Tourism slump a concern, even if it's not all about Trump

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The Commerce Department last week confirmed what tour operators and destination marketers already knew: Inbound travel to the United States is continuing to fall, in some cases precipitously. 

Tourism leaders quickly called on the administration to take action. 

"These numbers are an undeniable wake-up call, and correcting this troubling trend needs to become a national priority," stated U.S. Travel Association CEO Roger Dow. "The travel industry will turn over every stone looking for all available policy options to better promote the U.S. as an international destination, and we stand ready to partner with the federal government to grow travel and American jobs and exports along with it."

NYC & Company, New York's tourism marketing organization, has long been warning that inbound numbers were falling. As the top U.S. destination for overseas travelers, with a nearly 30% market share, the city was a canary in the coal mine on this issue, and it raised warning flags as early as February. New York now predicts it could lose up to 100,000 overseas visitors, the first drop in international tourism since 2009, during the height of the international financial crisis.

NYC & Company CEO Fred Dixon said last week that the Commerce data "underscores concerns we have had this year about the international tourism landscape in the U.S. New York City has been astutely attuned to this vulnerability for quite some time."

NYC & Company has long blamed the Trump administration for the drop in international arrivals. Trump's America-first rhetoric, continued attempts to institute a travel ban on Muslim-majority countries, restrictions on electronic devices on airplanes and the rollback of Cuba travel easement have put the travel industry at odds with the administration all year. As far back as February, in the wake of Trump's first attempt at a travel ban, NYC & Company said it would "resist impediments to international travel" and changed its 2017 marketing message to "All are welcome."

Other destinations followed suit, including Visit California with its #AllDreamsWelcome campaign and Brand USA, which launched its "One Big Welcome" marketing campaign in June with signage in major U.S. airports expressing warm welcome messages in various languages.

But Brand USA CEO Chris Thompson last week said that while certain countries are impacted by the political climate -- Mexico, Canada and Germany being the top three in a study Brand USA solicited -- there are plenty of factors having nothing to do with the politics of the Trump presidency that were starting to affect travel in 2016.

"Even before the election and change of administration there were a lot of other headwinds that typically have a greater impact on people's ability or intent to travel," Thompson said.

The strong dollar seems to be chief among them, as well as economic weakness in certain large inbound source markets like Brazil.

"The fact that the dollar was at such high levels for such an extended period of time really affected travel over the last two years and coming into this year," Thompson said. "Even though it's somewhat moderated, we're still suffering a bit, and a there is a little bit of a hangover."

Tour operators agreed that currency has had a major impact, but said that is all the more reason for the administration to cool its rhetoric. 

"It's twofold," said Paula Twidale, executive vice president at Collette. Inbound traffic was down this year, she said, but it represented a small part of Collette's business and was offset by higher outbound travel. Currency issues, she said, impacted the U.K., Canada and Australia markets.

"When those currencies are down, you're going to see an effect," she said. "But clearly the sentiment [of us not] being a hospitable and welcoming nation has negatively impacted the industry for inbound travel. There is an implication to every action, and we've seen it. ... Maybe if currencies start to stabilize and go up for some of these countries, and everything stays settled, we can optimistically say a lot of that will turn around."

Paradoxically, visitation from both Canada and Germany grew during the first half of this year, 4.8% and 0.3% respectively, despite Brand USA survey's finding them to be the second- and third-most sensitive countries to the political climate.

Mexico, however, continued to show signs of being impacted by both currency and Trump. The country registered highest in terms of choosing to not visit the U.S. due to the political climate, and 9.4% fewer Mexicans traveled here through June, a significant loss to U.S. tourism.

Lisa Simon, executive director of the International Inbound Travel Association (IITA) also said that the inbound slump is mainly due to currency, and she pointed to other, less obvious factors, like Canada's 150th anniversary this year. "This has sent many visitors to the north," she said. 

Visa issues add to challenges

Of real concern to some is the drop in visitors from China and India, countries that had been considered somewhat immune to both currency fluctuations and political rhetoric.

Some tour operators say it's a visa issue. 

"Many countries are relaxing their visa policies to attract Chinese tourists, while the Trump administration moved toward tougher U.S. visa vetting for foreigners, and Chinese visitors are impacted by that," said Lin Wang, the National Tour Association's director of China market services. "We are not creating a welcoming attitude to Chinese visitors, which other countries are doing."

In contrast to the approach the U.S. is taking, Wang said, Canada will open seven new visa centers in China, Japan has eased visa regulations for Chinese visitors and Serbia waived all visa requirements for China, the first European country to do so.

Simon also said IITA members who do business in the China and India markets "have reported that the increase in visa rejection rates has impacted business from these regions."

But Thompson said that in the case of China, which has had many years of double-digit growth, it is natural that growth would start to decline.

"I don't  think the dip is necessarily a surprise," Thompson said. "We always hope those double-digit numbers can keep up. But it's really hard ... to think it will increase every year like that. It's unrealistic."

Thompson added that while the number of visitors who came to the U.S. through June was down, spending was up 3%, to $189 billion, through September.

"We are anticipating that will hold up and that we will have record spend," he said, adding that the high spending figures reversed a nine-month decline in 2016. Much of that is attributable to China, which jumped last year to the No. 5 spot in visitation but was the top market in terms of spending.

"So you have just under 3 million Chinese, and they outspent 19 million Canadians and 19 million Mexican visitors," Thompson said.
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Michelle Baran contributed to this report.

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