The holiday season is fast approaching, which bodes well for travel ETFs that focus on the leisure and travel sector. However, there is one prevailing caveat — inflation could affect travel plans.
With the prices of oil and fuel rising, vacationers could bear that cost regardless of whether they’re traveling to their intended destinations by air, land, or sea. Additionally, rapidly rising interest rates could spin the economy into a recession that could add an additional damper to vacation plans.
“High annual inflation has made 2022 an expensive year, and holiday travel isn’t immune,” a NerdWallet article said. “Many Americans planning holiday trips are concerned about inflation’s impact on travel costs and taking steps to save money before takeoff.”
Nonetheless, the fear doesn’t seem to be stopping Americans from traveling the same way that the onset of the pandemic did in 2020. According to NerdWallet, it appears that consumers have their credit cards at the ready in order to pay for rising travel costs. “Around two-thirds of 2022 holiday travelers (66%) — defined as Americans who plan to spend money on flights/hotels this holiday season — plan to put some or all of their travel expenses on a credit card, charging $1,417, on average. That’s more than $106 billion in credit card spending on holiday travel this year.”
Whatever method of travel they choose, it appears vacationers will feel the dent in their wallets.
“Between inflation, rising demand in travel and ongoing staffing shortages within the travel industry, high travel costs are set to put a strain on many budgets this year,” said Sally French, a NerdWallet travel expert. “So many people are turned off by airport chaos and are opting to drive. But with rental car and gas prices so high, a road trip might not necessarily be much better.”
Play an Increase in Holiday Travel with ETFs
If industry experts are right with their forecasts, then traders can use the Direxion Daily Travel & Vacation Bull 2X Shares (OOTO). The fund focuses on returning 200% of the BlueStar® Travel and Vacation Index.
The index exposes traders to global commercial airlines, hotels, resorts, resort casinos, travel agencies, online travel booking sites, hotel REITs, cruise lines, theme parks, and ski resorts. With its double leverage, traders can look to amplify their returns, but that amplification also applies to losses, so only seasoned investors should use these tactical strategies.
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