The U.S. Needs Tourists. Why Make Visiting So Hard?

As many Americans living or traveling overseas returned home for the holidays in the past couple of weeks, a lot of them spent time stuck in long lines to clear immigration and customs, staring at warnings about the symptoms of measles and Middle East respiratory syndrome. But far longer waits were reserved for foreigners coming to the U.S. for business or tourism, supporting an industry that employs 8 million Americans. Recent research suggests that if the U.S. made the process of visiting America a little less painful, more people would come—and spend money, and create jobs. Although the U.S. prides itself on openness, it’s one of the world’s least friendly nations in terms of the bureaucracy required to visit. It’s time for that to change.

International tourism is booming worldwide: In 2012 a billion people crossed an international border for a holiday. But a shrinking proportion of those tourists are crossing American borders. According to World Bank data, the U.S. accounted for 8 percent of global tourism arrivals in 1995—a number that had fallen slightly to 7.3 percent by 2000. During that time, the U.S. share of global tourism receipts actually climbed to 21.2 percent from 19.4 percent.

Then came 2001 and its aftermath. At the nadir in 2006, the U.S. accounted for just 5.8 percent of international tourist arrivals and less than 15 percent of receipts. While the U.S. share of arrivals had recovered slightly by 2011, to 6.1 percent, its share of revenue remains at just 14.9 percent. That’s a 16 percent decline in global tourism arrival share since 2000 and a 30 percent fall in global revenue share. If the U.S. still had the share of global arrivals it had in 2000, there would have been 12 million more international tourist visits to America in 2011 and $36 billion more in international tourism receipts. The windfall would be $80 billion more if those tourists still spent the same share of global expenditures as they did in 2000.

There are lots of reasons why the U.S. was likely to lose some share of the global tourism market during the past decade. Not least, there are more and more stable, tourist-friendly, and interesting places to visit that aren’t in the U.S. Think Croatia, Chile, or Cambodia—and those are just the expanding tourist destinations that start with a “C.” But the lack of a long-term recovery from the post-Sept. 11 slump requires another explanation. And a recent paper by Robert Lawson of Southern Methodist University and Saurav Roychoudhury of Capital University provides one: onerous visa requirements.

Looking at 188 countries around the world, Lawson and Roychoudhury examined which ones require people to apply for a visa before they visit. Then they studied how many tourists travel from one country to another. Allowing for factors such as population, income, the size of bilateral trade, economic policies, a measure of democracy, and an indicator of world-class sites of cultural importance, they found that tougher visa requirements imposed on potential visitors from a given country are associated with considerably less tourism from that country. In short: Demanding a visa from a country’s travelers in advance is associated with a 70 percent lower level of tourist entries than from a similar country where there is no visa requirement. The U.S. requires an advance visa from citizens of 81 percent of the world’s countries; if it waived that requirement, the researchers estimate, inbound tourism arrivals would more than double, and tourism expenditure would climb by $123 billion.

Lawson and Roychoudhury themselves are careful to caveat that result. It’s based on an association between pre-travel visa requirements and lower tourism—not strong evidence of a causal link. And the U.S. is so much of an outlier when it comes to demanding visas in advance that the impact of moving toward a more friendly visa regime may be smaller than the authors’ initial estimate suggests.

On the other hand, there are reasons to think the research may underestimate the impact of U.S. visa regulations on tourism. Not least, the researchers only studied the impact of a pre-travel visa requirement. But the U.S. not only requires people from the vast majority of countries to pre-apply; the application procedure itself is one of the most toilsome in the world. The standard process to visit the U.S. looks something like this: complete the DS-160 online application and upload photos; schedule two appointments at the applicant service center and the consulate; pay application fees; go to the applicant service center, give fingerprints, and have your photo taken; go to the consulate for an interview; don’t annoy the interviewing consular official who has absolute power to accept or reject your visa application; wait 10 days.

Again, that process is pretty much the standard for four out of five of the world’s countries. It applies not only to Yemen or Afghanistan, but also to such countries as Brazil—rarely considered a global terror hub.

That complicated visa requirements deter travelers shouldn’t come as a surprise—it’s an article of faith at the World Tourism Organization, and analysis (PDF) by the U.S. government suggests the same thing. Research by the Department of Homeland Security indicates that by 2007, travelers who weren’t required to obtain a visa in advance because their countries are part of the U.S. “visa waiver program” were visiting in similar numbers as before 2002. But travelers from the other 81 percent of countries—the particular victims of additional visa bureaucracy—were still down 10 percent from their pre-2002 numbers. And in 2002, the Department of Commerce suggested that ending the waiver program for the lucky one-fifth of countries that don’t require visas before travel would deter about 600,000 visitors a year at an annual cost of around $6 billion—alongside almost half a million jobs.

So while there’s no good evidence that increasingly Byzantine visa processes have made the U.S. significantly safer, there’s plenty of reason to conclude that they have made the country significantly worse off, potentially costing hundreds of thousands of jobs. It’s about time America stopped trying to compete with Saudi Arabia and Turkmenistan in deterring tourism and started welcoming visitors to U.S. shores again—visa-free.

Before it's here, it's on the Bloomberg Terminal.