The world seems to be returning to normal.
And I’m not talking about a “new” normal either…
We’re starting to see crowds return to events, people traveling, and hotels filling up.
For example, I went to the Ducks Unlimited Expo at the Texas Motor Speedway over the weekend. It was hot, but that didn’t stop the fun.
Attendance was 50% greater than my friends on the organizing committee were expecting.
Everyone just wanted to go somewhere and do something. That’s what we’re seeing now from every part of the economy.
And there’s been a large increase in revenue for tourism in particular.
I got a chance to talk to people from all over the country at the Expo. The reports were all the same… Airports are busy, rental cars are impossible to find, and hotels are booking up quickly. The sector is gearing up for a record summer season and many businesses are short-handed.
During the worst of the pandemic lockdowns, there was a lot of concern that demand for social activities would not bounce back quickly. So, the rush to get back to normal is surprising policy makers.
The main cause for concern was the possibility of spreading COVID-19 at social events. However, there’s been extensive testing to determine the risk of transmission at these events. And we have some good news…
City officials in Liverpool conducted some large-scale experiments to figure out how much of a super-spreader risk big social events represented.
They permitted a three-day music festival and tested attendees beforehand. Then, they tested about half of the 13,000 in attendance after the event. Just eleven of them tested positive for COVID-19. So, the conclusion was the risk of mass infection was almost zero.
Nonetheless, the mainstream media is full of warnings about the emerging threat from the Delta variant.
However, the results of the study are very encouraging for places looking to reopen their economy. It suggests that even with rising numbers of cases, prudent care can still deliver a normal experience.
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In much of the U.S., we’re going ahead on the assumption the pandemic is over. That suggests reopening over the next few months will continue to progress, particularly in the areas that depend on tourism.
It’s not a mistake that Florida has been at the forefront of states opening back up. The local economy leans heavily on tourism. There’s no way they were going to miss another season of revenue.
And as the demand for tourism rises, so will the competition. With so many wanting to travel, but so few places to stay, people will need to shop around for the best deals. That means more people will be looking at sites like Airbnb, Expedia, Booking.com, or Trivago.
The ETFMG Travel Tech ETF (AWAY) was launched right before the pandemic struck last year, and promptly collapsed. Its holdings include Airbnb, TripAdvisor, Trivago, and Expedia, to name a few…
AWAY bottomed with the wider market in March 2020 and has trended higher since.
Take a look at the chart…
The fund has spent the last four months ranging and is now beginning to move higher once again. This looks like an attractive entry point for anyone who wants to play the revival of tourism – the sector that was hit the hardest by the pandemic.
As an aside, since the ETF is a travel technology fund, it also holds stocks like Uber and Lyft. These companies survived the pandemic with flying colors. And, they have since raised prices. This new focus on profitability, rather than aggressive expansion, suggests they have achieved the market share they want and are now looking to make money.
That’s something that could help transform their businesses right along with the tourism sector.
All the best,
Eoin Treacy
Co-editor, Market Minute
P.S. Last Friday, I held another one of my video presentations where I talked about what I see happening in the markets.
I covered what I think about the new infrastructure bill, the action in Tesla, and supply chain improvements in the semiconductor sector. If you missed it last week, you can click here to watch, and I’ll be back again on Friday with another video on what’s been going on this week.
Reader Mailbag
Do you think the pandemic is over enough for the tourism industry to skyrocket? Or do you think the Delta variant will limit its growth potential?
Let us know your thoughts – and any questions you have – at [email protected].