Along with making resolutions, many investors also look for emerging opportunities in the new year. However, one industry that has grabbed people’s attention is leisure and recreation services. Not only have businesses in this sector shown significant increases, but there are diverse investment options since it includes a wide array of interests such as sports, media, art, travel, etc. Although it’s had a history of rises and falls, the current trend has shown continual growth. Demand for new types of leisure and entertainment has grown during the pandemic, leading to new innovations, technology, and business models. And, it is attracting a lot of attention from important investors due to the ample business opportunities. If you have an innovative idea or have a business you would like to invest in, here are 5 reasons why you should invest in leisure.
What Does Leisure Include
The broad definition of “leisure” applies to any activity done when not working. When it comes to investing, the leisure industry is the market sector that focuses on entertainment, recreation, tourism, and sports. As you can probably guess, there are multitudes of businesses that fall under this category. And, there are more popping up every day as technology advances and the sector continues to evolve.
But, how does what you do in your free time apply to investing? All you have to do is look around your community. There are leisure and entertainment venues everywhere. Traditional leisure venues include retail stores, restaurants, bars, health clubs, sports complexes, movie theaters, amusement parks, casinos, and concert halls, just to name a few.
For conservative types, there are well-established stocks in airlines, hotels, and theme parks that have a strong performance history. However, there are also several gaming companies, streaming services, and social media platforms that also promise good returns on your investment. And, there are new entertainment options introduced to the market every day. Thanks to the internet and trading apps, the market is even more accessible to investors.
Reasons Why You Should Invest in Leisure
When choosing a sector, you’re probably asking yourself which ones are projected to see the most gains. There are endless strategies and theories out there. However, here are 5 tangible reasons why you should invest in leisure.
1. The Leisure and Recreational Services Industry currently ranks in the top 27% of all industries.
As any sound financial advisor will tell you, do your due diligence. You should always evaluate past and current market performance before you buy into any stock. Luckily for those who are short on time, online resources like Zacks compile and compare the most recent data for you.
According to their analysis, stocks in this sector are expected to outperform the market in the next 3-6 months. They also provide a convenient list of their top-ranked stocks. Resources like this make it easier to come to a decision, especially when picking individual stocks. It also shows which markets currently attract the most consumers for those interested in new ventures.
2. Analysts expect leisure stocks to see a significant rebound.
With the outbreak of Covid-19 and the ensuing pandemic, the entire stock market has taken a dive. Undoubtedly, the leisure travel industry was one of the hardest hit. As businesses closed and social distancing measures were enforced, stock prices continued to plummet. But, there is hope on the horizon as businesses re-open and adapt to the new normal. Although the spread of the latest variant threatens to cause another sharp decline, analysts expect leisure spending to double by 2030.
People have become restless being cooped up, and are looking for entertainment outlets. While we have been sitting at home, many of us have also managed to build our savings. The Bureau of Economics reported that the average personal savings hit a record high of 33.7% back in April 2020. Then, March 2021 showed an additional increase of 27.7%. This bodes well for the leisure and recreational services industry.
3. The world’s population is getting richer.
As Engel’s Law indicates, when a person’s income increases, they spend less on basic necessities and more money on other goods. Despite recent economic hardships, the world’s population has never been wealthier. Of course, there are large variations between different countries and individual households. But, people today have more expendable wealth than ever before.
The most difficult question to answer is how people are going to spend their discretionary funds. However, there will always be the human need for recreation and entertainment. Therefore, it isn’t unreasonable to assume that the more people earn, the more likely they are to spend their extra money on leisure.
4. The industry offers diverse investment options.
When you look at the entertainment industry, it includes a wide range of businesses and services. This diversity is one of the most attractive features of this sector. Not only does it encompass all the businesses who provide services, but also those which cater to the needs of the customers spending money on entertainment and recreation services. New businesses that can meet these needs the fastest and most efficiently will see the most success.
With the myriad of investment options, leisure-focused ETFs are a great way to help your portfolio gain exposure to this market. These ETFs offer baskets of leisure stocks, mitigating the risks of choosing individual stocks. Meanwhile, you also get a random sampling and can gauge which companies have the potential to yield a higher return.
5. Leisure businesses have been quicker to adapt.
Since fewer people are frequenting public places, leisure businesses have to adapt quickly in order to survive. Therefore, they had to fully embrace technological advances to keep up with people’s changing lifestyles. However, it has also set them as some of the most dynamic and innovative companies in the market. Their flexibility to meet the demands of all consumer groups and provide more mediums to connect with them provides a huge advantage and promising investment opportunities.
Trending Businesses Opportunities to Invest in Leisure
. Whether you are seeking to invest or start your own business, there are new niches being carved out. These areas have attracted focused attention:
- Play Zones
- Art Galleries
- Advertising Agency
- Sports Shop
- Online Retail
- Streaming Services
- Digital Marketing
- Resorts and Hotels
- Golf Courses
- Multimedia Companies like Disney
- Leisure-focused ETFs
The market is ripe with potential. However, the rising tide won’t lift all boats equally. Before making any major financial decisions, you should always consult with your financial advisor. But if you are looking for new opportunities, you should consider to invest in leisure.