The latest long-term forecast for inbound traffic to the United States released by the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO) takes a wink at the past two years and, with currency exchange rates now suggesting a dollar that is weaker than it was two years ago, projecting modest increases this year in international inbound traffic from all but one of the Top 21 performing markets for the U.S.
We make the point because a stronger dollar in 2015 and 2016 produced a downturn in international arrivals in 2016 and 2017. As other currencies began to strengthen toward the end of 2017, the movement had an impact on travel business written up in Q4 2017 and the first month of this year. What there was of the putative “Trump Slump”—a decline in inbound traffic from certain markets—was a factor in some of 2017’s weakness, but it was only one factor versus a mix of variables employed by NTTO in its forecasting model, which also takes into account measures such as airline lift capacity, in-country intelligence from U.S. commercial service officers, national economic figures such as employment rates and household income, and more.
So, what happened with the dollar vs. key global currencies in the past year? We took a look at the exchange rates between the dollar and eight key currencies and what happened to them for the first year of the presidency of Donald Trump.
While the forecast projects increases in the numbers of international travelers in the next four years, the overall figure falls sufficiently below a hoped-for 100 million visitors a year by 2021, thanks primarily to the exchange rates that were in place from late 2015 until the latter part of last year.
The 100 million-visitors-by-2021 was established during the mid-point of the Presidency of Barack Obama, when the number of annual visitors to the USA had reached nearly 68 million. And as arrivals pushed past 77 million in 2015, the goal looked achievable—on paper. For, 2015 also brought with it a dollar that strengthened considerably vs. the British pound sterling, the euro, the Mexican peso and the Canadian dollar—suddenly, travel to the USA had become 20 percent more expensive for consumers in some markets. To make matters worse, Brazil lapsed into its worst economic recession in a century.
That the drop-off in traffic was not greater is largely a tribute to the work of Brand USA and its partners in key overseas markets, especially in the number one overseas market, the UK. The agency’s research showed that its promotional efforts were able to keep “intent-to-travel” and ROI figures high. And it appears that, with 2016 and 2017 behind us, the worst is over.
After increasing by 29 percent from 2010 to 2015, total arrivals dropped by 3 percent over the next two years. NTTO is now forecasting—once all the data are final—a 2017 total of 75.1 million visitors. This should increase to 86.2 million in 2021 (well below the 100 million target set in 2012) and 89 million in 2022.
Overall—Bad News vs. Good News: The bad news is that the outlook for inbound travel to the United States over the next five years will not achieve the increase hoped for in 2012. The good news is that, over 5 years, arrivals will increase by nearly 19 percent, or by almost 14 million visitors over what they were in 2017.
U.S. Arrivals from Top 21 International Source Markets
Sources: U.S. Department of Commerce, International Trade Administration, National Travel and
Tourism Office; Statistics Canada; Banco de Mexico. January 2018
International Visitors to the U.S. and Projections
Source: National Travel and Tourism Office, Industry & Analysis, International Trade Administration, U.S. Department of Commerce