How currency, policy could affect inbound travel to US
How currency, policy could affect inbound travel to US
28 MARCH 2017 8:19 AM

The U.S. Travel Association recently laid out how the strong U.S. dollar and a perception of the country as being unwelcoming in light of recent policy changes could likely have a chilling effect on inbound international travel.

REPORT FROM THE U.S.—The recent efforts by President Donald Trump to restrict travel from a handful of Middle Eastern countries are expected to have a negative impact on the amount of inbound international tourism in the United States even as the countries account for only a tiny fraction of that travel, according to the U.S. Travel Association.

In a recent webinar detailing international travel trends, David Huether, SVP of research for the U.S. Travel Association, said the organization has seen the strong U.S. dollar have a noticeable impact on travel to the U.S., although it could be worse.

“Spending by international business has generally been on decline since mid-2015,” he said. “However, on the positive side, the travel industry fared much better than goods exporters.”

The combination of these factors could lead to a weaker summer for international travel to the U.S., sources said.

Here are five key takeaways from what experts expect for inbound travel to the U.S. in 2017.

1. Searches, and seemingly intent, have dipped
Representatives from both ADARA and Nsight Travel Intelligence said they’ve tracked a drop-off in international searches for U.S. destinations following the initial rollout of the executive order to restrict travel from Syria, Iran, Yemen, Libya, Somalia, Sudan and Iraq, which was removed from the revised order.

The trend seemed obvious since the amount of searches were actually marginally up prior to the ban’s initial rollout.

Ted Sullivan, VP of resorts and destinations analytics at ADARA, said the drop in searches will likely correlate to a drop in bookings.

“Since searches are down, it could be exponential,” he said. “That’s intent. But we should see booking numbers in the next couple of weeks and get a better read on things.”

2. It’s not the countries in the travel ban that matter
Adam Sacks, founder and president of Tourism Economics, noted that the countries included in the travel ban represented only a fraction of a percent for overall inbound international travel to the U.S., but the impact of the ban could be felt in perceptions from travelers in other countries.

“The sentiment towards the U.S. is turning negative, and that centers around the America-first rhetoric,” Sacks said.

That means travel could fall not just from Middle Eastern countries but Mexico and Central America, Europe and other parts of the globe. Sacks noted a large United Kingdom-based tour operator recently surveyed its clientele with plans to travel to the U.S. and found 34% were reconsidering their plans.

Sacks said travel from Mexico could see the greatest drop-off “in sheer numbers”—by as much as 7%, according to his company’s projections.

3. We’ll see how much things might slow this summer
Sacks and other experts on the webinar projected the first real signs of a slowdown could be coming in the late spring and could linger throughout the summer travel season.

This is expected to have a disproportionately large impact on gateway markets like Miami and New York. Should that come to pass, it could be a difficult pill to swallow for hoteliers in those markets, which already are dealing with a host of other issues including increasing supply and lingering Zika concerns for Miami specifically.

“This gives us the sense that the markets that are really at risk right now,” Sacks said.

Markets like Miami would also be particularly exposed to the loss of high-spending travelers from Canada, he said, because of the unfavorable currency exchange situation.

4. Other markets could be opportunistic
Sacks mentioned much of the pain the U.S. travel industry could feel soon would be derived from the fact that the U.S.’s “brand” has been damaged, and he said there is a clear connection between the country’s favorability rating internationally and inbound travel.

“There is a strong correlation there that does give us some insight that the brand matters and that these sorts of things do affect very discretionary consumer behavior,” Sacks said.

This could also present an opportunity for other countries that would be more aggressive courting international travelers to their shores. Ultimately, this could result in a share shift in international travel, he said.

“There are marketing organizations that are really seeing this as an opportunity to gain market share and position themselves with messaging that is perhaps not so subtly saying ‘We are welcoming,’” Sacks said.

Clay Jackson, president of Nsight, said his company has already seen a negative shift in the U.S.’s share of global demand based on booking site data.

5. Indian and Chinese travelers expected to remain static
While many of Sacks’ predictions might seem dire or at the very least negative, he said one thing the U.S. travel industry can likely count on is stable inbound travel from large Asian feeder markets such as India and China. He said in the past those countries have continued to supply the U.S. well, even at times when the country’s reputation was relatively poor.

“Historically, those markets have been incredibly resilient,” he said. “Their appetite is relatively unaffected by some of these external political factors.”

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