By comparison, nearly a quarter of participants said travel was not a priority right now.
According to the results of a new survey, more than half of all Americans consider leisure travel an important budget priority right now, even as an economic recession looms.
Responding to a survey conducted by Destination Analysts in September, 54.4% of Americans said travel was an “extremely high”, “high” or “somewhat high” budget priority over the next three months. By comparison, nearly a quarter of participants said travel was not a priority right now.
Moreover, a large majority of American travelers do not seem too dismayed by the likelihood of a recession. In response to another poll question, about three-quarters of respondents (74.8%, to be precise) said they thought travel was a “worthwhile” investment, even if the economy were to contract.
Late fall and early winter are popular times for many Americans to hit the road or fly away, and this holiday travel season may be no exception. More than a quarter of survey respondents said they planned to take a trip in October (26.6%), November (24.8%) and/or December (28.4%), despite the rise in the price of gasoline and plane tickets.
Travel in luxury
Destination analysts also note so-called “luxury travelers,” who make up about 27% of the U.S. traveling population. Over the next 12 months, the average luxury traveler is expected to spend $6,260 on their trip, which is $2,000 more than the typical US traveler.
Compared to other Americans, luxury travelers are more likely to prefer commercial flights to driving, and they are also more likely to take cruises.
Investors may see Carnival Cruise Line’s decidedly unremarkable stock market performance — it recently hit a 30-year low — and think the entire cruise industry is in trouble. But as one stock analyst put it, Carnival’s problems are “company specific.” The Miami-based company is overexposed to Europe, “where the currency, Covid-19 and a weaker economy are impacting close bookings,” says Steven Wieczynski, chief executive of Stifel. Indeed, Carnival was down more than 21% in the three-month period to October 5, while its competitor Royal Caribbean Cruises was up almost 20%.
Wieczynski is nonetheless bullish on the cruise industry and, in fact, issued a “buy” recommendation for Carnival, with a target stock price of $17. Shares of the company were trading below $7 on Monday, its lowest point since February 1992.
Norwegian Cruise Line, the third-largest U.S. operator by market capitalization, announced this week that it will remove all Covid-related testing, masking and vaccination requirements starting Oct. 4. The company’s decision should be welcomed by travelers who may have been waiting on the sidelines for the past two years. “Many travelers are patiently waiting to take their long-awaited vacations at sea, and we look forward to celebrating their return,” said Norwegian CEO and Chairman Harry Sommer.
An economic engine
I believe this is all very positive news no matter how you look at it. The domestic travel and tourism industry is estimated to make up 7.6% of the US economy, which is not negligible. From a loss of nearly $766 billion in 2020 due to the pandemic, the industry looks set to contribute $1.8 billion by the end of 2022, according to the World Travel & Tourism Council (WTTC).
Millions of Americans depend on travel and tourism for their livelihood. In 2019, the most recent year of data, the industry supported one in 20 jobs in the United States, either directly or indirectly. The airline industry alone employed about 770,000 Americans in June 2022.
Originally published by US Global Investors on October 6, 2022.
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