Travel in the Trump Era: What Will His Policies Mean For Tourism?

Photo courtesy of Gage Skidmore via Flickr

Photo courtesy of Gage Skidmore via Flickr

The road to Donald Trump’s election as the 45th President of the United States has been anything but smooth. Trump’s controversial campaign was rife with scandal (the Access Hollywood tape, the Trump University fraud case), and fueled by rhetoric around banning Muslims from the country as well as building a wall along the border with Mexico. His supporters have celebrated his victory, and his detractors have protested his win across the country, from the streets of New York City and Chicago to Portland and Los Angeles. Some nervous citizens have even considered moving abroad; on November 8, the Government of Canada’s immigration site crashed as the race results inched closer in Trump’s favor. 

Regardless of whether Trump’s surprise win left you with a bitter or sweet taste in your mouth, many, including experts in the global travel industry, are asking the question: what now? After all, his campaign, which called for shifts in foreign, fiscal, trade, and immigration policies, could have potentially significant implications on tourism. We asked experts to weigh in on a variety of travel topics -- from relations with Cuba to business at Trump's own hotels -- to help us understand exactly what the impact of his policies could have on travel. 

U.S. Reputation

If Trump's presidency damages the U.S. reputation abroad, it could impact travel to the United States. "The U.S. consistently scores highly as an aspirational destination for global travelers and is ranked number one in terms of international traveler spending,” says Adam Sacks, president of Tourism Economics. “However, Trump’s policies and persona represent a real market risk if they translate to antipathy towards the U.S. in general and dissuade travel to the U.S.”

And tourism is extremely important for the country's economy. “In 2015, international and domestic travel and tourism contributed to $1.5 trillion of the country’s GDP,” says David Scowsill, president and CEO of the World Travel & Tourism Council. “Additionally, the sector supports 14.2 million jobs. The travel and tourism sector in the U.S. has been growing on average at three percent per year over the last five years.” 

To help predict whether a Trump presidency could affect that growth, it's worth looking to the past. According to Laura Mandala, former VP of U.S. Travel Association who also served as appointee to the U.S. Travel and Tourism Advisory Board at the U.S. Department of Commerce, international visitation declined by 20 percent during the Bush presidency, though some of that was gained back. Looking at data of arrivals to the U.S. from 2000 to 2006, Tourism Economics found that in the mid-2000s, the U.S. was experiencing negative trends in global favorability as a result of the 2003 invasion of Iraq and its aftermath. “Global opinion of the U.S. mirrored the lower visitation,” said Mandala.

Skift surveyed Canadian and U.K. adults to gauge how they might be swayed by Trump’s policies -- if at all. Forty-five percent of Canadians said they would now be less likely to visit the U.S. (more than half of Canadian women said they are less likely to travel to the U.S., compared to 37 percent of men) -- which is significant, considering Canada is the largest market for inbound international travel to the U.S. In addition, roughly one-third of U.K. adult residents surveyed said they are less likely to visit the U.S. as a result of the election; the U.K. is the U.S.'s third biggest market. 

Caroline Bremner, the Head of Travel at Euromonitor International, directed us to FutureBrand, which shows the U.S. as ranked seventh when it comes to destination branding. Japan, Switzerland, Germany, Sweden, Canada, and Norway precede it. “It will be important for Brand USA to ensure that consumer sentiment remains high, despite the new political leadership,” she says. Other surveys are also estimating that the numbers of British visitors could drop by 1.18 million.

Interestingly enough, millennials are more likely to make travel decisions based on values they share and the desire to “do good” with their expenditures, in comparison to other travelers, according to Mandala. “We saw boycotts of states where laws were passed that violated some people’s sense of values, such as the overturning of the LGBT protection laws in North Carolina,” she says. “New York state and several cities blocked any government-backed travel to North Carolina in response.”

Cuba

One of the many talking points of Trump’s campaign focused on possibly reversing Obama’s historic agreement with Cuba. But if you’re one of the many travelers that have this Caribbean destination on your bucket list, don’t fret. It’s still too early to tell, but both Bremner and Tom Popper, president at InsightCuba, think it’s unlikely that Trump can undo what has already been done.

Since 2014, when the Obama administration began advancing trade and loosening the travel restrictions with Cuba, Starwood has taken over the management of many Cuban hotels, commercial airlines have taken flight, and there has been an overall increase in U.S. travelers to the country. Popper adds that not only has the growth in U.S. tourism to Cuba had a positive effect on the U.S. travel industry, but there has also been increasing bipartisan support on Capitol Hill to further loosen travel and trade restrictions. “These are real benefits to U.S. businesses and any such reversal would reverberate with negative financial consequences for those that opted to engage,” says Popper. 

Jason Clampet, co-founder and editor-in-chief of Skift, had similar sentiments. “Trump could get in trouble and need support of south Florida politicians who liked Cuba how it was before Obama opened it, and therefore start letting them have their way,” he says. “But he’ll have to go through Marriott, Carnival, and every major U.S. airline to reverse things.”

