U.S. Global Investors (NASDAQ:GROW) CEO Frank Holmes joined Steve Darling from Proactive to discuss o discuss the strength of global travel demand and why he believes the sector continues to offer attractive opportunities for investors despite higher fuel costs and ongoing geopolitical uncertainty.
Holmes said travel demand remains exceptionally strong and is acting as a powerful tailwind for both airlines and luxury hotels, helping companies overcome challenges such as oil prices trading above their 50-day moving average. He pointed to Air Canada (TSX:AC.B) as an example of an airline successfully navigating higher fuel costs while continuing to benefit from robust passenger demand.
According to Holmes, recent travel trends suggest consumers remain eager to travel despite geopolitical tensions in several regions. He highlighted reports showing a roughly 30% rebound in travel activity out of Dubai, arguing that global demand for both leisure and business travel remains resilient even during periods of uncertainty.
A key factor supporting airline profitability, Holmes said, is the industry's increasing use of artificial intelligence and sophisticated revenue-management systems. Rather than focusing solely on filling seats, airlines are now optimizing revenue on a per-seat basis, allowing them to maximize profitability through dynamic pricing and capacity management.
He explained that when demand does not justify daily service on a route, airlines are increasingly shifting to every-other-day schedules instead of discounting fares aggressively. This more disciplined approach helps preserve ticket prices, maintain strong load factors and improve overall financial performance. Holmes noted that this represents a significant change from past industry practices, where airlines often added capacity regardless of demand conditions, leading to fare pressure and weaker margins.
The strength of travel demand is also benefiting the luxury hospitality sector. Holmes said high-end hotels across Europe continue to command nightly rates between €1,000 and €2,000 without any noticeable decline in occupancy or pricing power. He also cited Toronto's Four Seasons Hotel, which he said is currently charging approximately $1,400 per night.
As a result, business-oriented hotels remain highly occupied, reflecting the ongoing importance of in-person meetings across industries.
Holmes also highlighted Toronto's unique role as a global center for mining finance and investment, particularly within the gold sector. He noted that the city's status as a hub for mining capital makes direct airline connections especially valuable for firms such as U.S. Global Investors, which manages gold-focused investment funds and maintains extensive relationships throughout the mining industry. Overall, Holmes believes the combination of strong leisure travel, resilient business travel, disciplined airline capacity management and sustained luxury hotel demand continues to create favorable conditions across the travel and hospitality sectors.
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