As summer heats up, travelers are gearing up for a season of adventures and leisure travel. Recent surveys indicate a significant increase in travel plans, with about 50% of adult travelers planning to travel more this summer compared to last year, according to Yahoo Finance.
Record Fourth of July Travel
This Fourth of July, a record 70.9 million Americans are expected to travel, marking a 5% increase from last year. Lower gas prices, currently averaging $3.45 per gallon and expected to remain stable through Labor Day, are making travel more affordable.
Surging European Vacation Demand
Demand for European vacations is particularly strong, with popular destinations like Amsterdam, Barcelona, and Paris seeing room rates rise by about 10% for summer travel. Major U.S. airports are preparing for a busy season, with over 57,000 flights scheduled to Europe alone.
Air travel is also thriving, with 5.7 million Americans projected to fly over the Fourth of July weekend. Domestic airfares have decreased by 18% from last summer, averaging $263 per ticket for the holiday weekend.
Positive Airline Industry Outlook
The International Air Transport Association (IATA) reported in early June that global airlines have raised their profit forecast for 2024, projecting industry-wide revenues just shy of $1 trillion, driven by a record number of travelers boarding flights. Passenger yields, or the average amount paid by a passenger to fly one mile, are expected to rise by 3.2% year over year due to constrained capacity growth. However, cargo yields are anticipated to decline by 17.5% in 2024 as freight markets normalize post-pandemic.
Popular Summer Destinations
Paris is emerging as a favorite international destination this summer, largely due to the upcoming Paris Olympics set to begin in late July. Japan, particularly cities like Tokyo, Osaka, and Kyoto, is also expected to see a surge in summer travel.
Affordable Travel Options
Air trips to Canada and the Caribbean are available for under $500 round-trip, while European trips average around $900 round-trip, according to Hopper data cited by Yahoo Finance. These affordable options are contributing to the travel boom among U.S. tourists.
ETFs to Consider
To capitalize on the surging summer travel demand, investors may consider the following ETFs:
1. U.S. Global Jets ETF (JETS)
Focuses on global airline stocks, benefiting from increased travel demand and raised profit forecasts.
2. Invesco Dynamic Leisure and Entertainment ETF (PEJ)
Targets companies in the leisure and entertainment industries, poised to gain from the travel and tourism resurgence.
3. ALPS Global Travel Beneficiaries ETF (JRNY)
Invests in companies that stand to benefit from increased global travel, including airlines, hotels, and booking platforms.
4. iShares Transportation Average ETF (IYT)
Includes major transportation companies, benefiting from higher passenger yields and increased travel activities.
5. ETFMG Travel Tech ETF (AWAY)
Focuses on technology companies within the travel and tourism industry, such as booking platforms and travel services.