Others speculate that Trump may continue a diplomatic relationship with Cuba, while renegotiating the terms of the agreement. “As a businessman, it is hard to believe the President-elect will scrap all relations, and thus potential business opportunities with Cuba,” says Scott Hume, Global Rescue’s director of security operations.

But what if he does? “If Trump takes a hardline view on Cuba and reverses the decision to normalize relations, then travel restrictions will begin to be reinforced again and the situation will revert back to the status quo of the past few decades,” says Bremner.

Airfare Costs

Photo courtesy of Shutterstock
Photo courtesy of Shutterstock

Several U.S. airlines, including American, United, and Delta, are not a fan of the competition pouring in from other international carriers. In fact, they've been outspoken in limiting American travelers’ access to major Gulf carriers like Eithad, Emirates, and Qatar Airways. Industry folks have also spoken out about the subsidies that the UAE and Qatar give their state-owned Gulf carriers, which in turn, threatens the U.S. jobs. So will Trump follow through and stand up to the UAE and Qatar?

“It’s an open question whether he’ll follow through on it as President,” says Vinay Bhaskara, author at “Airways Magazine.” “If he did enforce it, the U.S. carriers might gain or retain a few hundred million dollars in revenue apiece, but that gain would be more than offset by his broader trade agenda. If he only goes after the Middle East carriers, the U.S. carriers will see somewhat improved profitability -- nothing substantial -- and customers will pay higher prices.”

The President-elect has also prioritized funding $1 trillion over the next decade on infrastructure through public-private partnerships and private investments from his tax incentives. Among many projects, Trump highlighted airports. “[Trump] has suggested the adoption of public-private partnership models, which have been successful around the world in Europe, India, and Australia,” says Bhaskara. “But his plans aren’t going to do much to solve the fundamental problems facing bad U.S. airports. The budget he’s planning is going to get him less bang for his buck.” According to Bhaskara, the major issue with U.S. airport infrastructure isn’t necessarily lack of funds -- budgets, labor standards (the U.S. doesn’t import low-cost workers from foreign countries), and environmental protection (which can add years and tons of cash to planning a new airport project) all come into play.

Many airports have also yearned for increasing the cap on local taxes on each ticket to fund construction projects (think terminal improvements and more gates). “From an airport perspective, it’s a win. But this would drive ticket prices up,” says Bhaskara. “It’s a win for airports but loss for airlines and travelers.”

Banning Minority Groups

After 9/11, security in the U.S. ramped up. In 2002, this contributed to a steep drop (about 45 percent) in inbound demand. The following year saw a further 12 percent decline, according to Bremner. She believes, then, that the impact of inbound demand from the Middle East will be very much based on the travel policies that Trump will instruct the Department of Homeland Security to introduce. In a recent Skift article, Bremner stated that “a U.S. ban on Muslim visitors could cost $71 billion and up to 132,000 jobs annually.”

Turkey has already issued a travel warning for the U.S. due to the recent mass anti-Trump protests. “It’s a natural response by a Muslim-majority country to warn their citizens of hostile environments and policies that may be arising in the U.S.,” says Ahmed Bhuiyan, the director of business development for Utrip. This comes after the British Foreign Service Office advised gay, lesbian, bisexual, and transgender Britons to be wary if traveling to North Carolina or Mississippi, due to anti-LGBT laws. The Bahamas also advised its young male citizens traveling to the U.S. to be vigilant when interacting with police, following the "tensions in some American cities over shootings of young black males by police officers."

According to the U.S. Travel Association, more than one million Middle East-based travelers passed through U.S. customs in 2014 -- and spend an average of $6,000 each. In other words, if Trump follows through his proposed plan to ban Muslim travelers to the U.S., it will result in a loss of revenue for the travel industry. 

The Strength of the Dollar

Photo courtesy of 401kcalculator.org via Flickr

Photo courtesy of 401kcalculator.org via Flickr

The strong dollar represents one of the strongest headwinds for travel to the U.S., according to Sacks. “Any weakening of the dollar would alleviate some of the price burden that visitors to the U.S. are bearing,” he says. “U.S. outbound travel spending has responded in kind to the strong dollar -- growing seven percent last year and another nine percent through the first nine months of 2016.”

Given that the dollar is the strongest it has been in a decade -- against the pound, euro, and Canadian dollar -- Bhuiyan believes outbound travel won’t be impacted as much as inbound travel. “Outbound travel will not decline. However, if the U.S. enacts new and unfriendly travel policies for inbound travel -- with people from Dubai or China, for example -- then you can expect retaliatory travel restrictions from those countries as well,” he says. He cites Brazil as an example: because the U.S. has a restrictive travel policy for Brazilians, Brazil has a high visa fee for Americans. 

