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Of all the hits the pandemic dealt the to the U.S. economy, the blow to tourism was one of the hardest. As quarantines went into effect and borders shut down, travel spending fell from $1.17 trillion in 2019 down to $680 billion 2020 - a 41% drop - according the U.S. Travel Association industry group.
Although there's been a gradual return to business as usual, the one-two punch of delta and omicron hasn't exactly helped the tourism industry get its legs back.
But there are encouraging signs that the U.S. tourism sector is coming back stronger than ever. Expedia Group Inc. (NASDAQ: EXPE) has rocketed 24% over the past month; Chief Investment Strategist Shah Gilani made a recommendation there recently. Expedia's own research shows a travel boom in the works. They say the number of people planning to spend money on travel is up 54% from 2020.
It seems travelers are itching to make up for lost time, and a growing sense of the safety and stability of travel is fueling a tourism boom that's just getting started. The U.S. Travel Association is projecting tourism spending will increase by more than 7% between now and 2025.
Clearly, this is the time to jump in and claim a piece of this growth. Here's the best way to do that...
The Tourism Industry Is About to Explode
In order to jump back into travel, people want to know two things: Is it safe, and will the higher prices be worth the experience?
In response, companies in the tourism sector are evolving their business models. They're offering new products and services that focus on sustainability and cultural awareness, in addition to the "traditional" aspects of tourism.
As competition increases, every company's focus is on growing its offering. From bigger companies, this has meant adjusting their business models. For example, some have explored new technologies, such as VR and AR, to keep guests at a distance.
Right now, 77.9% of American travelers are in a travel-ready state of mind, reassured by the care these companies are taking to meet their concerns.
As for travel trends, it looks like travel for this year is following what some call "bucket list trips." People are planning to do everything they've wanted to do in the last two years - all at once. The general idea is to get as much traveling done as quickly as possible in case things shut down again.
The back and forth of this pandemic has led consumers to adopt a "now or never" mindset, which has the industry bubbling underneath the surface. High travel season is brimming with potential.
And there are already clear signs of growth - and not just in the United States.
The number of international visitors to the United Kingdom increased 28% between 2017 and 2022, largely because of the number of high-quality hotels they offer as a brand-new type of travel experience - ones that focus on sustainability and cultural importance.
Other European countries like France and Germany are also seeing increases, along with countries such as India and China.
Overall, the tourism sector is extremely promising and ready for continued growth - here's the best, easiest way to profit.
The Best Tourism ETFs to Buy Right Now
Rather than try to guess at the best stocks to buy, we think most investors will do well with broad exposure to the entire sector.
And the best way to do that, of course, is with exchange-traded funds that own a basket of travel, aerospace, and related stocks.
Here are the two best travel and tourism ETFs from our research...
The U.S. Global Jets ETF (NYSE: JETS): JETS is a great growth prospect with a net asset value of about $4 billion. Management is best known for its "propel-and-burn" model, in which it earns a stable income by investing the money it collects from investors in various platforms.
Airlines make up over 50% of this fund, and since air travel is the second-largest subsector in the tourism industry, U.S. Global Jets is a handy asset.
Lately, management has ditched the riskier assets in search of value, slowly building its profile and gaining favor with investors. Its holdings include popular airline companies like Delta Air Lines Inc. (NYSE: DAL), Southwest Airlines Co. (NYSE: LUV), and American Airlines Group Inc. (NYSE: AAL), as well as many international air travel stocks.
This fund is a winner if you're looking to cash in on the tourism boom.
The ETFMG Travel Tech ETF (NYSE: AWAY) is another must-have for any investor looking to tap into the global travel and tourism industry. You'll gain direct exposure to some of the world's most innovative technology companies within the travel sector. The advantage here is that this fund's holdings are spread across the globe, so your earnings are never 100% dependent on one country's economy. And with heavy hitters like Expedia Group Inc. (NYSE: EXPE), Uber Technologies Inc. (NYSE: UBER), and Airbnb Inc. (NYSE: BNB), you can safely bet on some of this industry's most well-known names.
As of today, the fund has a net asset value of $245.3 million and a market cap of $4.1 billion.
Shah Gilani recommended an Expedia tourism play with 100% profit potential earlier this month, but now he's pulling back the curtain on a play that could be even richer.
Shah's found a way for regular people to own a piece of some of America's hottest startups, the product of a record-breaking entrepreneurial boom. It's something called "pre-IPO rights," and in most cases, you can get them for less than a dollar. Shah's looking at a new crypto company that stands to profit whether crypto goes up or down. You can grab pre-IPO rights for around 70 cents right now, but you can see projections showing these as being worth $7 in a year.
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