In the Spotlight Trends of the Month
The COVID-19 pandemic threw the global travel industry into an unprecedented crisis. With countries on lockdown, and people forced to stay at home, the multi-trillion-dollar industry came to a standstill. But we are well past those days now (thankfully). And the industry is roaring back to life.
The pandemic created a lot of pent-up demand for travel. It also fundamentally altered many people’s perspectives on life with some coming to the realisation that life is too short to miss out on “experiences” with friends and family. This backdrop is leading to a surge in travel spending today (helped by wage increases and falling inflation). Around the world, travel bookings are booming.
Just look at recent airport data from the US. This year, on the Sunday after the Fourth of July holiday, the Transportation Security Administration (TSA) screened a record 3.01 million passengers at US airports. Meanwhile, over the whole July 4th weekend, TSA agents checked in an average of 35 passengers every single second. Incredibly, nine of the 10 busiest days in TSA history occurred this year. So, the July 4th weekend wasn’t an anomaly.
It’s worth noting that a March survey from NerdWallet found that nearly half of Americans plan to travel by air this summer. Some of those surveyed said that they were willing to go into debt to achieve their travel aspirations. Many of those who aren’t flying by air will be doing road trips across the country. These travellers will benefit from lower fuel prices as oil is currently well off its recent highs.
As the US dollar is strong at present, many Americans are taking advantage of favourable exchange rates and travelling internationally. Europe is one popular destination due to the fact that the Summer Olympic Games are taking place in Paris (this has already led to a 400% increase in Airbnb bookings in the city). Japan is another popular destination given that the dollar recently hit its highest level against the yen since 1986. It saw 900,000 Americans arrive in the first five months of 2024 — an increase of 36% on the figure for the same period in 2019.
One company that is looking to capitalise on the travel boom in Europe is Uber. In Paris, visitors can now book “Uber Cruise” — a one-hour private tour on the river Seine. This provides views of landmarks such as the Eiffel Tower, Notre Dame, and the Louvre. Uber has also launched a new water transport service in Venice called the “Limo Boat,” and it’s planning to launch “Uber Yacht” in Ibiza this month.
In response to Japan’s thriving tourism industry, major hotel operators such as Marriott and Hilton are expanding their presence in the country. Marriott, for example, recently launched a mid-scale hotel offering through a portfolio of 14 properties belonging to private equity firm KKR. These hotels will be converted to its Four Points Express by Sheraton brand and will be ready to welcome their first guests in the second half of 2024. They could prove to be popular since American tourists tend to stick to well-known hotel brands when travelling abroad.
Overall, there is a potential to be a record-breaking year for travel. According to the World Travel & Tourism Council (WTTC), revenues across the global travel and tourism market are on track to hit an all-time high of $11.1 trillion in 2024.
Those looking for exposure to the travel industry may wish to check out eToro’s TravelKit Smart Portfolio. This portfolio provides investors with exposure to hotel operators, airlines, rideshare businesses, booking companies, and more.
Gold prices have been moving higher recently. In July, the precious metal hit a new all-time high of $2,484 per ounce. So, what has been behind this recent strength in the commodity? And what’s the outlook for gold prices from here?
There are two key factors that have been pushing gold higher in 2024.
First of all, expectations of interest rate cuts by the US Federal Reserve.
Historically, there has been a negative correlation between gold prices and the direction of US interest rates (meaning that when rates have risen, gold has fallen, and vice versa). The main reason for this is that higher interest rates make bonds and savings accounts more attractive relative to gold (which doesn’t pay any income) while lower rates make gold more appealing as an investment. However, there are a few other forces at play with this inverse correlation. Rate cuts in the US typically lead to a weaker US dollar. And a weaker greenback tends to boost gold demand globally, as the precious metal becomes cheaper for foreign investors to buy. Meanwhile, rate cuts can signal that the US is facing some economic challenges. And this can bring gold’s role as a safe-haven asset into focus, drawing in investors and pushing prices higher.
Looking ahead, the Fed is expected to make two interest rate cuts this year (most economists expect the central bank to cut rates in both September and December). And more rate cuts are forecast for 2025. At present, analysts at Morningstar expect US interest rates to hit 3.00% to 3.25% by the end of next year — a level well below the current 5.25% to 5.50%. So, the outlook for rates has led to increased interest in gold recently with many investors buying in ahead of the expected cuts from the Fed.
The other factor behind gold’s recent strength has been the political environment in the US.
Currently, Donald Trump is the favourite to be the next US president. Now, last time Trump was in power — between 2017 and 2021 — investors were faced with trade wars with China (which created volatility in the financial markets at times), inflationary policies (tax cuts and increased levels of government spending raised concerns about inflation), and US dollar volatility. Overall, his tenure was marked by significant economic and geopolitical uncertainty. So, the fact that he is favourite to win the next election is driving investors towards safe-haven assets like gold.
It’s worth pointing out that Trump is not guaranteed to be the next US president. Recently, President Joe Biden’s decision to end his re-election bid and endorse Kamala Harris has shaken things up and raised some doubts in relation to Trump’s chances of returning to the White House. The uncertainty here could provide support for gold in the months ahead as investors seek out safe-haven assets to protect their portfolios against financial market volatility. Analysts at Morgan Stanley believe that gold has the potential to rise above $2,600 per ounce in Q4 this year.
Those with a bullish outlook on gold may wish to check out eToro’s GoldWorldWide Smart Portfolio. This portfolio provides access to both gold ETFs that track the price of gold and companies that are involved in the exploration and production of the precious metal.
