Travel, especially abroad, has historically been a luxury for most Americans. Despite a tightening labor market and uncertain economic conditions, the number of households traveling abroad has soared nearly 30% as households build wealth.
The number predictably fell in 2020 and 2021 during the COVID-19 pandemic but has increased in each of the past three years.
The Data: A post on X relayed data from Bank of America.
The number of households travelling abroad has increased in the past two years, and, as of June, is nearly 30% higher than 2019 levels pic.twitter.com/zhhq8DeQRo
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) July 11, 2024
Meanwhile, spending on luxuries abroad has seen similar increases since 2019, according to Bank of America.
Why It's Important: Amid a period of inflation, households have become price-sensitive in some areas and willing to spend in others. Consumers have gravitated toward luxury or bargains, with less spending on items or experiences in between.
Meanwhile, flying is as popular as ever. More than 3 million passengers were screened at U.S. TSA checkpoints on Sunday, July 7, a new record.
Market Implications: Long-term changes in consumer behavior stand to impact companies in various industries, most notably airlines and luxury goods.
Airlines have struggled since the pandemic, not so much with filling seats but with margin contraction and declining profitability. Delta Air Lines, Inc. (NYSE:DAL) shares sunk on Thursday after beating revenue estimates but missing on earnings.
Delta's luxury status seems to have insulated it better from industry trends better than competitors United Airlines Holdings Inc (NASDAQ:UAL) and American Airlines Group Inc (NASDAQ:AAL).
Online travel agency Booking Holdings Inc (NASDAQ:BKNG) is a stand-out name for its stock performance — up more than 100% — since 2019.
LVMH Moët Hennessy Louis Vuitton (OTC:LVMUY) and Hermes Intl S A Unsponsored France ADR (OTC:HESAY) have benefited from increases in American travel to Europe. Ralph Lauren Corp (NYSE:RL) has been a standout performer in 2024, up over 25%.
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