International guests: They’re (not) coming to America
 
International guests: They’re (not) coming to America
19 FEBRUARY 2018 8:15 AM

The lodging industry needs to sound the alarm in our communities, especially with our local conventions and visitors bureaus, as well as with our elected officials, to get back to making the U.S. a place that travelers want to visit.

After years of growth, international visitation to the United States declined in 2016 and 2017, according to the U.S. Department of Commerce’s National Travel and Tourism Office. To paraphrase Neil Diamond, international visitors are not “coming to America” in the numbers they used to.

While international travel grew worldwide, America’s share of the global long-haul travel market shrank from 13.6% to 11.9% between 2015 and 2017. While this may not seem like a massive drop, it has deprived our economy of an estimated 7.4 million additional visitors, $32.2 billion more in spending and 100,000 additional jobs. As the U.S. Travel Association’s president and CEO Roger Dow put it recently, that’s like missing out on two Amazon HQ2s’ worth of jobs.

That’s not all. Fewer international visitors means less spent at small businesses (84% of all travel businesses are small businesses), less state and local tax revenue to fund vital public services, plus a larger trade deficit. To add insult to injury, the gains other countries are experiencing in tourism mean that this demand has shifted overseas; unlike other industries, lost international travel business is truly lost business.

The Trump administration talks about “America First,” but when it comes to international travel, we seem to have become “America Last.” In fact, among the 14 top long-haul international travel destination countries, the U.S. and Turkey are the only two that experienced a decline in overseas visitations from 2015.

The decline in international travel to the U.S. started in April 2016, following the strengthening of the U.S. dollar. Up until then, the U.S. was experiencing a resurgence in international inbound travel, growing at an annualized rate of 8% since 2010. This was due to many factors, including a reduction in visa wait times, reforms to visa issuance, an increase in the number of countries included in the Visa Waiver Program, as well as marketing efforts by Brand USA.

Starting in April 2016, however, international inbound travel demand turned negative, and its rate of decline accelerated in 2017. This trend appears to have continued into 2018 despite the significant drop in the U.S. dollar over the last year and the improving global economic outlook, both historically positive drivers of international inbound travel demand.

This information may surprise many industry experts, especially in some gateway cities that have continued to enjoy high numbers of international visitors, because the data used by many in the industry to measure international travel includes passengers on inbound international flights, without differentiating between foreign visitors and U.S. citizens returning home.

Americans have been traveling outbound internationally at increasing rates over the last couple of years, which is attributable to the improving economy, strong dollar, higher levels of employment, and the continued trend of consumers preferring to collect experiences rather than things.

The record-breaking international numbers being reported primarily reflect Americans returning to the U.S. from traveling abroad, not international travelers coming to America. The following table shows the latest 2017 year-to-date change in inbound travel to the U.S. by top countries:

These statistics are also reinforced by the U.S. Department of Commerce’s numbers for non-U.S. resident arrivals at U.S. ports of entry. July 2017 year-to-date port data (the latest available) shows that arrivals to the U.S. declined 6% overall, with declines of 21% in New York, 7% in Miami, 9% in Los Angeles, 2% in San Francisco, 5% in Chicago, 4% in Orlando and 21% in Atlanta.

What does this mean for the U.S. economy, let alone the travel industry? Based on the Commerce Department’s most recent numbers, about 2.4 million fewer travelers came to the U.S. compared to 2015. According to the report, this translates to a loss of $9.1 billion in spending on travel-related services since 2015, of which hotels account for a large part. The U.S. employs about 15.3 million travel-related jobs, but simply put, fewer international travelers means fewer jobs across the U.S.

The Trump administration is excited (as they should be) when companies like Apple announce that they will be bringing dollars back to the U.S., using this increased investment to build factories here. However, the decline in international travel has caused America to miss out on the equivalent of 46 new manufacturing plants like the $200 million facility Apple recently announced in Kentucky.

The lodging industry needs to sound the alarm in our communities, especially with our local conventions and visitors bureaus, as well as with our elected officials. We need to advocate for security policies that prioritize secure, efficient entry for legitimate international travelers.

America is open for business, and that means being simultaneously both the most secure and the most welcoming country—the two are not mutually exclusive. Visa delays and negative impressions around travel bans and other security policies, along with other historic economic factors, have caused the U.S. to fall behind in the highly competitive international travel market.

We need to get back to making the U.S. a place that travelers want to visit, so that Neil Diamond can once again be proven right: “Everywhere around the world, they’re coming to America.”

Raymond D. Martz is the chief financial officer for Pebblebrook Hotel Trust and serves as the Co-Chair on AHLA’s Financial Management Committee. He is a graduate of the School of Hotel Administration at Cornell University and a MBA from Columbia University. The AHLA’s Financial Management Committee supports the overall goals and objectives of the American Hotel & Lodging Association by providing superior financial management expertise on issues of common interest to owners and operators of hotels.

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2 Comments

  • clif taylor February 19, 2018 10:34 AM Reply

    Do you not think that the US gun violence is also a deterrent to international travel?

  • Mark Carrier February 19, 2018 6:10 PM Reply

    Ray, thanks for summarizing and presenting this issue so effectively! MC

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