leveraged ETFs listed in the travel ETF theme on the ETF Database platform, and all have launched since the beginning of 2020. The largest of these is the ETFMG Travel Tech ETF (AWAY ), but the fund has just under $240 million in assets. AWAY focuses solely on technology-focused companies within the global travel and tourism industry such as BKNG and EXPE.
The AdvisorShares Hotel ETF (BEDZ ), the ALPS Global Travel Beneficiaries ETF (JRNY ), the Defiance Hotel Airline and Cruise ETF (CRUZ ), and the SonicShares Airlines, Hotel, CruiseLines ETF (TRYP ) round out the quintet. Each of these ETFs still has less than $100 million in assets, but we believe they will gain traction as investors begin looking for opportunities to participate in the re-emergence of travel plans.
As the names suggest, these four are different from AWAY. For example, BEDZ owns MAR and other hotels like Choice Hotel (CHH) and Red Rock Resorts (RRR), but not companies in other travel industries. Meanwhile, CRUZ and TRYP both own MAR, Carnival Corporation (CCL), and Delta Airlines (DAL).
In contrast, TRYP has top-10 holdings in technology-focused companies such as BKNG and UBER, hotels like MAR and Hilton Worldwide Holdings (HLT), and airlines like DAL.
The exposure differences these ETFs provide highlights the importance of looking under the hood, since none of these ETFs have achieved a long-term record.
And if you are wondering, yes, my family is planning an August vacation, and I have returned to traveling for in-person meetings.
To see more of Todd’s research, reports, and commentary on a regular basis, please subscribe here.
