U.S. airline bookings fell 17% in April 2022, according to an Adobe report, signalling that air travel demand may be cooling as ticket prices start to surpass pre-pandemic levels. However, summer vacation plans could still boost the entire travel sector as consumer seek to release pent-up demand from previous pandemic-related social restrictions.
Consumers spent $7.8 billion booking domestic flights month-to-month in April, Adobe reports, down from March's total of $8.8 billion--meaning consumers spent over $1 billion less on air travel heading into the spring season as inflationary pressures impact everything from gas prices to groceries.
Despite the slowdown in bookings, demand for domestic flights still remains above pre-pandemic levels, according to Adobe. In April 2022, online spending on tickets was up 23% over the same month in 2019 and bookings were up 5%. Prices increased 27% over 2019 levels in April and were up 8% month-over-month, Adobe reports.
Consumers have also spent a total of $28.8 billion on U.S. flights, which is more than double the $13.9 billion spent in the first four months of 2021.
"An uncertain economic environment is pushing come consumers to reorient their travel plans," said Vivek Pandya, lead analyst with Adobe Digital Insights, in a blogpost. "We see indications, however, that some have chosen to delay their travel plans rather than to cancel them outright. While bookings for Memorial Day are down, summer travel is above pre-pandemic levels."
Travel-focused exchange-traded funds (ETF) give investors exposure to a broad range of companies in the sector, including airlines, hotels and other leisure and hospitality stocks.
Here are some travel-related ETFs to consider:
U.S. Global Jets ETF
JETS is the only pure-play air travel ETF on the U.S. market, tracking an index of companies including airline operators, manufacturers, airports and terminal services. Top holdings include the "Big Four" U.S. airlines--American
Defiance Hotel Airline and Cruise ETF
CRUZ follows an index comprised of globally-listed companies that obtain most of their revenue from the passenger airline, hotel and resort, or cruise line industries. Top holdings include Marriott
ETFMG Travel Tech ETF
AWAY, which launched in early 2020, focuses on technology-focused companies within the global travel and leisure industry. The ETF's top holdings include Booking Holdings
SPDR S&P Transportation ETF
While not the typical pick for travel-related ETFs, XTN provides exposure to airline and airport service companies alongside air freight and logistics, highway and railroad, marine and trucking companies--targeting the broad transportation sector outside of just the travel sector. Top holdings include UPS