Trends & ForecastsSeptember 23, 2019

America’s Tourist Shoppers Are Staying Home

How a Downturn in Tourist Spending Is Impacting the Retail Industry

By BRANDON SAMS | CONTRIBUTING WRITER‍

[RETHINK Retail] — Some American foreign and domestic policy choices  have led some tourists to choose to vacation elsewhere causing a downturn in retail tourism and leading many industry figures left scratching their heads and their pockets.

Government data compiled by the U.S. Travel Association found that dips in tourism has cost $4.6 billion in loss revenue and 40,000 un-exportable American jobs linked to the travel industry in 2017 alone. This trend started in 2017 after a five-year record surplus of increased tourist spending amounting to approximately $87 billion. Increasing international inbound travel would help America close the trade gap and help this economic engine to reinvigorate retail and travel-associated business.

While there has been a stark decline in inbound travel and revenue generated from tourism, many experts remark that the issues are multifaceted and cannot simply be boiled down a tense political landscape. Still, the trend is troubling and has led to the U.S. Chamber of Commerce and the National Retail Federation’s launch of the “Visit U.S. Coalition” in an attempt to rekindle the snuffed spark of foreign investment in American tourism.

The official site states between 2015 and 2018, the latest year with numbers available, 14 million fewer foreign tourists came to the United States than projected.  In the same time interval, more than 120,000 projected jobs were not created, and the United States lost out on $59 billion in traveler spending. It’s no wonder many business associations like the National Retail Federation, National Restaurant Association, American Hotel & Lodging Association and the Asian American Hotel Owners Association have committed resources to incentivize travelers to make the United States one of their preferred destinations once again.

One potential aspect on this decline in tourism spending is the US-China Trade War, which has caused many Chinese travelers to take their foreign monies elsewhere. For the first time since 2003, Chinese tourists rate decreased. It decreased by approximately 5.7 percent, according to the National Travel and Tourism Office. This unprecedented downturn is seen as a direct result of President Trump’s trade war with the emerging global giant after a Bloomberg report found that the Chinese government was telling businesses to avoid trips to the United States.

In the August 19 episode of the “Retail Rundown,” Carol Spieckerman, president of Spieckerman Retail and RETHINK Retail advisor, broke down how the US-China Trade War is causing disruption in the retail and greater business industry.

“It isn’t just the tariffs themselves, the money implication of it, it’s the unpredictability and the volatility that’s freaking them out, because It’s compromising their ability to plan their business,” Spieckerman revealed. “I work with a really diverse group of retail stakeholders…they’re definitely all sweating these tariffs.”

She cited the negative impact the decrease in international tourism is having on big chain stores such as Macy’s, which stated international tourist sales fell 9 percent in Q2. Chinese tourists are among the greatest contributors to the United States through tourism spending approximately 50 percent more than other foreign visitors.

However, it’s not just the US-China Trade War influencing tourism: it’s the tumultuous events occurring in American society as well.  As of September 12, there have been 255 days in 2019 thus far, yet more than 283 mass shootings: more than one mass shooting per day, according to data compiled by the nonprofit Gun Violence Archive. Amnesty International as well as more than half a dozen nations including Canada, France, Germany and Japan warn travelers against visiting the United States citing a gun violence problem.

Historically, we see the impact mass violence can have on tourism after the October 2017 Las Vegas massacre, which left 58 people dead and hundreds injured, helped influence a major slump in the touristy city several months later affecting businesses. Similar questions were raised in Orlando after a gunman targeted LGBTQ patrons at Pulse nightclub in June 2016 leaving 49 people dead in what was the deadliest anti-LGBTQ hate crime in American history was. While Vegas and Orlando bounced back, news of a hostile American government and gun-toting citizens is likely to stick for the time being.

America has a lot to reckon with as policy and culture combine to negatively effect the businesses that make this country one of the otherwise most business-friendly in the global West. Retailers have seen fewer tourists in their stores and, unfortunately, will continue to with no signs of improvement in sight. The challenges of volatile trade policy and cultural tensions compound.