The tourism industry is recovering - is it worth investing in?

Americans' spending on airline tickets increased by 548 percent. y / y Domestic tourism in the USA and China is slowly recovering, and international tourism is slowly recovering. Also in Poland, where the tourism sector is responsible for around 4,5 percent. GDP, you can see a recovery in the industry.

Tourism is back on the "old" track

Tourism is one of the largest global industries. Its turnover before the pandemic was 9 trillion. dollars and accounted for 10,4 percent. global GDP. COVID-19 hit the industry with enormous force, dropping it by 49% last year. It is currently recovering slowly, but remains largely dependent on the speed of vaccination. In the first place, domestic tourism is being revived, especially in places where it has always been the most popular, such as in the USA and China. Domestic tourism is responsible for 70 percent. global tourism revenues, the rest is international tourism. Also in Poland, due to the pandemic, we observe an increased interest in trips to the country, but we can also see a slowly reviving international tourism. The universal recognition of the EU vaccine passport, which will take place on July 1, will be a huge support for the industry. The next step will be the recognition of this passport by other countries, such as the USA, and vice versa.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.

Leisure tourism is responsible for 80 percent. industry revenues, while the rest is business tourism. Mexico is the country where tourism has the largest share of GDP (15%). It is followed by Spain (14%), Italy (13%), China (11,5%) and Turkey (11%). In Poland, this share is around 4,5 percent.

There is a growing level of travel spending in the US. Current reports on Americans' spending using credit cards show that flight spending increased 548 percent. y / y, car rental 301%, hotels 277% This is happening with an overall increase in consumer spending by 36,2 percent.

Airlines are an important part of the tourism industry. According to the data of the International Air Transport Association (IATA) for April 2021, the global revenues of carriers per 1 km (RPK) are 65,5 percent. lower than the same month in 2019. In the case of international travel, it is -87,3%, and domestic -27,7%. Interestingly, the domestic airline market in China grew by 6,8 percent, and in Russia by 11 percent. and is above pre-pandemic levels.

Tourism and investment options

We can use funds to build an investment portfolio based on the tourism industry ETF for example, US Global Jets, investing in airlines. You can also build a portfolio of individual companies, such as hotel chains, e.g. Hyatt or Meliaor companies offering cruises, e.g. Royal Caribbean, Czy Norwegian Cruise Line. Also the entire economies of countries with a large share of tourism in GDP, e.g. Meksyk whether Spain should feel the effect of the industry recovery. You can invest in them through ETFs or individual stocks from industries, not necessarily related to tourism.

When investing your funds, it is worth focusing on diversification, i.e. on diversifying your investment portfolio in such a way that it includes both domestic and foreign companies, as well as companies from various sectors of the economy. Due to economic growth, rising inflation and the increasing probability of interest rate increases, we have recently been dealing with a rotation of interest in individual industries. Investors' interest is now more focused on industries and cyclical companies, i.e. those that are the greatest beneficiaries of economic growth.