International Travel to the U.S. Declines as the Dollar Grows Stronger

International leisure travel to the United States has slowed down for a variety of reasons, according to new Travel Trends Index data from the U.S. Travel Association.

Fortunately for the U.S. economy, increased domestic leisure travel spending has helped offset the decrease in international vacationers.

“One of the reasons the travel industry expanded early on in the recovery was because inbound travel was really strong,” said David Huether, senior vice president of research at U.S. Travel. “What we’re seeing now is that [domestic] leisure travel actually accelerated throughout much of 2015, offsetting the slowdown in international inbound. We think that is going to continue in the first half of 2016.”

U.S. Travel’s Leading Travel Index finds that growth is still expected for 2016, but not at a high rate. While all forms of travel are expected to grow year-over-year, the rate of growth looks to be slow for all but domestic leisure travel. (An index score of more than 50 means growth is expected.)

Business travel growth may be especially limited, according to U.S. Travel.

“We’re seeing a slowdown in growth, but the larger impact is on the actual spending when they’re here,” said Huether. “One of the positive things is the outcome of the improving labor market and wages starting to increases, so we’ve seen domestic leisure travel help offset the slowdown in international inbound.”

Macro trends are probably limiting inbound tourism. Economic crises in Asia, along with depreciated currency in countries that normally lead travel to the U.S., have all contributed.

“There is some sluggishness in growth overseas and the dollar is affecting some countries differently than others,” said Huether. “Canada has had a dramatic slowdown.”

An interesting wrinkle in the data shows that business travel decreased in December 2015, year-over-year, with stagnant growth expected for the first half of 2016.

“There hasn’t been a significant recovery yet in business travel, but our outlook does show it picking up modestly in the first half of 2016,” said Huether.