With over 70 million visitors, the USA is the third most popular tourist destination in the world, behind France and Spain... or at least it was until Donald Trump decided to shake things up with his particular trade war. A month and a half ago, the Republican leader announced the first tariffs - officially - against products from its two most relevant trading partners, Canada and Mexico. North America, which is not the USA, also exports a large number of travelers, mainly for tourism to New York, Las Vegas, or Miami, but the hostile tone of the White House undervaluing other nationalities and the trade war opened against the rest of the world is also starting to weigh on this sector, where hotel reservations and flight tickets have decreased.
But this is not a new situation. The beginning of the Trump presidency had already caused some tourism data to cool down during the first quarter, with a decrease in domestic demand for flights between states and also for corporate and government travel in the USA - United Airlines had acknowledged a 50% drop from the previous year - due to fears of an economic recession. "Since then, investor concern has been increasing and to some extent pointing to a decline in travel to the USA," the report states. So far, according to the most recent data collected by Goldman Sachs, in the weeks after Donald Trump announced the first tariffs against Mexico and Canada on March 3, passenger arrivals in the USA plummeted by 12%.
Canadians are the foreigners who travel the most to the USA by far compared to other nationalities, with over 20 million visits in 2023 (almost half), according to data from the U.S. International Trade Administration, generally as part of their vacations or to visit friends and family. They are followed by the UK, Mexico, and Germany with less than 5 million visits each. Among the top ten travel emitters to the USA, three are European (along with France), and against three of them, the Trump Administration has launched an unprecedented crusade, such as the aforementioned Mexico, Canada, and China, the tenth largest exporter of tourists.
At the end of March, the OAG (Office of the Auditor General of Canada) stated that flight bookings made in Canada to fly to the USA had plummeted by 70% compared to the previous year. Analysts consider this figure excessive, although they find more reasonable the one provided by the French hotel chain Accor two weeks ago when they mentioned a 25% drop in European reservations at their hotels in the USA for this summer, with tourists shifting to friendlier destinations in South America and EMEA (Europe, Middle East, and Africa). In their statements, tourists mention a unfriendly climate in the USA towards the rest of the world and the fear of not being allowed to enter the country at the daunting border controls at airports.
The major Spanish hotel chains acknowledge not feeling any impact on reservations for their hotels in the USA. Meliá Hotels only has two establishments there, in Orlando and New York, where they have not noticed a decline in European tourists. For them, the company states, the number of visitors coming from the USA to their hotels in Spain and other parts of the world is more important, and there has been no impact from the trade war. Riu, on the other hand, has five hotels in the USA, and the company claims to "not be seeing" any impact, although they believe it is too early to make a definitive statement.
The biggest impact will be on the major American hotel chains. Hilton, Marriott, or Hyatt have seen their stock market value drop by around 25% since the start of the trade war, although it is even higher for U.S. airlines. Delta Airlines has seen a third of its market value evaporate in a month and a half; American Airlines has dropped another 35% on Wall Street. This means losing all the gains made in the last four years and going back to the starting point of the 2020 pandemic.
In Europe, it is estimated that between 15% and 30% of the revenues of the three largest airlines, IAG, Air France-KLM, and Lufthansa, are exposed to a possible drop in demand from American travelers. This explains the stock market declines. IAG has lost a third of its market value; Air France has dropped another 17%, and the German Lufthansa has lost 8%.