Earlier this year, economic uncertainty and market fluctuations left many Americans hesitant about making summer travel plans. However, that caution has faded with recession predictions taking a backseat amid easing trade tensions.
More travelers are now not only planning vacations but are also willing to spend more on them. Despite consumer sentiment touching the second-lowest level on record this month, nearly 1 in 5 Americans plan to increase their summer vacation budgets, according to the travel app Hopper, as quoted on Yahoo Finance.
Memorial Day: A Key Indicator of Travel Trends
“Memorial Day is usually a bellwether for summer travel,” Stacey Barber, Vice President of AAA Travel, told Yahoo Finance. This year, more people are flying for Memorial Day than last year, with airports expected to be crowded as travelers head to top destinations such as Orlando, New York City, Las Vegas and Seattle.
AAA anticipates that 45.1 million people will travel at least 50 miles from home over the holiday, an increase of 1.4 million from 2024.
Lower Prices Fueling Travel Demand
Falling gas prices have spurred enthusiasm among travelers. Per David Michael Tinsley, senior economist at the Bank of America Institute, “prices have come down, particularly airfares, and with lower gas prices, the road trip seems to be very much in vogue,” as quoted on Yahoo Finance.
The national average for a gallon of regular gas has dropped from $3.59 last Memorial Day to $3.19 this year, according to AAA data.
Airfare Hits Four-Year Low
Air travel is more affordable than it was four years ago, per Hayley Berg, lead economist at Hopper. Domestic round-trip tickets this summer are averaging $265, down 3% from last year. International round-trip tickets have dropped to under $900 on average, marking a 6% decrease.
Trip to Asia sees even greater savings, with average airfare at $1,337 — a 14% drop from last summer. Long-haul destinations like Sydney and Hong Kong are also more affordable, with prices down 23% and 16%, respectively.
Even peak travel period “Fourth of July” airfare is nearly 10% cheaper than last summer, noted Paul Jacobs, General Manager and SVP at Kayak, as quoted on Yahoo Finance. However, rental car rates are also holding steady, averaging about $47 per day — roughly the same as summer 2024, Berg added.
ETFs to Ride the Travel Rebound
Against this backdrop, investors can play the following leisure-based exchange-traded funds (ETFs) that should gain amid the potential rebound.
Amplify Travel Tech ETF AWAY – Up 13.7% past month (as of May 16, 2025)
Invesco Leisure and Entertainment ETF PEJ – Up 17.1%
US Global Jets ETF JETS – Up 23.6% past month
AdvisorShares Restaurant ETF EATZ – Up 13.7% past month
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amplify Travel Tech ETF (AWAY): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports Invesco Leisure and Entertainment ETF (PEJ): ETF Research Reports AdvisorShares Restaurant ETF (EATZ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
