International visitor spending down 20%, misses $10bn mark

Visitors to the United States from other countries spent a mere $9.6 billion in July, down almost 24% year-over-year, according to data from the Department of Transportation. Currency exchange rates continue to make a recession even more … ummm … recessed(?) for the travel business. So, we’re looking at nine consecutive months in which tourists from overseas just aren’t plunking down the cash they did last year.

The price paid to travel – called “passenger fare receipts” – plunged 26% from July 2008 to July 2009, with only $2.1 billion spent to get from Point A to Point B and back. This is the lowest level reached for passenger fare receipts in two years. Travel receipts – i.e. the purchase of travel-related goods and services – amounted to $7.5 billion for the month. This is the cash spent on food, lodging, entertainment gifts, and it’s down 23% year-over-year.

The fact that July was the ninth month in which international tourist spending fell masks an even greater problem: this trend has been gaining momentum. In November 2008, foreign visitor spending was off 4% from November 2007. By January 2009, the year-over-year change fell to -6% and -10% in February. May, June and July all posted travel export declines of worse than 20%.

For the year so far, travel exports (same thing as spending by foreign visitors) has reached $69.2 billion – a decline of 17% relative to the same period last year. What’s this mean? People visiting the United States have spent $13.9 billion less than they did last year.

But, in the spirit of fairness, we’re spending less when we leave the United States. American travel imports are down almost 13%. We’ve spent $8.3 billion less than we did last year. But, we still shelled out a total of $57.5 billion in “support” for the local economies we’ve visited in 2009. The United States is still sitting on an $11.7 billion trade surplus in the travel space – but the balance is $5.7 billion less favorable than it was last year.

Foreign spending in U.S. continues to fall

Foreign spending in the United States continues its downward spiral. According to recent U.S. Department of Commerce data, visitors to the United States from outside the country fell 17 percent from April 2008 to April 2009, settling at $9.5 billion. In conjunction with struggles in the domestic market, the result is an even greater gap that remains to be filled.

Spending on travel and tourism-related goods and services amounted to $7.4 billion in April, down 17 percent (consistent with the overall result). This consists of such products and services as food, lodging, recreation, gifts, entertainment and travel within the country. Another $2.1 billion came from travel to the United States from other countries. This represents a fall of 18 percent from April of 2008 and a decline of 4 percent from March 2009.

This is the sixth month in a row in which U.S. travel exports fell relative to the same month the previous year.

  • November 2008: -4 percent
  • December 2008: -2 percent
  • January 2009: -5 percent
  • February 2009: -9 percent
  • March 2009: -19 percent
  • April 2009: -17 percent

While the year-over-year declines softened from March to April, it’s clear that, in general, the slide of U.S. travel exports has accelerated significantly. This trend is also a drastic change from the 60 months of gains that preceded it.

For the year, the situation is dismal, as well. From January through April, U.S. travel exports reached $40.3 billion, which is off 12 percent ($5.7 billion) from the same period in 2008. The United States still has a trade surplus – of $6.4 billion – but it’s down $2.3 billion year-over-year.

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.

Is Scotch the World’s Most Popular Liquor?

Airlines are suffering, as are a majority of businesses that supply luxury goods. Scotch, however, is not among the sad faces. The BBC reports that the U.K.’s most famous beverage is enjoying a 14% increase in exports over the past year. Are people drowning their sorrows? Surely there are cheaper ways to forget your pains.

Many of the new markets for high quality scotch are in Asia. Brands like Chivas Regal are a status symbol amongst the new money of China. That puts them ahead of many other luxury brands looking to cash in on the growing middle class. But sales are even high in North America and other long time scotch buyers.

This begs the question: is scotch the world’s most popular liquor? Every region of the globe has their own brand of rotgut. But when a certain type of beverage has success like scotch has enjoyed recently, one has to wonder. In Mexico and on college campuses, Cuervo rules, but what if you take the whole world into account, it has to be scotch. Am I right, readers?