The travel and tourism sector is one of the fastest-growing sectors in the global economy.
According to the World Travel & Tourism Council, there will be an increase of 32 billion visitors by 2022.
Luckily, this article provides some interesting insights into this booming market so you can decide whether investing in it is right for your financial goals and risk tolerance.
What is the Travel and Tourism Sector?
The travel and tourism sector includes companies that provide services, cruise lines, tour operators, airlines, hotels, car rental companies, retailers, tour operators, etc. In being so broad, the sector includes many different types of companies. The tourism sector is one of the largest sectors in the global economy. According to the World Travel & Tourism Council, there will be an increase of 32 billion visitors by 2022. By 2021, it is estimated that spending will reach $7.3 trillion globally. With such a large market, there are many opportunities for investors who want to get involved in the sector. Luckily, this article provides some interesting insights into this booming market so you can decide whether investing in it is right for your financial goals and risk tolerance.
How Does the This Sector Work?
Travelers – “travellers” – spend money to travel. A traveler might visit several places in one trip or various places over many trips. The traveler makes the choice to travel for various reasons. For example, a traveler might want to visit new places, meet new friends, or experience new activities. Tourists – “tourists” – go on vacation. When a traveler wants to visit a new place, people usually first comes up with a plan to visit some cities, beaches, parks, or other places in that area. A tourist usually wants to visit a few specific places at once.
Key Differences Between Investing in Travel and Tourism Companies vs. Investing in a Stock
– Ownership – Travel and tourism companies make money by selling services to travelers and tourists.
An investor in a travel and tourism company does not own the company itself. Instead, the investor owns a fraction of a portion of the company (i.e., stock).
If a company goes out of business, the investor gets back only what was paid for the company.
– Risk – The most significant difference is the level of risk involved in the two industries. Investing in a travel and tourism company is high risk because the company does not make money and the investor does not get ownership of the company.
Investing in a stock is low risk because the company does make money and the investor can own part of the company.
– Time Frame – It is also important to note that investing in stock usually takes a few days to weeks and may cost $5 to $10 per trade. Investing in a travel and tourism company may take months to years and may cost upwards of a million dollars.
Examples
Flights and Hotel Booking Companies – Expedia, Orbitz, AirBnB, etc.
Cruise Lines – Royal Caribbean, Azamara, Celebrity, etc.
Rental Companies – Hertz, Avis, Sixt, etc.
Tour Operators – Alps Travel, Insight Vacations, etc.
Railway Travel – Eurostar, Thalys Transportation Companies – Greyhound, Uber, Lyft, etc.
Hotel Chains – Marriott, Hyatt, InterContinental, etc. Car Rental Companies – Enterprise, Alamo, etc.
Travel Insurance – World Nomads, Travel Guard, etc.
Tourism has many advantages, including economic advantages for nations that draw large numbers of tourists because of the money they spend on both their actual stay and on local businesses. Additionally, it generates a sizable number of jobs for those employed in the transportation and hospitality sectors, among others.
Bottom Line
The travel and tourism sector is one of the fastest-growing sectors in the global economy. According to the World Travel & Tourism Council, there will be an increase of 32 billion visitors by 2022. Luckily, this article provides some interesting insights into this booming market so you can decide whether investing in it is right for your financial goals and risk tolerance.
