Strong Dollar vs. Stricter Visas vs. Global Political Rejection

by Stephen B. Richer, DC Correspondent

The U.S. Department of Commerce has recently announced that inbound tourism to the United States was down 700,000 visitors in the first three months of 2017, with the steepest drops coming from countries in the Middle East and Africa, which sent about one-fourth fewer visitors than just two years ago. The overall drop represented a 4 percent decline from the same period in 2016.

Comparatively, Europe was down 10 percent and Mexico 7 percent. Asian markets were less affected. Africa and the Middle East account for small segments of the inbound market, which is why the drop was not steeper.

The loss for the first quarter in real spend was $2.7 billion and could reach $18 billion for 2017 if trends continue.

The first downward movement in recent years has leading travel industry organizations analyzing this result.

The most cautious analysis has been to assign a lot of the loss to the strong dollar, suggesting that America is less affordable to the prospective inbound traveler. This is certainly true and has been cited by IITA inbound operators as the cause they most often hear from their international trade partners. The strong dollar could be impacting travel from all markets where the U.S. has suddenly become too expensive for budget-minded travelers.

On the other hand, it is easy to match the big drops in Africa and the Middle East to the second cause—visa restrictions and more difficulty in obtaining visas—due to security decisions made by executive order in the last nine months. Even though these decisions have either been overturned by various courts or expired, the message that certain visitors are less welcome has not been lost on the world.

Africa and the Middle East are home to virtually all the countries on the various lists of excluded visitors who cannot obtain visas under the executive orders. Anecdotal information from these countries, and others with strong representation of Muslims within their populations, tells us that travelling to the U.S. is becoming increasingly difficult for some nations, with the result being fewer applicants.

The third reason given is that the U.S. is less popular with people who are looking through a political prism. While this is certainly not a large segment of travelers, there are global surveys that illustrate this reaction is in the mix.

In a June 2017 global opinion poll, Pew Research found that trust in the U.S. and its president had dropped significantly from an overall trust in America, going from 64 percent last year to just 49 percent in 2017. The President fared much worse, suggesting that marketers are in better position when selling American culture, places, and people than anything related to American policy.

Happily, Brand USA is employing exactly that kind of strategy with a new film on music and culture–primarily featuring America’s cities—that is expected to follow the great success of its 2016 IMAX film on national parks.

Once again, inbound operators are urged to stay abreast of these trends. Report any first-hand evidence of impacts from any of the three factors—strong dollar, visa challenges, or political sensitivities—and share them with IITA for use in policy-level discussions with both Congress and the Administration, to see if any or all of them can be addressed.