There’s a Safe Money Way to Profit from Pent-Up Travel Demand

As I sat down to write this piece, a segment about the launch of a new cruise line ran on television. Yes, a cruise line ...

Called Virgin Voyages and backed by British billionaire Richard Branson, it wants to set sail for the first time in July. It had previously planned a splashy spring 2020 launch in New York City.

Of course, that got shelved when the COVID-19 pandemic struck with full force.

Before they can board, Virgin Voyages passengers will be required to prove they’ve received one of the available COVID-19 vaccines.

Competitor Royal Caribbean Group (NYSE: RCL) announced a similar plan recently, too, re-positioning a ship to Israel.

The inoculation process is far enough along there that sailing vaccinated-only passenger cruises is a viable option.

But it’s not just cruise companies showing signs of life again.

Hotel occupancy rates in the U.S. averaged 49% in early March. Though still well below a pre-pandemic reading of 65%, that was the highest since October, according to research firm STR.

Meanwhile, the Transportation Security Administration (TSA) continues to see more passengers filter through its checkpoints.

Officers screened 1.35 million people at U.S. airports in a single day last week. That was the most since March 15, 2020, and well above the pandemic low of 87,500 last April.

I doubt anyone would call this a travel “boom.” But it’s definitely an improvement. And it clearly speaks to a general desire to get back on the proverbial road, to explore again after a year of lockdown.

If it’s done safely — and if vaccination efforts continue to gain steam such that we hit a broad-based immunity level sooner rather than later — this development is ultimately a healthy thing from an economic and societal perspective. It also creates market opportunities for savvy Safe Money investors.

You can find travel-focused and leisure-based funds that target the sector, for instance. Examples include the Invesco Dynamic Leisure and Entertainment ETF (NYSE: PEJ) and the U.S. Global Jets ETF (NYSE: JETS).

But many travel companies face significant balance sheet problems and other issues due to the pandemic. So, I prefer taking a more targeted approach.

One of my recent recommendations, for instance, is a high-yielding real estate investment trust (REIT) with a nicely diversified base of leisure and casino properties. It managed to maintain at least a “Hold” grade from our Weiss Ratings model throughout the pandemic.

Now, it’s back in “Buy” territory, and its shares are spinning off growing gains for Safe Money subscribers.

Bottom line?

In a market environment driven by excessively easy monetary and fiscal policy — and the gradual unleashing of pent-up demand in certain sectors — you can find opportunities too tempting to pass up.

Select travel names fit the bill.

Until next time,

Mike Larson