Leisure Companies May Benefit From Higher Tax Refunds as Consumers Eye Spending, Wedbush Says

Leisure activity companies are poised to benefit from larger-than-expected tax refunds that bring an influx of disposable income to consumers later this year, Wedbush Securities said on Tuesday.

The investment firm conducted a survey of more than 1,000 people on how they spend free time and extra cash, and found that travel “was far and away the #1 preferred use of leisure time and money, across age and wealth demographics,” analysts James Hardiman, Sean Wagner and Matthew McCartney said in the report.

They said 57% of respondents weren’t aware of what their tax burden will be under new laws.

“While a portion of these savings were already accounted for in the form of higher paycheck withholdings, we could see an influx of disposable income in coming months as consumers receive unexpectedly large tax refunds,” the analysts said.

While almost half of respondents, or 47%, said they will use any refund or tax savings to pay down debt or add to their own coffers, some 36% anticipate spending at least a portion of any tax benefits.

Many said they would like to spend on trips, according to Wedbush. Online travel companies and hotels like Hyatt Hotels (H), Marriott International (MAR) and Hilton Worldwide (HLT) were “particularly strong performers” in winning positive associations with their brands, along with TripAdvisor (TRIP).

Walt Disney (DIS) “unsurprisingly” won recognition in the consumer survey as the most valuable brand, the analysts said, delivering both awareness and favorability. Other theme parks performed “very strongly relative to other brands” including Six Flags (SIX) and Cedar Fair’s (FUN) Knott’s Berry Farm while SeaWorld (SEAS) is facing competition from Disney and Universal Parks and Reports in Orlando, Florida, and southern California.

Honda (HMC), Yamaha, Polaris (PII) and Harley-Davidson (HOG) performed “relatively well” among powersports names. Fitness brands “were most consistently mediocre in our survey” with none standing out, apart from Planet Fitness (PLNT), which had “double digit negative favorability” in the survey.

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