November 12, 2016

How Will President Trump Affect Travel Industry

by Malek Murison

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As tempting as it was to draft a new post about travel industry technology or the latest SEO techniques, both article choices would have left a yuuuuge xenophobic and populist elephant in the room. Here at Travelshift we have no problem delving into the big issues; so here goes nothing. This week we're going to talk about Donald Trump, and take a closer look at how his rise to the office of President of the United States might affect tourism. How will President Trump affect the travel industry?

donald trump travel industry affect

Trump election goes against foundations of travel industry

The initial reaction from many in the travel and technology industries - or those halfway between the two, like us - will likely be one of shock and dismay. At the core of travel is a willingness to grow, to learn, to expand your horizons. Travel is what drives and what results from an increasingly connected world in which the freedoms of trade and movement and exploration are freedoms to be shared by all. In short, we're all about breaking down barriers with progressive ideals and innovation.

But what we have witnessed in America in recent days has been the dismissal of those ideals. It's been a kick in the teeth, rightly or wrongly, for globalisation, delivered by those who feel they have been left behind. Instead of continuing to lead the world in breaking down social barriers, the United States has elected a president that literally wants to build them up. A campaign littered with racism and misogyny has left minorities feeling uncomfortable in the country they call home. Issues of race, poverty, age, wealth, education and gender will all come to define an election that will go down in history. A country is divided, and nobody knows how things are going to work out.

To say that Donald Trump's campaign and ultimately, his election, go against everything the travel industry stands for would be an understatement. But rhetoric and actions are two completely different things. Playing to a populist crowd and enacting legislation are two different things. Whether Trump goes through with his many suggested policies will go a long way to determining his impact on the travel industry.

America wakes up a nation divided

As we have just explained, traditionally those in travel and tech are a pretty liberal bunch. The rise of a populist, right-wing candidate in the USA is troubling whether or not you are based in the States. This is especially the case when much of Trump's support appears to have come from an echo of white supremacy, as not for the first time in recent months a political campaign harnessed racial tensions for maximum impact. One of Trump's many slogans referred to building a wall between Mexico and the United States, another key message was his willingness to deport all Muslims from America and restrict the travel of an entire religion. And then there was the relentless barrage of misogyny faced by his opponent in the presidential race, Hilary Clinton, who was vying to be the first female commander in chief.

Sure, the travel industry isn't as diverse as it could be, but industries often reflect the societies and political climates they are built in, not the other way around.

This, from Skift CEO Rafat Ali, puts it quite nicely:

" Every bit of travel news, every trend, every analysis, every product we have put out since we started four and a half years ago, everything speaks to the progressive, interconnected future of the world, it is the reason for our existence, it is the reason for existence of our industry, the world’s largest industry.
The geopolitical realities of our world are worth embracing by the travel industry, instead of ignoring them or, worse still, wishing them away. And even more so, travelers will reward the industry for it by traveling more, by being more aware of the world and travel’s key place in it, rather than staying in isolationist bubbles for people to indulge in when they need an escape once in a while. Those of us in the travel industry have to figure out how we move from here, and the biggest role we have is to fight for the right of free movement of people — ALL of us, every color, every race, every orientation — in and out of America and beyond, and the future of a connected world outside of the neo-isolationist bubbles.
Travel is the most progressive expression of human curiosity. It behooves us to take on more activist roles on behalf of our right to travel, and the future of the travel."

Nationalism on the march

Donald Trump's campaign was a victory for inward-looking nationalism, a landslide for isolationism and intolerance. The worrying thing is that these sentiments are in no way exclusive to this presidential campaign. Increased nationalistic sentiment can be seen across much of the western world, from the Brexit vote in the UK to the rise of the right wing in France, Switzerland, Austria and across Scandinavia. Nationalist sentiment, when harnessed in such a negative fashion, can and will impact on tourism; whether potential visitors find it slightly unwelcoming or completely offputting.

Donald trump travel industry america

The rise of racially motivated hate crimes in the UK since the Brexit vote has been nothing short of terrifying, and it's easy to imagine a similar, more extreme reaction occurring all over America in the coming months. After all, the US is a country essentially built on undercurrents of racial tension and social injustice.

All of this adds up to America fast becoming as unappealing a destination as it's ever been. A recent article in The Independent took a closer look at the reaction of potential UK tourists to the US after Trump's win:

A leading travel industry figure has warned that many prospective British visitors to the US may decide not to go as a result of Donald Trump’s election. Joel Brandon-Bravo, UK managing director for Travelzoo, said: “Following confirmation of a win for Donald Trump in the presidential election today, we’re now forecasting an unstable 2017 for US tourism, with over one million UK travelers set to reconsider the country as a holiday destination.”

That's right: 1 million potential UK travelers are considering a boycott of the United States while Trump is at the helm.

