Amid economic headwinds, geopolitical tensions and market volatility, some travel industry insiders are predicting a potential tourism downturn. Hotels editor Christina Jelski spoke with Richie Karaburun, a clinical associate professor at New York University's Jonathan M. Tisch Center of Hospitality, about the possibility of a "travel recession" occurring before a broader economic contraction. (The interview took place prior to the April 9 pause of the Trump tariffs.)
Richie Karaburun
Q: How might current economic uncertainties affect different segments of travelers?
A: There is always that top echelon we call the top 5% -- it's not going to impact their lives. They're not going to stop going to the Four Seasons, they're not going to stop taking cruises. What we are going to see a lot in the middle and upper-middle class is that they're going to say, "All right, maybe we have to stay put for a year." Or, as a middle-class or upper-middle-class traveler, if I was planning to go to Africa, maybe I'm just going to have to put that trip on hold because it's expensive. Maybe I'll travel to the Caribbean or Europe instead. Travelers are going to change their long-haul versus short-haul plans, or they'll decide they're not going to treat themselves to five-star hotels. It is really going to be a huge change.
Q: Could we see a travel downturn hit before a broader economic recession?
A: Definitely. When people look at their retirement accounts -- and many retirees are travelers -- they see their retirement income shrinking, and what do they do first? They start cutting their travel expenses. People are going to re-evaluate their travel decisions.
Q: Why is the timing of these economic and geopolitical challenges particularly concerning?
A: This is a very dangerous booking period. This is when many people book their summer vacations. They plan before Easter. We're very close to Easter now, but people are probably not making big travel decisions right now. To me, it just really couldn't be worse timing in terms of bookings for the summer and this year's bookings for international inbound travel.
If the EU says, 'Don't go to the U.S., you're not welcome, go somewhere else,' it's going to create a very big challenge.– -- Richie Karaburun
Q: Speaking of international inbound travel, which international markets are you most concerned about?
A: I'm most concerned about the Europeans, Canadians and Chinese. Those are the top source markets into the United States. I mean, yes, Cambodia has a high tariff, but how many Cambodians actually come annually to the United States? That's not going to have a big impact. But once Canadians stop traveling, which is already happening, and if Chinese stop traveling and if the European Union says, "Don't go to the U.S., you're not welcome, go somewhere else," then it's going to be a very big challenge.
Q: What other segments of the traveling population are you keeping a close eye on?
A: I'm curious as to how this is going to impact higher education in the United States. International students are a big economic driver for universities. And all of my international students, when they come to America, they travel. They go to Los Angeles, they go to Washington. They are normally affluent and have money. Even on the weekends or on spring break, they travel in and out of the United States. And when their parents come for graduation, they stay in nice hotels, and they travel as a family. That's a huge part of the economy and a huge part of the tourism ecosystem, too.