Foreigners spend $9.5bn on travel to and in the U.S., down 22%

by Tom Johansmeyer on

It’s not exactly a surprise: foreign spending on U.S.-related travel is down sharply year-over-year. In May this year, foreigners dropped $9.5 billion on travel to the United States and tourism within the country. This is down 22 percent from May 2008. according to the Department of Commerce. A global recession triggered by last year’s financial crisis (duh) has made travel relatively more expensive, despite the fact that it’s generally cheaper. After all, a trans-Atlantic flight for $10 is worthless if you only have $1.

People traveling to the United States spent $2.1 billion last May, a decline of more than 22 percent. Other travel and tourism goods and services accounted for $7.5 billion – off 23 percent year-over-year. This is the seventh month in a row in which travel spending to and within the United States fell, and the trend has accelerated since November 2008. Single-digit declines ended in February 2009, and a 15 percent drop in April preceded May’s total 22 percent decline.

So, if you aren’t hearing as many fun accents at your local restaurant, this is the reason why. Travel discounts, sometimes, aren’t enough to offset financial calamity … a fact that industry has come to know all too well.

Americans prefer independence (when traveling)

by Tom Johansmeyer on

The United States is the largest leisure travel market in the world – by far. The closest point of reference is the entire European Union. We’re three times larger than our closest competitor, the United Kingdom. Yet, despite our size, we just don’t spend as much money on packaged travel. In fact, the folks in the UK spend 50 percent more on it than we do.

Over here, the travel business accounts for $271 billion a year, according to travel industry research firm PhoCusWright, and only 7 percent of that ($18 billion) is spent on travel packages. Meanwhile, the UK has an $84 billion-a-year travel industry – not even a third of ours – and they spend $30 billion a year on packages (35 percent of the local market).

What’s the deal?

There are plenty of reasons bandied about. Europeans tend to take longer vacations, with 10 to 14 days not unusual (especially for the residents of northern European countries), and they tend to take more time off than the workaholics in the United States. They go more and longer, which translates to increased spending.

But, this doesn’t explain the affinity for packages. What makes Americans different?

Well, independence is a major factor. Americans usually prefer to set their own agendas, deciding what they want to see and do, taking on the task of research (and coming to places like Gadling – thanks, by the way, we all appreciate it) and putting together the pieces on their own.

Maybe we’re getting lazier or trying to seem like sophisticated Europeans, but the packaged travel market is growing on this side of the Atlantic, even rapidly. Of course, you need to compare it to starting point to understand how this can happen. In 1999, the packaged travel market was effectively nonexistent. Some large, enterprising online travel agencies, however, created a market from nothing, and turned it into an $8 billion space by the end of last year. This “new” offer has grown at a compound annual growth rate (CAGR) of 50 percent during this time, while tour operators have seen aggregate revenues decline at a compound annual rate of 5 percent.

So, we’re still not heavy package buyers in the United States, but taking the easy way out is becoming more and more attractive.

World tourism to be slower than expected this year

by Tom Johansmeyer on

The UN World Tourism Organization just changed its mind about global travel and tourism this year. I guess forecasting is easy when you can always issue a new one … as long as the previous efforts are forgotten. Well, I wish I could tell you that the UN believes we’ve turned the corner – and that travel is going to spike this year. But, it isn’t. The group has added a bit more doom and gloom to its prediction, given continued economic instability and the swine flu situation.

Worldwide, the organization predicted a 4 percent to 6 percent international tourism decline for the year – this is down from the January prediction of zero to 2 percent. The changed direction coincides with the International Monetary Fund‘s sense of the global economic situation. In January, it called for economic growth of 2 percent this year. Now, it’s predicting a fall of 1.3 percent.

For the first four months of 2009, the World Tourism Organization noted an 8 percent drop in global tourism, with only 247 international tourism arrivals. Europe‘s results were more severe than those of the world as a whole, off 10 percent. Asia was down 6 percent, and Africa and South America were up 3 percent and 0.2 percent, respectively.

Even in tough times, everybody wants to go to France, which remained the top tourism destination with 79 million arrivals. The United States moved into second place for the first time since the September 11, 2001 attacks, reclaiming its position from Spain.

Americans still spending everywhere else

by Tom Johansmeyer on

Last year, 63.6 million Americans traveled abroad, a 1 percent drop from 2007, according to data from the U.S. Department of Commerce. This was the first fall since 2002. Nonetheless, spending grew fro the fifth year in a row to $112.3 billion – up 7 percent from 2007. Americans spent $79.7 billion in foreign countries, with the balance ($32.6 billion) coming from air transportation.

Mexico bucked the trend in 2008: travel from the United States grew by 4 percent. Travel to Canada, the other nearby destination, dropped 7 percent, and overseas excursions were off 1 percent.

In addition to being the top destination for Americans abroad, Mexico led in spending. Americans dropped $11.1 billion with its neighbor to the south, followed by the United Kingdom ($10.5 billion), Canada ($7.3 billion), Germany ($6.3 billion) and Japan ($5.2 billion). U.S. travelers set spending records last year in Germany, Japan, Italy, Hong Kong, Taiwan, Korea, Australia, the Netherlands and Argentina.

Foreign spending in U.S. continues to fall

by Tom Johansmeyer on

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.