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2 Travel And Leisure ETFs Ahead Of A Busy Summer Season

Published 06/17/2022, 03:22 AM
MAR
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TRV
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AXP
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BKNG
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GDEN
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DJUSCG
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DJUSAR
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PEJ
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BVH
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LVMUY
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TH
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BEDZ
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JRNY
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Travel and leisure stocks and exchange-traded funds (ETFs) that invest in them have not performed well in 2022. Despite loosening global COVID-19 restrictions, the toxic combination of rising fuel prices, high inflation, geopolitical tensions, and global recession worries keeps dampening the sector's long-term outlook.

As a result, the Dow Jones Travel & Leisure Index and Dow Jones Airlines Index lost around 30% and 24% year-to-date (YTD), respectively. Similarly, the Invesco Dynamic Leisure and Entertainment ETF (NYSE:PEJ) has fallen over 27% since January.

PEJ Weekly Chart

Still, there is a great deal of pent-up demand for travel and leisure both stateside and worldwide ahead of the busy summer season.

For instance, recent checkpoint travel numbers from the US Transportation Security Administration (TSA) point out that on June 14, the same weekday "passenger throughput" was 2,117,726, up over 26% from 1,678,688 in 2021.

According to the Travel 2022 report from the Mastercard Economics Institute:

".. an estimated 1.5 billion more passengers globally will fly in 2022 compared to last year…Travelers) are returning to spending on experiences over things. Travel budgets have shifted toward restaurants, bars, and recreational activities."

Today's article introduces two travel ETFs that could appeal to contrarian readers who expect the decline in travel shares to come to a halt in the summer months.

1. AdvisorShares Hotel ETF

  • Current Price: $19.80
  • 52-week range: $19.80 -$27.80
  • Expense ratio: 0.99% per year

Recent analysis suggests that by 2026, global hotel revenues should reach $485 billion from around $300 billion in 2022. Such an expansion would mean a compound annual growth rate (CAGR) of about 12.7%. Recent metrics also indicate that:

"80% of total revenue will be generated through online sales by 2026."

For readers searching for opportunities in the global lodging segment, the AdvisorShares Hotel ETF (NYSE:BEDZ) could be of interest. It invests mainly in the hotel industry and related travel services. The fund was first listed in April 2021, and its net assets are shy of $7.7 million. Put another way; it is a relatively new and small ETF.

BEDZ Weekly Chart

BEDZ currently holds 28 stocks, where the leading 10 comprise about half of the portfolio. Among them stands the vacation ownership company Bluegreen Vacations Holding (NYSE:BVH); casino operator Red Rock Resorts (NASDAQ:RRR); Target Hospitality (NASDAQ:TH), which provides temporary workforce lodging for different industries and the government; leading hotel group Marriott International (NASDAQ:MAR); and Golden Entertainment (NASDAQ:GDEN).

BEDZ has lost over 25% since the start of the year, hitting a record low yesterday. Readers who expect the hotel industry to benefit from summer travels could research the ETF further.

2. Alps Global Travel Beneficiaries ETF

  • Current Price: $ 18.24
  • 52-week range: $18.24 - $27.31
  • Expense ratio: 0.65% per year

Our second fund is the ALPS Global Travel Beneficiaries ETF (NYSE:JRNY), which invests in global names in the travel industry. The fund was launched in September 2021.

JRNY Weekly Chart

JRNY, which tracks the S-Network Global Travel Index, currently holds 76 stocks. Close to half of the portfolio is in consumer discretionary stocks. Next, come industrials (28.60%), consumer staples (11.18%), and financials (4.50%)—among others.

The top 10 stocks comprise around 40% of $8.6 million in net assets. Among them are the travel reservation platform Booking (NASDAQ:BKNG); Marriott International; French luxury group LVMH Moet Hennessy Louis Vuitton (OTC:LVMUY); and American Express (NYSE:AXP).

JRNY is down close to 27% YTD and, as we write, is changing hands at record lows. Potential investors who expect travel companies to look beyond current macro worries could consider investing in a thematic name like JRNY.

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