When it comes to currency fluctuations, there are always two
sides to every coin. So, while this year’s strong dollar has benefited the U.S.
traveler abroad, it has posed some challenges for inbound travel from source
markets where currencies have slumped.
“We’ve seen a shift in buying patterns,” said Joseph Walker,
who oversees sales for Amadeo Travel Solutions, a receptive tour operator based
in Verona, N.J. Amadeo’s president and CEO, Jonathan Zuk, also serves as
chairman of the Receptive Services Association of America (RSAA), a network of
U.S. inbound tour operators.
According to Walker, the higher-end inbound market is seeing
a greater impact than the mid-level market due to the strong dollar.
“A lot of people who are selling more luxury or premium
product are a little worse off than those who are selling a more moderate
package, because people shift down a bit from the premium to the more moderate
[price level],” Walker said.
According to U.S. Department of Commerce data, the amount
that the U.S. earned in tourism receipts compared with how much U.S. travelers
spent abroad, known as the tourism trade balance, dropped 17% for the first
eight months of 2015. In other words, the U.S. is spending more over there as
travelers but making a bit less here at home.
For January through August, travel- and tourism-related
receipts in the U.S. totaled $145 billion, down from $147 billion during the
same period last year, a 1.3% drop. Meanwhile, U.S. travelers spent $103
billion abroad through August of this year, up from $96 billion for the first
eight months of 2014, a 7.2% increase. As a result, the U.S.’s tourism trade
balance was a surplus of nearly $52 billion through August 2014, a 17% drop
from the $43 billion surplus for the same period this year.
Tour operators that either handle the inbound market in the
U.S. or work as outbound operators abroad report that the market posing one of
the biggest challenges is Australia, which has seen its dollar steadily decline
against the U.S. dollar; it lost 30% of its value since its peak in 2011 and
2012 when it was trading at between $1.05 and $1.10. This year, it sank as low
as 70 cents, and last week it was hovering between 71 and 72 cents.
The verdict is still out on whether and how much the U.S.
dollar will continue to strengthen against global currencies in the coming
weeks and months.
But Intrepid Travel, an Australian tour operator that works
in both the U.S. and Australian source markets, noted that the company has
already seen a drop-off in sales to North America out of Australia, even though
Intrepid’s overall outbound numbers from Australia are up, according to Pete
Rawley, sales manager for Intrepid Australia.
Sales from the Australian source market to all destinations
for the first half of 2016 are up 27% overall compared with this time last
year, while bookings from South America were up 54%, Central America more than
doubled and Europe grew 62%.
Sales of North American trips from Australia were down 29%
compared with this time last year, when they were up 25% over the previous
year. Rawley said it’s “difficult to confirm if this is solely driven by the
Australian dollar’s weakness compared with the U.S. dollar. … While the dollar
is certainly a factor, we also made significant changes to our North American
product range for 2016; we have fewer departures, so less product to sell.”
Madhvi Buch, CEO of the Travel Corporation’s inbound tour
operator Destination America, said the Australian dollar has been hit hardest
against the strong U.S. dollar but that it’s still too soon to tell what the
impact will be on the 2016 season.
“The North America inbound market is largely made up of two
segments: Americans traveling within the United States, and overseas
[visitors],” Buch said. “The domestic market has the bigger share and … is
likely to compensate for the drop in international visitors.”
Amadeo’s Walker said another factor compensating for
currency-exchange shortfalls is more reasonable airfares. When the dollar was
weaker, he said, airfares were higher. Now, airfares from markets in South
America and Europe have eased, mitigating the increase in total travel costs
for some international visitors to the U.S., Walker said.
Chris Thompson, chairman and CEO of Brand USA, the
destination marketing organization for the U.S., said that while the strong
dollar does pose some hurdles for marketing the U.S., the dollar’s strength
also makes Brand USA’s marketing spending go further in markets where there is
currency weakness.
“The United States is still a desirable destination around
the world in every market that we’re active in,” Thompson said. He added that
when the currency is not in international travelers’ favor, “we found that
people don’t necessarily not come. Instead, they might change their travel
patterns and what they might do when they get there.”
Thompson said the U.S. is on track to achieve its goal of
receiving 100 million international visitors by 2021.