Fitch: Travel & tourism buoys leisure sector as consolidation continues

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Mon, 07 Aug 2017 - 09:57 GMT

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Mon, 07 Aug 2017 - 09:57 GMT

A flag is reflected on the window of the Fitch Ratings headquarters in New York in this February 6, 2013 - Reuters

A flag is reflected on the window of the Fitch Ratings headquarters in New York in this February 6, 2013 - Reuters

NEW YORK - August 07: Travel and tourism continues to be a bright spot within the leisure sector, according to Fitch Ratings.

"Consumers continue to allot their discretionary dollars to experiences, especially as the employment picture has improved," says Colin Mansfield, Director, U.S. Corporates.

"While that bodes well for the travel and tourism industry, the entire leisure sector faces high competition for consumers' wallet share." Tourism spending has outpaced U.S. GDP growth and the leisure GDP subcomponent, despite U.S. dollar strength that has made it more costly for inbound international visitors and lowered the costs for Americans to travel abroad.

Fitch expects U.S. GDP growth to support healthy air travel to demand, despite weak passenger air transportation volumes during fourth-quarter 2016 and first-quarter 2017. Cruise operators and online travel agencies (OTAs) continue to report improving booking trends, despite negative sentiment surrounding the Trump administration's proposed U.S. travel policy changes.

Many of these subsectors, including cruise operators and OTAs, have already completed several rounds of consolidation to achieve scale, cost savings and access to new markets.

Video gaming, timeshares and the golf industry are now consolidating to help combat a fragmented market and achieve scale benefits. Scale in particular is a competitive advantage in the leisure sector, both as a barrier to entry and source of large, brand-loyal customer networks.

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