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(Nexstar) – As economic unrest and international tensions grow, some of the country’s biggest hotspots are worried that visitors will not appear this year. But their losses could be in your profits, travel analysts say demand is very low and deals start to pop up.
Where is tourism fading?
The Las Vegas Tourism Report, released this week, shows that visits and hotel occupancy are declining year-over-year. The California Tourism Office has reported sudden drop-offs from February and March.
As a result of a decline in travel demand, major US airlines have reduced flight schedules and revised or withdrawn their profit outlook for the year.
“We won the fourth quarter and saw decent business in January, and when we entered the February time slot, our domestic leisure trips fell quite a bit,” American Airlines CEO Robert Isom told CNBC.
Consumer resistance to booking leave responds to a new poll that showed many fear that the US is in a recession, fearing that President Donald Trump’s widely and accidentally enforced tariffs will raise prices.
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The decline in travellers is both domestic and foreign. The American Travel Association reports that international visits fell 14% in March compared to the same month a year ago. The biggest decline was from visitors from Canada and Western Europe, the group said.
JP Morgan’s chief economist Michael Ferroli said the decline in travel could be due to widespread anti-American sentiment.
“In recent weeks, there have been many news stories about tourists canceling trips to the US in protest of the strength of recent trade policies,” he wrote in a client’s note. “This points to a potentially different channel to consider when assessing the impact of tariffs on economic activity.”
Bloomberg reports that even a relatively small drop in foreign tourism, whether it’s due to boycotts or economic uncertainty, even the relatively small decline in foreign tourism, is costly to the US economy.
Will a decrease in tourism lead to travel transactions?
If demand is declining in the travel sector, airlines, hotel chains and more have the opportunity.
Airfares fell in February and March, according to a tracking by the Bureau of Labor Statistics.
“Freights were the fourth quarter of last year and not as strong as we came in the first part of January and February,” Alaska Airlines CFO Shane Tackett told CNBC. “Demand remains very high for the industry, but this is not the peak we expected to be coming out since last year.”
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Before coming to too many conclusions, some industry analysts will be urging them to wait until April’s data is released and assess whether the usually busy spring break and Easter travel season also showed a drop in price.
Despite this, airline business writer Brian Summers told The New York Times: “Overall, I expect prices to go down and I think we’ll see more empty seats.”
Watching the US economy fall into economic recession this year will also help you make travel and other goods and services cheaper.
“In fact, we saw deflation for months in the 2008 recession when overall price levels were actually low,” said Tyler Sypper, an associate professor of economics at St. Thomas University. “I think this is especially true for most households, like travel, which is probably more luxurious. For example, airline travel can see prices falling around most recessions.
Nexstar’s Addy Bink and the Associated Press contributed to this report.
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