Summer Travel Industry: Financial Impacts and Economic Insights
Summer is a key period for the travel industry and for various destinations around the United States. Summer is a time when many families travel with their children being off from school. It is also a great time to visit a number of destinations that might be less desirable in the cold weather of the fall or winter months. Travel Trends 2024 According to research recently released by the World Travel and Tourism Council (WTTC), a record $11.1 is expected to be spent on global travel in 2024. About 1 in 10 people are employed in jobs that are related to tourism.1 According to data from Bank of America, about 70% of the respondents to their summer travel survey indicated they were planning summer travel for 2024. The data also shows that younger generations (Millennials and Gen Z) are planning longer trips and plan to spend more on summer travel than in prior years.2 There is a gap between the travel plans of higher and lower income families. According to the Bank of America’s survey, a higher percentage of households with incomes under $75,000 said that they did not have travel plans for 2024 than in prior years. Travel Spending and Local Economies Travel spending, especially seasonal travel spending like the summer travel season, can have a huge impact on the economies of certain areas whose overall economy is tied to or greatly influenced by summer travel spending. This might include areas with a preponderance of summer homes where families will go to spend time away from home for a weekend or an extended period. Resort or tourism areas can also be impacted. The Wisconsin Dells area of Wisconsin are prime examples. Certain specific events can be impacted by travel plans. For example, the Republican and Democratic conventions will be held this summer in Milwaukee and Chicago respectively. The impact of spending by attendees at the conventions and the press covering the conventions will have a favorable impact on the economies of these two cities. One note that can impact the broader national economy, a Bankrate survey indicated that about one-third of travelers are planning to use debt to cover their travel costs in 2024.3 This might help the finances of the various credit card issuers, but it could have an adverse impact on the finances of the individual travelers if they end up with more debt than they can handle. Travel Spending and the Stock Market There are a number of stocks that are impacted by travel spending and certainly favorable spending in the travel sector. Travel stocks are generally a part of the S&P’s consumer discretionary sector and play a relatively small role in the overall index and the markets. Certainly, unfavorable trends in travel spending can have a negative impact on the broader market, but spending in this category is generally not as significant to the markets as say consumer spending on autos, housing food and other staples. Industrial spending also plays a significant role in the economy and the markets as well. Ways to Invest in Travel Stocks For those investors interested in investing in the travel industry there are a number of ways to do so. There are several categories in travel industry, some of them include: Travel agency platform. A number of well-known travel websites fall under their umbrella including Priceline, Kayak, Booking Holdings, Expedia, Open Table. Expedia’s website is also a well-known travel website. They also own Travelocity and Vrbo, a vacation rental company similar to Airbnb. Rideshare providers. Lyft and Uber are some examples in this specific category. Travelers to many areas will need rideshare services for local transportation during their stay. Additionally, Uber is a major provider of food delivery and other services. Theme parks and entertainment. Universal and Disney, for example, are well-known in the entertainment industry. Not only do they own major theme parks in California and Florida, but they also have locations outside the USA. Air and sea transportation providers. Cruises and Airlines are another category, that, from domestic to international, allow travelers to enjoy distant destinations and relax while unplugging from the day-to-day work. There are also ETFs that allow different and broader exposure to cover multiple areas of the travel industry. For example, we have ETFs that are diversified across over 30 travel companies in different segments of the travel industry, and we also have others that focus on specific parts, like airlines. Summer travel spending can reveal a lot about the mindset of consumers which can reflect on other aspects of the economy, and ultimately the markets. For more on how to look at summer travel spending in terms of your portfolio contact your Wedbush financial advisor. 1: World Travel and Tourism Council 2: Bank of America Institute 3: Bank Rate Disclosure Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice. Third-party entities, companies, and organizations that may be referenced on this page are not affiliated with Wedbush Securities or any of its affiliates. Opinions mentioned are that of the third-party and not of Wedbush Securities, the financial adviser and/registered representative, or any of our affiliates. Investment products involve investment risks including potential loss and are not
Navigating Election Impact on Finance: Market Volatility, Regulatory Shifts, and Economic Policies
With the 2024 presidential election just a few months away, it makes sense for investors to give some thought to the potential impact the results of the election might have on the economy, the financial markets and their portfolios. Past election years have seen varying degrees of market volatility, and we could potentially see some level of volatility as the election day nears. Impact on the Markets So far in 2024, we have seen record closes in several major indexes including the S&P 500, the Dow Jones Industrial Average and the NASDAQ Composite currently at or near all-time record highs.1 As the election nears and various events unfold, it remains to be seen what impact these events and other related issues have on the markets. As an example, the 2016 election season saw a huge drop in the Dow of over 800 points in a single day, only to rebound dramatically the following day.2 In 2020, the markets were quite volatile leading up to the election reflecting the uncertainty that was felt about the potential outcome as well as the impact of the pandemic on the economy. Beside the presidential election this year, a number of seats in the House and Senate are up for grabs; the outcome here could have a bigger impact than the outcome of the presidential election. While we may experience a level of market volatility directly before and after the election, this volatility will generally be short-lived based on history. Long-term performance and volatility tend to be more impacted by actual policy changes and economic events. Regulatory Changes What is more likely to have an impact on the markets are any actual regulatory or policy changes made by the new president in conjunction with the House and the Senate. Historically, over longer periods like ten years, market returns are fairly similar, whether the Democratic or Republican candidate wins the White House. While we do not know what either candidate will do if elected regarding the economy, investors should avoid repositioning their portfolios in anticipation of either candidate winning for president, or either party taking over the House or the Senate. Economic Policy Shifts Economic policy shifts can impact the markets both in election years and non-election years. A prime example is the Fed’s stance on interest rates. The current indications are for the Fed to gradually lower rates. This is now set as an expectation among many investors. Should the Fed change this policy as a result of the election or for other reasons, it could have an adverse impact on the markets. A key issue that will be front and center regardless of which candidate wins the presidency or which party takes control of the House and Senate is the looming sunsetting of the current tax rules that came into effect with the passage of the Tax Cuts and Jobs Act in 2017. Many of the provisions of this legislation are set to sunset after 2025. These include the current lifetime exemptions for estate taxes, lower corporate tax rates and a host of other provisions. There are policy differences between the two parties and the presidential candidates in a number of areas including views on the uses and development of fossil fuels on the part of the Republicans and a focus on renewable energy on the part of the Democrats. Economic Trends Versus Election Results More so than the election results or which party assumes power, economic trends and inflation historically have had a greater influence on the stock market as opposed to who wins the election. This is not to say that the election results and which candidate assumes power does not matter, but the impact may be a bit overblown. The lesson here is that investors should focus more on the long-term including their own goals and financial situation rather than worrying too much about who becomes president or which party controls the House and the Senate. If you have concerns about what impact the potential outcome of the election might have on your portfolio contact your Wedbush financial advisor to discuss this. 1: Yahoo Finance S&P 500, Yahoo Finance Dow Jones Industrial, Yahoo Finance NASDAQ 2: Forbes Disclosure Wedbush Securities does not provide tax or legal advice. Please consult your tax or legal advisor. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice. Third-party entities, companies, and organizations that may be referenced on this page are not affiliated with Wedbush Securities or any of its affiliates. Opinions mentioned are that of the third-party and not of Wedbush Securities, the financial adviser and/registered representative, or any of our affiliates.