Tourist spending plunges in the US
International visits to the United States fell 12 percent in May 2009 from the year before. Those still flying over spent a lot less – only $9.5 billion, down 22 percent from the same period last year. May was the seventh consecutive month in which international visitor spending declined. For the first five months of the year, international visitation fell 10 percent, and spending dropped 14 percent to $50.1 billion relative to the first five months of 2008.
Do we need to ask why?
The global financial system is stilly trying to recover from the effects of the worldwide credit crisis. Rises in unemployment and corporate cost-cutting measures have put incredible pressure on the travel industry, and the continued decline in travel exports only exacerbates the situation. Travel is the top services export business in the United States, and the loss of foreign money will almost certainly impede a recovery.
Visits from overseas (excluding Canada and Mexico) fell sharply from May to May. The 14 percent decline in visitation was driven by drops from 19 of the top 20 countries that send tourists to the United States. Travel from Europe fell nine percent for the month, with Asian off 27 percent. In North America, Canadian visits dropped by six percent, with Mexico down 22 percent.
The trend in Asia suggests acceleration, as May 2009 was below the year-to-date average. The situation is headed in the same direction in Europe, though travel with America's neighbors seems to be stabilizing. Yet, for travel exports from no region is there anything that indicates a definitive turn in the market.
The only cure for a sluggish travel and tourism business is an increase in consumer spending, which obviously will take time. There's no light at the end of the tunnel for a battered travel industry yet. Instead, the best it can do is cut expenses and focus on survival at the expense of near-term growth, breaking from cost discipline only occasionally for no-brainer deals that will result in compelling medium- and long-term gains. There's still plenty of time to prepare for a recovery – it isn't going to happen tomorrow.