Memorial Day is Monday, May 27 and to many, that holiday marks the arrival of the summer travel season.
Some data indicate that consumer confidence is retreating and that persistent inflation is a primary concern for many Americans. However, some experts believe the 2024 summer travel season could be huge. Should that assessment prove accurate, the ALPS Global Travel Beneficiaries ETF (JRNY) could be an exchange traded fund to consider over the near term.
JRNY, which tracks the S-Network Global Travel Index, is a pertinent summer travel play on multiple fronts. First, many traditional consumer discretionary ETFs lack adequate exposure to travel-related names. Second, JRNY offers breadth. The ALPS fund features exposure to airlines, casino and cruise operators, and travel booking websites, among other travel-related segments.
Maybe Good Reasons to Jump for JRNY
JRNY allocates nearly a third of its weight to casino and cruise operators and hoteliers. Each of which could be hot corners as the summer travel season heats up. Looking at cruise equities, some analysts are increasingly bullish on the space. Additionally, data indicate summer bookings for the industry are likely to be strong.
“The largest cruise operators source the majority of their guests from the US. And these companies provide leisure travel – as opposed to business travel – almost exclusively. So their revenues are closely tied to the health of the US consumer. Of the 60 percent of consumers who are planning to travel this summer, 6 percent are planning a cruise,” noted Michelle Weaver, Morgan Stanley’s US Thematic Strategist.
Regarding JRNY’s gaming exposure, it’s Las Vegas Strip and Macau-centric, which is an advantageous trait at a time when there are mounting signs high inflation and interest rates are weighing on regional casinos.
While Caesars Entertainment (CZR) and MGM Resorts International (MGM) have extensive regional portfolios, they’re also the two largest operators on the Strip. Las Vegas Sands (LVS) only operates in Macau and Singapore and Wynn Resorts (WYNN) depends on Macau for the bulk of its earnings and revenue. All four of those stocks reside in JRNY.
“The data suggests that upscale and luxury operators are outpacing midscale and economy ones. In addition, the Las Vegas strip, which tends to skew higher end, has outpaced regional casinos,” added Weaver. “And even when you look within the Las Vegas strip, baccarat is outpacing slot demand and luxury properties are outpacing more affordable options.”
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