The European Tourism Renaissance: Why Investors Should Bet Big on Spain and France While Hedging U.S. Exposure

The post-pandemic tourism recovery has diverged sharply between Europe and the U.S., creating a compelling investment narrative: Europe's hospitality and travel sectors are poised for sustained growth, driven by geopolitical stability, currency tailwinds, and shifting consumer preferences. Meanwhile, the U.S. faces headwinds from protectionist policies, a strong dollar, and declining international traveler confidence. For investors, this bifurcation presents a clear strategy: allocate aggressively to European tourism assets while hedging exposure to U.S. travel-linked equities. Here's why.

The European Boom: Geopolitical Safety and Currency Strength Fuel Demand

Spain and France are emerging as the twin engines of global tourism recovery, backed by data from the UN World Tourism Organization (UNWTO) and the World Travel & Tourism Council (WTTC).

1. Spain's Dominance:
2. Revenue Growth: Spain's international tourism receipts surged 9% in early 2025, outpacing pre-pandemic levels by 7%, driven by strong demand from Europe and North America.
3. Geopolitical Appeal: Spain's safety contrasted with instability in the Eastern Mediterranean (e.g., Türkiye), diverting tourists to its sunny beaches, cultural landmarks, and winter resorts.

4. Currency Dynamics: While a stronger euro (now at $1.12) might deter some U.S. travelers, intra-European demand remains resilient, with German and U.K. tourists compensating for currency effects through higher spending.

5. France's Steady Rise:

6. Cultural Magnetism: France's receipts grew 6% in early 2025, with Paris and the French Riviera retaining their allure despite inflationary pressures.
7. Policy Support: The EU's visa facilitation and France's focus on eco-tourism (e.g., carbon-neutral initiatives) are attracting value-conscious travelers.

U.S. Tourism: Policy Headwinds and a Strong Dollar Threaten Growth

While Europe soars, the U.S. faces a perfect storm of self-inflicted wounds:

1. Protectionist Policies:
2. Trade Tariffs and Visa Delays: U.S. measures against China and Canada have dented inbound travel. Canadian arrivals fell 35% by land in April .

3. Xenophobic Rhetoric: Incidents like the detention of French travelers have eroded trust.

4. Currency Impact:

5. A strong dollar (up 5% YTD vs. the euro) makes U.S. travel expensive for Europeans, while attracting U.S. tourists to Europe. This reverses the trade balance: European tourism revenue grows as U.S. imports of travel services decline.

6. Consumer Shifts:

7. Asian markets (China +40%, South Korea +32%) are compensating partially, but European arrivals remain depressed. The WTTC warns of a $12.5B revenue loss for U.S. tourism in 2025.

Investment Playbook: Go Long on Europe, Hedge U.S. Exposure

European Tourism Stocks: A Bullish Thesis

• Hospitality & Airlines:
• IAG (owner of British Airways and Iberia) and Air France-KLM benefit from rising transatlantic demand and intra-European travel.

• Hotel chains like Meliá or Accor are capitalizing on Spain/France's value-for-money appeal.

• Recreational & Leisure:

• Theme parks (e.g., Merlin Entertainments) and ski resorts in the Pyrenees and French Alps are seeing record bookings.

U.S. Tourism: Proceed with Caution

• Avoid Overexposure: Airlines like Delta or United, while benefiting from domestic travel, face headwinds from declining international demand.
• Hedge with ETFs: Use inverse ETFs (e.g., PST, shorting the Consumer Discretionary sector) or currency hedges to offset dollar strength risks.

Conclusion: Pivot Capital to Europe's Golden Age of Travel

The data is clear: Spain and France are the winners of this decade's tourism boom, backed by geopolitical safety, currency dynamics, and evolving consumer preferences. The U.S., meanwhile, is trapped in a cycle of policy missteps and overvaluation. Investors ignoring this divide risk missing out on Europe's $1.7T tourism economy while exposing themselves to U.S. sector declines.

The time to act is now. Buy European travel equities, and hedge against U.S. exposure—before the gap widens further.

Nick Timiraos