Why I would buy these tourism shares today

The Mantra Group Ltd (ASX:MTR) share price is one of two which I think could have meaningful upside potential thanks to the tourism boom…

a woman

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According to data provided by the Australian Bureau of Statistics, during the 12 months to July 2017, Australian inbound tourism has increased 7.1% on the prior corresponding period.

The biggest driver of this growth has been arrivals from the China mainland. In July 126,300 Chinese tourists arrived in Australia, up 18% on July of 2016.

With Chinese tourism continuing to grow at a strong rate, I expect this trend to continue for the foreseeable future.

This, combined with increased inbound tourism from the United States and India, is likely to be a big win for a number of companies operating in the tourism sector.

Two shares which I think could be in the buy zone because of this are listed below:

Mantra Group Ltd (ASX: MTR)

As demand for hotel rooms increases I expect Mantra will enjoy higher occupancy rates and be able to command higher room rates. This should ultimately lead to strong bottom line growth, allowing the company to grow its generous dividend even further. At present its shares provide a trailing fully franked 3.5% dividend. I believe the winning combination of growth and income makes it a great option for investors.

Sydney Airport Holdings Ltd (ASX: SYD)

As the main gateway into Australia I believe Sydney Airport is in a great position to benefit from the tourism boom. As of August 2017, the company has seen a 7.6% increase in international passengers through its gates year-to-date. Thanks to a number of new routes opening up and the adoption of larger planes, I expect this increase in capacity will lead to another year of strong growth in FY 2018. This could make it an opportune time to snap up its shares.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Sydney Airport Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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