Record foreign travel spending in 2008, unlikely to continue

Records were broken last year. International visitors to the United States spent $142.1 billion on travel and tourism-related activities (including traveling to and within the country), according to preliminary U.S. Department of Commerce statistics. This is up 16 percent from 2007 – which was a record-setting year, as well.

Visitors spent $110.5 billion on travel and tourism-related goods and services in 2008, a 14 percent increase year-over-year. This includes food, lodging, recreation, gifts and entertainment. They spent another $31.6 billion on travel using U.S. carriers and vessel operators, a 24 percent spike from 2007.

Last year’s success was driven largely by spending early in the year, as international visitors to the United States took advantage of a weak U.S. dollar and generally robust financial conditions. Toward the end of 2008, of course, market conditions turned, setting the tone for 2009. In the fourth quarter, travel and tourism spending by international visitors fell 10 percent, and preliminary data for the beginning of this year indicates a tough market to come (which isn’t exactly a secret).

Travel and tourism spending by visitors from outside the country accounted for 8 percent of all U.S. exports last year – not to mention 26 percent of services exports. This makes travel and tourism the country’s top services export. Travel and tourism exports grew faster than imports y a ratio of 2:1 in 2008 and constituted more than 20 percent of the total U.S. services sector trade surplus.

Spending by visitors from the United Kingdom and Canada grew most in hard dollar terms ($2.5 billion each), followed by Germany ($1.3 billion), France ($1.2 billion) and Italy ($1 billion). In percentage terms, Italy and France led the world, with its visitors spending 38 percent more in 2008 than in 2007. Argentina, the Netherlands and China turned in solid increases, as well – 32 percent, 32 percent and 31 percent, respectively. Of all the countries reported, only Argentina, Hong Kong, Japan, South Africa and Taiwan did not set visitor spending records.

The top five international markets for U.S. travel and tourism exports were: Canada at $18.7 billion, United Kingdom at $17.5 billion, Japan at $15.1 billion and Germany at $6.5 billion.

The trend is likely to come to a close this year, given the pressure of a worldwide financial crisis and the resurgence of the U.S. dollar. The travel industry is expected to shed more than 200,000 jobs in the United States this year, and the many travel deals available tell the rest of the story.

Buckle up; it’s going to be a rough year for the travel industry.