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3 leisure stocks to benefit from a tourism boom

You may have seen the headlines in the past few days how New Zealand plans to grow its tourism industry by 70% over the next decade. Our friends across the ditch are aiming for a NZ$41 billion contribution to the New Zealand economy by 2025.

With the Australian dollar currently trading around 91 US cents, further falls may well see an influx of big-spending tourists into Australia. In 2013, tourism’s contribution to GDP hit $42.3 billion, while total visitor expenditure rose 4% to $98.5 billion.

The following companies are working hard to get their share of that spending.

SeaLink Travel Group (ASX: SLK) operates the one-and-only ferry to Kangaroo Island in South Australia. It’s reportedly a popular destination, not just with international tourists, but fellow Aussies from other states. SeaLink also runs the Captain Cook Cruises on Sydney Harbour, an activity that you might imagine many tourists will consider. With Managing Director Jeffrey Ellison recently acquiring 440,000 shares on market, now might be the time to follow the smart money into SeaLink.

Reef Casino Trust (ASX: RCT) is the property trust that owns the property and the hotel for the Cairns casino. Currently subject to a takeover bid, units (shares) are trading at a large discount to the offer price. Casino resorts developer Aquis Casino Acquisitions is offering $4.354 for each Reef Casino Trust unit, but shares are currently trading at around $4.00. Given the Queensland government’s shortage of revenues, it seems highly likely that the takeover will proceed. A brand new multi-billion casino is being proposed for Cairns, which is expected to generate plenty of jobs and inject some much needed capital into the state.

Indoor Skydive Australia Group Ltd (ASX: IDZ) is developing indoor skydiving facilities. Its first facility is under construction at Penrith in Sydney and further facilities are expected to open on the Gold Coast, Perth, Adelaide and Melbourne. It’s early days yet, but given the popularity of outdoor skydiving, this company could be onto something. On the other hand, any investment now is highly risky given the company won’t generate any revenues until at least one facility is operational, and there’s no certainty that the company can genuinely make a profit after that.

Ardent Leisure Group (ASX: AAD), which operates theme parks on the Gold Coast among other leisure destinations, or Village Roadshow Ltd (ASX: VRL) which recently opened Sydney’s Wet’n Wild theme park, may well be waiting in the wings to see if indoor-skydiving takes off, before developing their own facilities or taking over Indoor Skydive Australia Group directly.

Foolish takeaway

Sealink and Reef Casino Trust could be worthwhile adding to your watchlists, but you may want to sit on the sidelines with Indoor Skydive and wait to see how it plays out.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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