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US Tourism Faces Decline Amid Economic Headwinds
(Bloomberg) — The US economy is projected to face a significant loss of revenue in 2025 due to a decline in foreign tourism combined with boycotts of American goods. This trend adds to the mounting concerns about the risk of a recession.
Recent data from the International Trade Administration reveals that the number of foreign arrivals to the US by air fell by nearly 10% in March compared to the previous year. Analysts from Goldman Sachs Group Inc. estimate that in a worst-case scenario, the financial impact of reduced travel and ongoing boycotts could amount to approximately 0.3% of gross domestic product (GDP), translating to nearly $90 billion in lost revenue.
While foreign tourism has previously bolstered the US economy—especially following the easing of pandemic-era restrictions—many potential visitors are now reconsidering their travel plans due to increased tensions at the border, geopolitical concerns, and broader global economic instability.
One traveler affected by this shift is Canadian videographer Curtis Allen, who recently canceled a planned vacation to the US. His decision comes after former President Donald Trump imposed tariffs on Canada, alongside inflammatory remarks suggesting it should become a US state. Allen and his partner, who have frequented Oregon for camping trips, will now explore British Columbia instead.
“We’re not just staying home,” Allen, 34, commented. “We’ll spend the same money elsewhere.” His hesitance extends to his cancelation of a Netflix subscription and striving to avoid American products while grocery shopping. “It now takes us double the time to check where products come from,” he noted.
International tourism to the US saw record spending of $254 billion last year, according to ITA data. A positive outlook was initially expected for 2025, with projections indicating the US could welcome around 77 million visitors—close to pre-pandemic levels—yet adverse reports regarding treatment of foreign travelers at US airports jeopardize this forecast. Detentions of individuals from countries such as France and Germany have raised significant concerns, alongside a noticeable decline in travel from Canada, which represents the largest demographic of foreign tourists to the US.
A Bloomberg Intelligence report suggests that nearly $20 billion in retail spending from international tourists may be at risk due to these evolving conditions.
Signs of a decrease in travel-related spending are apparent, with recent Bureau of Labor Statistics reports indicating reductions in airfare, hotel rates, and car rental costs for March. Economists from Goldman Sachs and HSBC attribute this drop in part to a decline in interest from international travelers.
Omair Sharif, president of Inflation Insights, highlighted that significant declines in hotel prices, especially in the Northeast, could be linked to fewer Canadian visitors. “Given the drop in Canadian travel, this could be concerning for that particular region,” he commented.
In Niagara Falls, the timing is challenging for Rainbow Air Helicopter Tours. After investing $25 million in expansions, including a new building and attractions, sales and marketing manager Patrick Keyes remarked, “We are waiting to see the fallout.”
According to OAG Aviation Worldwide, Canadian flight bookings to the US are down by 70% through September compared to last year. Additionally, there’s been a 25% decrease in summer bookings among European tourists at Accor SA hotels. CEO Sébastien Bazin noted that negative experiences at the border have contributed to a “bad buzz,” steering tourists to alternative destinations.
A Goldman Sachs report emphasizes the detrimental effects of US tariff measures and an increasingly aggressive stance towards traditional allies, suggesting these factors have tarnished global perceptions of the US. Economists Joseph Briggs and Megan Peters noted that this trend poses additional challenges that may further dampen US GDP growth in 2025.
Despite these adverse developments, Travel Oregon, the state’s tourism commission, remains proactive in its outreach to foreign visitors. CEO Todd Davidson stated that his team is actively promoting the state at international tourism conferences and plans to engage with partners from various countries, including the UK, India, and Brazil. However, there are considerations to pivot their strategy to accommodate more domestic tourists moving forward.
“Oregon is not and will not take its eye off those international markets,” Davidson assured. “We will be prepared when our international visitors feel ready to return.”
Source
finance.yahoo.com