U.S. Economy

The Trump Effect on Tourism Is Overhyped

Jobs haven't suffered; foreign visitors are still spending money. That matters.

Take pictures. Bring money.

Photographer: Drew Angerer/Getty Images

People in the travel business have been warning that the Donald Trump administration's isolationist rhetoric and tougher border controls -- as evidenced by the just-unveiled State Department questionnaire that asks visa applicants for 15 years of biographical information and their social media handles for the past five years  -- are going to discourage foreign travelers from coming to the U.S.

Some have even put forward evidence that this is already happening. Mobile app Foursquare, for example, reported last week that, among its users:

The share of international tourism to leisure locations in America has been steadily declining since October 2016, after small YoY growth in August and September. Over the full October 2016 to March 2017 timeframe, there was an average decrease of 11% YoY.

ForwardKeys, a travel data provider, reported Thursday that summer bookings for travel to the U.S. are down 3.5 percent over last year -- while bookings are up for all other major destinations.

So I was curious whether the jobs data released today by the Bureau of Labor Statistics showed any indication yet of an employment slowdown brought on by this newfound unpopularity of the U.S. I figured "accommodation" would be the likeliest industry category to be hit. 1 It hasn't been ... yet.

No Signs of a Hotel Bust

Payroll employment in accommodation, seasonally adjusted

Source: U.S. Bureau of Labor Statistics

Note: Y-axis does not go to zero.

Employment growth in accommodation did stall last year -- perhaps an indication of the impact of Airbnb, whose self-employed hosts don't show up in the payroll data -- but the past few months actually saw a modest return to growth.

Another place to look is the consumer spending data released Monday by the Bureau of Economic Analysis, which breaks out spending by foreign travelers in the U.S.

A Bit of a Travel Slowdown

Spending in the U.S. by foreign travelers, in 2009 dollars*

Source: U.S. Bureau of Economic Analysis

*Seasonally adjusted at annual rates. Note: Y-axis does not go to zero.

That does seem to show a slowdown since last fall, although not much of one. All of these numbers, especially the spending ones, are subject to revision as more data comes in. And in general, we'll know a lot more in a few months. Still, there is no sign yet of the kind of dramatic falloff in travel to the U.S. that followed Sept. 11 or the 2008 financial crisis. There may be a negative Trump effect on tourism to the U.S., but at this point it seems more likely to be a modest drag than an anvil to the head.

Also apparent, though, is that travel -- and foreign travel -- really does matter to the U.S. economy. Those 1.96 million people working in accommodation in May dwarfed the 655,000 employed in what seems to be the current administration's favorite industry: mining and oil and gas extraction. The lodging jobs don't pay nearly as well ($14.31 to $28.31 an hour for production and nonsupervisory employees), and mining and drilling for oil and gas creates employment in other industries such as refining, plastics and metals manufacturing. But the $219 billion that foreigners spent in the U.S. last year on travel, education and medical services isn't far off the $265 billion gross domestic product contribution of mining and oil and gas. Tourism matters. We may find out over the next few years just how much it matters.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
  1. It consists mainly of hotels and motels but also includes bed-and-breakfasts, RV parks, campgrounds and rooming houses.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Brooke Sample at bsample1@bloomberg.net

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