A new tally of foreign visitors to the U.S. from 2015
through 2017 reveals that inbound tourism last year was not the complete
disaster that the industry originally thought it was.
A Commerce Department revision of 2017's inbound international
visitor numbers, published last week, put that fear to rest, although the new
numbers also confirm that the U.S. lost a lot of market share last year.
The department's National Travel and Tourism Office (NTTO)
added an additional 3.6 million international visitors to 2017's total, turning
what had been reported as a 3.1% downturn into a 0.7% increase.
A total of 4.5 million arrivals were added for the years
2015 to 2018, to make up for a misclassification error that the NTTO identified
in March.
The revised figures reveal that almost 77 million
international visitors arrived in the U.S. in 2017, a year when a "Trump
slump" had become the widespread explanation for what was perceived to be
an inbound travel slowdown.
In fact, there has long been evidence that the downturn
actually began in 2015, fueled by the strong dollar.
"The good news is that in 2017, travel rebounded into
the United States," NTTO director Isabel Hill said on a conference call
last week. "And the even better news is that it continues to grow into
2018."
While better than initially thought, however, the numbers
still reveal that, given global travel trends, the U.S. did not perform
particularly well last year and, in fact, lost market share. In a statement
last week, U.S. Travel Association CEO Roger Dow said, "The data picture
is properly viewed through a certain lens: While raw visitation figures have
been slowly rising, they are not keeping pace with the explosive growth we are
seeing in travel and tourism worldwide. U.S. market share has eroded."
The NTTO had suspended reporting of its U.S. inbound visitor
data earlier this year after noticing anomalies in the records it was receiving
from Customs and Border Protection (CBP). Hill explained that the underlying
cause of the miscount was a programming error at some kiosks used by visitors
at U.S. airports that misclassified visitors as residents.
The problem began in 2015, when the Department of Homeland
Security (DHS) shifted the I-94 forms that foreign visitors must fill out upon
entering the country from paper to electronic documents on the DHS website and
apps as well as at kiosks at customs and immigration entry points.
The ensuing investigation into the anomalies revealed an
undercount of 4.5 million travelers starting in 2015. Hill said that over those
three years, the kiosk problem "seemed to be accelerating at geometric
proportions."
Total arrivals were revised for 2015 and 2016, with 3,218
and 540,090 visitors added, respectively. Those corrections increased the
visitor totals for 2015 by 0.8% and for 2016 by 1.4%. With the adjustment of
2016 stats, arrivals fell 1.8% that year, not the 2.4% originally reported.
The new NTTO numbers also show that visitors spent a record
$251.4 billion in 2017, a 2% increase over 2016.
The NTTO initially noticed there was an issue when it became
apparent that CBP's international visitor numbers were inconsistent with its
other inbound travel indicators. Hill said that with the error fixed, the NTTO
can confidently resume publishing its monthly and annual data.
Competitors got better results
Adam Sacks, founder and president of Tourism Economics (TE),
also said that the revised numbers paint a better picture of inbound tourism
trends, but he agreed that the U.S. is not where it should be. TE works with
hundreds of destinations around the country, including major cities, to help
forecast travel patterns and numbers.
"Twenty-seventeen was actually not the debacle that the
original data ... had indicated," Sacks said. "The U.S. as a
destination proved to be quite resilient from most of its major markets -- and
in the face of a difficult environment, at least in terms of the political
environment and somewhat in terms of exchange rates."
Sacks added: "We still see clearly that the U.S. lost
market share in 2017. Globally, international cross-border travel increased 7%
in 2017. So while the picture is much improved, ... it doesn't change the
overriding concern that the U.S. did not perform well from a global competitive
perspective."
In fact, Sacks said, given how much "our key source
markets accelerated in 2017, we might have expected better performance. And,
indeed, many of our competing destinations did experience better performance."
Early data suggests this year will be better than last. The
NTTO reported its first set of 2018 arrival numbers, which indicate continued
and higher growth, with first-quarter visits increasing 8.1%.
"If you look at the trending, which we're now able to
look at from 2015 to 2018, we begin to see a very positive upward trend,"
Hill said.
TE's data also shows better performance this year, Sacks
said, but beyond the first quarter, the company sees clues that as the year
progresses, the results soften a bit.
According to TE, a bright spot in 2018 is the return of the
Mexican market. TE's numbers show that, so far this year, inbound travel from
Mexico is up 10%. The NTTO said that Mexico visitors decreased in 2017 by 6.1%.
One source market that could be a drag on this year's
results is China, which Sacks said was flat this year and grew only modestly in
2017 following years of double-digit increases -- a change he called "truly
remarkable."
"That's a sharp slowdown," Sacks said. "One
of the concerns there is that China historically has used travel and
restrictions on travel as one of its negotiating tools. The reality of the trade
war emerging between the U.S. and China right now is that China is quickly
running out of U.S. exports to tariff because we import a great deal more from
China than they do from the U.S. The exception is travel. The U.S. has a trade
surplus when it comes to travel."
Therefore, he said, China can make travel restriction a
point of influence in its negotiations with the U.S., a tactic he said China
has used against South Korea.
China was notably absent on a list of markets from which the
NTTO said there were strong visitor increases in 2017. That list was topped by
South Korea (17.8%), Brazil (11%), Argentina (10%), Ireland (9%) and Canada
(4.8%).