According to Bremner, currency is a factor in determining outbound travel choices, but the performance of the U.S. economy will have a greater bearing on Americans traveling abroad. “During the Great Recession, we saw that the staycation effect was prevalent in many countries, especially the U.S., where Americans opted for domestic trips over international trips.” That being said, if the U.S. were to enter a recession -- or experience any economic uncertainty -- this could lead to a downturn in outbound travel. “After Brexit and the 30-year low in the sterling rate to the dollar, it was anticipated that Americans would take advantage of the exchange rate to visit the U.K.,” says Bremner. On the flip side, domestic tourism will likely benefit from a weaker dollar. 

But a lot still remains up in the air. “People travel based on both heart and wallet -- and the strong dollar is likely doing more to dissuade visitors than offensive comments by a politician,” says Clampet.

Immigration

Photo courtesy of Michael Grabois via Flickr

Photo courtesy of Michael Grabois via Flickr

According to Mandala, international travelers spend an average of $4,400 and stay and average of 18 days when visiting the U.S. Mexico is the second international inbound market for the U.S., following Canada (18 million Mexican travelers visited the U.S. in 2015, an increase from 3.8 million during the first Bush administration).

Throughout the campaign trail -- and during his acceptance speech -- Trump has turned his attention to immigration and security, namely from Mexico. When comparing the Obama administration to the Bush administration, deportations to Mexico went from two million from 2001 and 2008 to about 3.2 million from 2009 and 2016, according to Jerry Lang, owner of House of Travel. “This did not have an effect on Mexico inbound tourism,” he says. “While deportations went up over 50 percent, tourists went from 13,373,085 in 2009 to 18,413,649 in 2015.”

According to Hume, changes to immigration procedures and policies may make travel to the U.S. too expensive, or it may be considered unsafe by international travelers. “Many populations, such as Middle Eastern or Latin American, may feel threatened by the political climate in the U.S. and refrain from traveling to the U.S.,” he says. Sacks adds, “Travel intentions of the targets of Trump’s rhetoric, including Mexico, China, and Muslims, could be damaged on the basis of perception.”

Given that economic performance is a major driver of outbound travel, one must also consider the potential changes to trade agreements, such as NAFTA. “According to a Trump downturn scenario developed by Euromonitor Analytics, this would lead the U.S. into recession in 2017 and 2018, and would have a knock-on effect on the Mexican economy due to their close trading links," says Bremner.

As for aviation, “If Trump follows through on his threat to renegotiate or rip up trade deals, it would reduce two-way economic activity between the U.S. and that country,” says Bhaskara. “Air travel demand is agnostic as to whether economic activity is mainly imports or mainly exports, so if Trump renegotiates NAFTA and harms Mexican exports to the U.S., air travel demand to Mexico would decline substantially.”

Bremner adds that the International Trade Administration forecasts that Canada will remain the largest source of inbound spending (Canadians spend approximately one-and-a-half times more than Mexico). “The mid- to long-term forecast for Mexican trips to the U.S. may need to be revised if there were changes to immigration once Trump takes over as President,” she says.

Sacks adds, “We’ve seen historically that perceptions of the U.S. can positively or negatively affect travel behavior. A more stringent immigration policy, if communicated poorly, could indeed weigh on the market. The main risk is that the rhetoric of the Trump administration conveys a distant, unwelcoming stance. In this sense, the challenge could have more to do with perceptions than reality.”

Trump Hotels

It’s all in the numbers. Laura Mandala, who’s also the founder at Women in Travel and Tourism International, conducted a survey with women during the campaign. When asked if information about Trump influenced their interest in booking accommodations at a Trump property, 71.9 percent said yes, 26.1 percent said no, and 1.9 percent were unsure. And following the release of the Access Hollywood tape, 29.9 percent of the overall pool said their level of interest in booking a stay at a Trump hotel declined, 1.2 percent said their level of interest increased, and 21 percent said they never had an inclination to book at the property even prior to the campaign. (The rest who were surveyed felt their interest decline due to other reasons in the Trump candidacy, stayed the same, or were not impacted by his behavior during the campaign).

Skift ran its own poll in May and again last week. The survey, which polled 1,542 people, revealed that consumer sentiment around his hotels remained negative -- 28.9 percent were more likely to stay in a Trump hotel, while 53.8 percent were less likely to book a stay now that he has been elected. The remaining 17.3 percent were unaware that Trump was in the hotel business at all. 

There’s no doubt that Trump’s election has sparked concern regarding the possible implications on the travel industry. “His policy proposals and rhetoric hold the potential to damage both,” said Sacks. “How Trump will actually govern remains the greatest uncertainty. Any changes to visa or security policies that would impede travel from major U.S. visitor source markets remain a wild card. And a continuation of campaign rhetoric that could alienate allies and trading partners also holds the potential to damage U.S. travel intentions.” Sacks expects Trump to soften his rhetoric and center his policies over the coming months. Whether that will hold true or not, time will tell.

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