Tourism Tumble: Will the U.S. Economy Weather a $12.5B Travel Spending Slump in 2025?

The WTTC attributes the projected slump to multiple factors eroding international traveler confidence. A strong U.S. dollar, up 4.2% against major currencies in 2025, per Bloomberg, makes vacations more costly for foreigners.

Tighter immigration controls, including reported detentions of tourists, have prompted travel warnings from countries like Canada, the UK, and Germany.

U.S. Department of Commerce data shows a 15% drop in UK arrivals and a 28% plunge from Germany in March 2025, with Canada’s summer bookings down over 20%.

The WTTC notes that while domestic tourism, accounting for 90% of 2024 spending, has propped up the sector, the international market, down 22.5% from its 2019 peak of $217.4 billion, is where growth lies. Social media discussions highlight fears that major events like the 2025 Ryder Cup may see reduced attendance.

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Policy Fallout and Global Perceptions

Since January 2025, the Trump administration’s hardline immigration enforcement has sparked backlash, with reports of lengthy border questionings deterring visitors.

Countries like Belgium have updated visa guidance, citing strict gender declaration rules, while Canada’s advisory reflects anger over Trump’s tariffs and “51st state” rhetoric.

A Tourism Economics report estimates tariffs could cut inbound visits by 5.1%, costing $64 billion, with NYU professor Jukka Laitamaki warning of a potential $60-$120 billion economic hit.

The U.S. National Travel and Tourism Office reported a 12% year-over-year drop in overseas arrivals for March 2025; however, there was an 8% rebound in April.

WTTC CEO Julia Simpson criticized the U.S. for "putting up a closed sign" while rivals like China eased visa rules, noting the decline as a "direct blow" to the broader economy.

Did You Know?
International tourists spent $254 billion in the U.S. in 2024, supporting nearly 18 million jobs, but Canada alone accounts for 20 million annual visits, generating over $20 billion in states like Florida and Arizona.

Economic Ripple Effects

The tourism downturn threatens more than just hotels and airlines. In 2024, the sector generated $585 billion in tax revenue, nearly 7% of government income, per WTTC.

States like Florida, California, and New York, reliant on international visitors, face acute losses. Bloomberg Intelligence estimates $20 billion in retail spending at risk.

Marriott and Hyatt downgraded 2025 revenue forecasts in Q1, citing weaker demand, while Delta Air Lines scrapped its annual guidance amid stalled international bookings.

Bank of America data shows a 6% drop in airfare spending and a 2.5% decline in lodging through March 2025, with lower-income households cutting travel budgets most. Social media posts express frustration over rising costs and fewer visitors, with some businesses fearing a prolonged recovery.

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Calls for Urgent Action

WTTC’s Simpson labeled the decline a “wake-up call,” urging immediate policy shifts to rebuild global trust. Recommendations include streamlining visa processes, boosting international marketing, and easing border scrutiny.

The WTTC warns that if action is not taken, the U.S. may not recover to pre-pandemic spending levels for years, falling behind the global tourism sector, which UN Tourism reports reached 98% of 2019 levels in 2024.

The U.S. Travel Association’s earlier projection of 77 million visitors in 2025 now appears optimistic, with Goldman Sachs estimating a 0.1-0.3% GDP hit, equating to $23-$71 billion. As summer approaches, the industry hopes for leadership from Washington to reverse the trend and avert further economic damage.