US travel industry fears Trump slump

US travel industry fears Trump slump
© Greg Nash

The U.S. travel industry is worried that a slew of travel restrictions proposed by the Trump administration will damage foreign tourism and deal a blow to the economy. 

The White House’s ban on visitors from six majority-Muslim countries, now on hold due to litigation, is just one of several Trump policies that could affect the $250 billion travel sector. Travel groups are also concerned about tougher vetting of travel visas, increased airport detentions and new restrictions on fliers using electronic devices.

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Roger Dow, president and CEO of the U.S. Travel Association, said that while the nation’s security is a top priority, Trump’s new travel protocols could discourage or turn away the millions of legitimate U.S.-bound tourists who pour money into the economy every year. 

“Our message to the president is very simple: We support security because it’s job No. 1,” Dow said. 

“The easy message is to say America is closed to terrorism, but we’re wide open to legitimate travelers and we welcome them,” he said. “We want them.”

Michael McCormick, executive director and COO of the Global Business Travel Association (GBTA), said Trump’s policy moves are creating challenges at a time when people have grown accustomed to a global economy.

“This is unlike anything we’ve ever seen before,” McCormick said. “This combined set of initiatives ... have created a strong sense of uncertainty. It creates doubts about the safety and security of traveling.”

Even small decreases in tourism to the U.S. could hamper economic growth and cause job losses. 

Dow said a 5 percent drop in tourism would cost the U.S. economy $12 billion to $15 billion and between 500,000 and 1 million jobs. 

McCormick said a 1 percent shift in business travel costs could lead to the loss of 71,000 jobs, nearly $5 billion in economic growth, $3 billion in wages and $1.2 billion in tax collections. 

While most travelers have not been affected by the Trump administration’s national security policies, industry advocates worry that they will have a broad chilling effect that extends well beyond the Middle East.

There are already signs that business travelers are rethinking their travel to the United States. In one recent survey, 38 percent of European business travel professionals said their companies would be less willing to send travelers to the United States because of Trump’s travel ban, according to the GBTA. 

“Clearly the impact is on international travel, for any meeting or event being booked from Europe or around the world,” McCormick said. “What we’re hearing is that it can and will change travel patterns.”

Still, international travel’s share of total U.S. exports reached 11.2 percent in 2016, the sector’s highest share since 2000, just before the fallout from the Sept. 11 terrorist attacks, according to U.S. Travel’s analysis of the latest Commerce Department data.

Justin Wolfers, an economics professor at the University of Michigan, said “tourism is a very important export industry.”

“If Trump is concerned about the trade deficit, stronger tourism is likely part of the solution.”

U.S. Travel said the overall U.S. trade deficit of $502 billion last year would have been 18 percent higher without their $88 billion trade surplus in 2016.

On a recent trip to Australia, Wolfers said that half a dozen people told him that they were canceling planned trips to the United States.

Reasons varied from concerns about a traveling partner being caught up in the travel ban to questions about whether it’s moral to spend money in the United States.

“I’m not sure that my sample is representative, but it did suggest real reason for the U.S. tourist industry to be concerned,” he said. 

Since 2001, the travel industry has aggressively pursued a multi-pronged approach to growing international tourism in an effort to recoup losses from what the industry calls “the lost decade” after the terrorist attacks.

Expanding the Visa Waiver Program, streamlining the visa process in huge markets like China and Brazil, creating Brand USA to promote travel and improving the customs experience for travelers all contributed to the rebound in tourism.

Gulf air carriers have also worked to boost their image in the U.S. by expanding to new markets and ramping up advertising efforts. Dubai’s Emirates airline even tapped actress Jennifer Aniston to serve as a spokeswoman.

Since hitting a trough of 41.2 million international visitors in 2003, the number of travelers to the U.S. steadily rose to 77.4 million in 2015 and is expected to hit 94.1 million by 2021, according to the Commerce Department.  

Dow called tourism “stealth public diplomacy” where travelers to the United States go home and encourage others to take a trip here. 

Travel industry leaders want to make sure that growth is not jeopardized.

Mark Zandi, chief economist at Moody’s Analytics, predicted that the Trump administration’s perceived hostility to foreigners will be “corrosive” to tourism.

“The president’s travel policies by themselves probably won’t have a large impact on tourism, at least not quickly, but a growing sense among potential travelers to the U.S. that foreigners aren’t welcome will weigh on tourism over the longer-run,” Zandi said.  

On top of Trump’s new policies, a strong dollar and a weak global economy also are hampering travel to the United States.

“It is important to note that a significant amount of tourism involves people coming to the U.S. to visit immigrant relatives and are related to other business dealings through trade and investment,” Zandi said. 

Despite the rough start, Dow said he hopes to meet within the next few weeks with Trump administration officials including Commerce Secretary Wilbur Ross and Secretary of State Rex Tillerson to discuss the importance of travel to the economy. 

To that end, about 350 travel executives are canvassing Capitol Hill this week and passing out mouse pads that say “Welcome legit tourists” overlaying a U.S. map. 

“We’re optimistic, and in the short-term some peoples’ hair is on fire around the world, we just want to make sure that just doesn’t continue.”