Travelzoo survey shows how Trump can impact travel intentions

A poll of American citizens conducted by Travelzoo suggests that people are concerned about what the outside world will make of the 2016 presidential election. Sixty-nine percent of those polled are worried that the election negatively impacts how U.S. citizens are perceived overseas.

The Travelzoo Fall 2016 Travel Trends Survey also found that tourism going out of America is set to change. Canada and Great Britain are on travelers’ minds; particularly the former. A third of those surveyed felt that Canada’s reputation as a potential destination has significantly benefited from the Trump saga. A large percentage (Thirty-six, to be precise) were looking to take advantage of the fall of the Pound and visit the UK. However, this may have changed already as the Dollar begins to fall. We'll come to that in a moment.

So, apart from a fall in liberal, principled tourists, what other impacts on incoming travelers can America now expect as a result of President Trump?...

Donald Trump's Muslim rhetoric - How will it impact travel?

You might remember that back in December 2015 Donald Trump said: “I am calling for a complete and total shutdown of Muslims entering the United States until our country's representatives can figure out what the hell is going on.” 

So, let's suppose that the Donald stands firm on this, and even goes as far as to begin his deportation policy on the Islamic population in the US. Clearly, it's a politically ridiculous policy and one that would probably be impossible to impose. Besides the fact that it's worryingly familiar rhetoric to the kind used in Europe in the 1930s, there isn't exactly a 'Muslim' tag on every passport.

For prospective tourists, this kind of vigilant vetting process is sure to be off-putting, let alone the right-wing, isolationist motivations behind it. It's a policy, if enforced, that will horrify states heavily dependent on tourism, such as Florida, Nevada and California, not just liberals who believe in freedom of movement and human decency.

Travel and tourism are directly impacted by government policies on trade and immigration. Trump’s campaign rhetoric focused on immigration and the relationship particularly with Mexico will have a direct bearing on the performance of U.S. tourism, as Mexico is expected to overtake Canada by the end of 2016 to be the largest source of tourism demand to the U.S." -  Caroline Bremner, international head of travel, Euromonitor.

It's difficult to imagine that Trump's rhetoric won't also have a huge impact on the number of Mexicans and Muslims entering the US. Those are some pretty big demographics to instantly dismiss. The Council on Foreign Relations estimates that a travel ban on Muslims to the U.S. could cost the country up to billion per year and up to 132,000 jobs.

Will Trump's election hit the dollar?

Currency markets don't like uncertainty and instability, and there's little doubt that those are two of the feelings felt by many Americans and outside observers at the moment. As a result, the Dollar has already begun to slide.

But it's not all bad news for the American tourism industry. Sure, outbound travel is likely to go down, but a falling dollar will stimulate increased demand for domestic tourism, as Americans with less disposable income choose to holiday at home instead.

Although a Trump downturn, should it occur, would have a negative impact across a wide range of consumer markets, this impact will not be catastrophic. In addition there could also be opportunities for home-grown American brands, and those whose marketing message registers with Trump’s rhetoric and is centered on nostalgia, localism and heritage.” - Caroline Bremner, international head of travel, Euromonitor.

How will Trump affect travel industry: A look on the bright side

While many Americans will have been left distraught at the result, those in the travel industry can at least take comfort in Trump's business background. As a man with a vested interest in the world of hospitality and travel, he has already highlighted the importance of improving tourism infrastructure across America, from roads to bridges and airports. He will also no doubt appreciate that tourism accounts for around 10 percent of American exports.

Speaking with Skift, U.S. Travel Association President and CEO Roger Dow put a positive spin on things. “I am confident that he [Trump] will be a valuable ally in advancing some of our industry’s key priorities. Mr. Trump demonstrated throughout his campaign that travel and infrastructure issues have his attention, and we stand ready to advise his administration on achieving his stated aims in these areas."

Trump's pledge to boost the country's crumbling infrastructure with a huge investment initiative is certainly a popular policy among travel industry professionals. Dow continued: “We are encouraged that Mr. Trump’s extensive business and hospitality background — not to mention that travel accounts for 10 percent of all U.S. exports and creates jobs in every single congressional district — will make him a ready and receptive ear for our agenda. Mr. Trump has explicitly highlighted the challenges facing our nation’s airports and our aviation security system on his path to the White House. He has voiced great enthusiasm for modernizing our roads, rails and airports with his promise to invest 0 billion in infrastructure reform.”

So it's not all bad then. The fall of the Dollar could simultaneously make America a more appealing destination for international tourists, despite the incoming president. There could also be a staycation boom as Americans choose to holiday domestically. And if Trump veers away from his more right-wing campaign messages on immigration and instead concentrates on boosting the country's infrastructure, tourism could win the day in the long run.