USA Set to Lose Billions in Tourism Revenue

 

In May, the World Travel & Tourism Council said in a report that the United States was the only country out of all 184 economies surveyed that was projected to have a decline in international travel and tourism spending in 2025 compared to 2024 – a decline they estimate could mean a loss of $12.5 billion in spending if it holds throughout the year. Without getting into the recent administration and policy changes that may be factoring into current travel trends, there is little dispute that a “significant decline” in international tourism in the U.S. could have serious financial implications for the country’s economy, with a trickle-down effect that may greatly impact businesses, consumers and communities.

How much decline is “significant”? Inbound travel to the U.S. is a current economic priority of the U.S. Department of Commerce due to the vital impact it has on the economy. The country still hasn’t rebounded to its pre-pandemic numbers of inbound arrivals – last year, the U.S. had 7 million fewer international visitors than it did in 2019. Although estimates vary on what exactly the impact will look like, organizations are touting the same sentiment: The decline we are observing is not negligible. Tourism Economics is forecasting a loss of $9 billion in spending from a 9.4% decline in international arrivals to the U.S. this year – a stark contrast to their initial prediction in December of an 8.8% increase. Oxford Economics had also expected about a 9% increase in international arrivals at the start of the year, but now predicts a decline of 8.7% for 2025 with $8.5 billion in less spending compared to 2024 (their original expectation for 2025 was a 16% increase in spending). The U.S. Travel Association calculates that every 1% decline in international visitor spending equates to $1.8 billion in lost export revenue for the year. If the current travel trends continue, the association estimates that the U.S. will lose a total of $21 billion in travel-related exports this year.

Where does the money go? The majority of tourism spending in the U.S. actually occurs through domestic travel, but the economic impact of the average international traveler is much greater than the average domestic traveler. According to the U.S. Travel Association, international travelers inbound to the U.S. spend an average of “$4,000 per trip – eight times more than domestic travelers.” The tourism industry directly supported 6.5 million jobs and indirectly supported an additional 3.5 million jobs for the U.S. in 2023. With a total employment of 167.8 million across the country, roughly 6% of American jobs were supported by the travel industry in 2023. That same year, total tourism output came to $2.64 trillion , with tourism and travel making up 3.03% of U.S. GDP.

What and who could be impacted Jobs could be affected, of course. You’ve likely seen cheaper pricing on flights and hotel bookings this summer. International travel can impact decisions on trade deals,manufacturing plans , and other business decisions, making it an important indicator of the overall growth of a country. But when it comes to community impact, areas may feel the impact in different ways. For example, communities that border Canada often count on the extra foot traffic from our northern neighbors to help support local businesses. Compared to June 2024, Canadian arrivals were down 33% by vehicle and 22% by air – a trend that has continued for several months. The owner of a Vermont resort close to the border told a reporter: “About 50% of our traffic is Canadian, and 60% in the summer. There will almost certainly be a reduction in workforce if we don’t get this turned around.” Coastal states like North and South Carolina are often ranked as popular travel destinations and greatly rely on tourism – in Charleston, S.C., it drives 25% of the local economy. Areas like these are also at greater risk during hurricane season. As a CNR News article notes: “Tourism can provide a lifeline for local economies in the aftermath of natural disasters, with tourist dollars supporting small businesses, creating jobs and even funding repairs to infrastructure.” As with all trends, there is the question of how long the current ones will continue. As travelers choose other destinations and businesses choose other markets, where does that leave the U.S. in five years? According to Geoff Freeman, chief executive of the U.S. Travel Association, there is an “urgent need for a coordinated marketing strategy to shape more favorable perceptions of America before the current ones become ingrained.”