February 14, 2017

Trump's Travel Ban Hits USA Tourism Industry Hard

by Malek Murison

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When we speculated about all the possible ways in which Donald Trump could impact upon the travel industry, we didn't really expect his actions to be so direct. Or so fast. On January 27th the new President of the United States signed an executive order halting all refugee admissions and banning people from seven Muslim countries:

  • Syria
  • Iran
  • Sudan
  • Libya
  • Somalia
  • Yemen
  • Iraq

In one swoosh of a signature, the President's travel ban brought chaos to airports and travellers' itineraries around the world.

Whether or not you agree that this kind of 'Extreme Vetting' is called for or not, there's absolutely no doubt that since Trump's order was put in place the US travel industry has shifted. Although the ban has been temporarily overturned by a federal judge in Seattle, Trump is still fighting hard to see it reinstated. Figures released by the Global Business Travel Association (GBTA) suggest that the executive order has already hit corporate travel hard.

The Law

Somewhat inconveniently for Donald Trump, back in 1965 the US Congress passed the Immigration and Nationality Act. This law stated that no longer could a person be "discriminated against in the issuance of an immigrant visa because of the person's race, sex, nationality, place of birth or place of residence". Legislation like this has seen his travel ban quickly overturned.

A Timeline of Trump's Travel Ban

3rd of February 2017: A Seattle federal judge suspends the order nationwide, in response to a challenge by the Washington State attorney general, who argued that the executive order violated a clause in the US constitution that prohibits the favouring of one religion over another.

5th of February 2017: A request by Mr Trump's administration for an immediate reinstatement of the order is rejected by the 9th Circuit Court of Appeals in San Francisco.

9th of February 2017: A three-judge panel in the same court rules unanimously against reinstating the ban, after hearing arguments from lawyers from the Department of Justice and Washington State.

As you can imagine, Trump didn't like these decisions one bit. He has criticised America's independent judiciary in a series of angry tweets since the Seattle ruling. He said the ruling came from a "so-called judge", and that the courts were "making the job very difficult!", and later said the courts were "so political". After the San Francisco appeals court decision, he tweeted "SEE YOU IN COURT".

The implications for American business travel

In a blog post released after Trump's travel ban had been overturned, the GBTA estimated the impact the executive order had already had on business travel to the USA:

  • USA system-wide business travel transaction levels month-over-month (January 2017 vs. December 2016) decreased by up to 8 percent depending on industry and sector
  • USA system-wide business travel transaction levels were increasing by +1.2 percent the week before the travel ban but decreased by -2.2 percent the week after the travel ban for a net negative industry impact of -3.4 percent in one week
  • In that week, approximately 5 million in business travel bookings were lost as the uncertainty surrounding travel in general had a rippling effect on traveler confidence
  • In 2016, 87.3 percent of USA business travel was domestic travel, 12.7 percent was international travel. This action had a significantly disproportionate impact on international travel
  • For every 1 percent impact on business travel spending annually, the United States gains or loses 71,000 jobs, nearly billion in GDP, billion in wages and .2 billion in tax collections

The headline from that data is probably the 5 million lost in business travel bookings due to uncertainty and a loss of traveller confidence.

Read more: Gap in the Market: Corporate Travel

Upholding the lower court’s ruling is also a losing situation for the business travel industry. The initial impact has already been felt and the uncertainty it will create as we await an appeal to the Supreme Court will continue to make its mark. Advanced bookings will likely slow as travel professionals cannot be sure if and when the ban will be reinstated. Meetings and events may be cancelled altogether. The cloud of uncertainty could leave a lasting economic impact. Large corporations and small businesses alike will suffer. The biggest driver of our economic recovery of the past seven years from the most recent downturn was international outbound travel. U.S. businesses found top line growth and business opportunity from new markets all over the world." - Michael McCormick, GBTA executive director and COO

Read more: How Will President Trump Affect Travel Industry?

The consequences for American tourism go further than business travel

We all heard the protectionist and nationalist rhetoric from Trump during the election campaign. But many onlookers expected the controversy and extreme views to die down after he took office. Now, though, it's become clear that he intends to act upon his promises. If nothing else, this is a man who keeps his word.

What will this do to incoming tourism to America?

Trump travel ban usa tourism

Speaking with The Telegraph, Patrick Surry, chief data scientist at travel analysis firm Hopper, argued that a reinstatement of the ban will lead to a "Trump slump" for the entire US travel industry.

“If travel restrictions are reinstated it may send the message that visitors are no longer welcome in America and we could be seeing the start of a significant downturn for the travel and tourism industry,” he said.

And that makes a lot of sense. Many prospective travellers from all over the world would have rolled their eyes at Trump's pre-election rhetoric, without really taking it seriously. But now many Muslims and liberally-minded people are reevaluating trips to the States for the foreseeable future. A country divided, led by a president that is wholly unwelcoming to visitors, doesn't make for the most appealing destination.

The Telegraph also spoke with Suzanne Perry from travel marketplace Kayak. Their data suggests that Trump's isolationist stance is already having an impact on those thinking of visiting the US. It reported a 14% decrease in the number of EU citizens searching for flights to the US in January compared with the same month in 2016.

“With 1.5 billion searches conducted on Kayak websites every year, these percentage changes are really significant,” said Perry. “The data strongly indicates that there has been a substantial decline in searches and interest for travel to the US since the start of Donald Trump’s campaign.”

Interestingly, not everyone has been put off by America's new stance towards the wider world. Travel analysts Hopper noticed that there is an exception to the trend: In Russia searches for US-bound flights have increased by 88%. Really.

Will Canada offer what America can't?

Despite the diplomatic joint press conference between Canadian Prime Minister Justin Trudeau and Donald Trump (above), the two men couldn't be any more different. One is a proud feminist who has welcomed over 40,000 Syrian refugees to his country. The other is a president caught on tape bragging about sexually assaulting women with a tough stance on immigration.

With that in mind, it's no surprise that liberal travellers seeking a trip to North America might now be considering Canada instead. After all, Canada offers a similar culture, plenty of stunning scenery and is generally regarded as being a little bit more laid back.

Nikki Davies, marketing director of Trailfinders, said “It’s too early to what know effect Trump has had on the US, but Canada has in all honestly been selling unbelievably well for the last eight or nine months. The figures are huge, up 50 per cent, year on year, while the US has been tracking the same as last year.”

We can only speculate how the US travel industry will be affected in the months and years to come by the new president. Perhaps things will settle down, or perhaps this is simply the start of a tumultuous presidency that has no interest in encouraging tourism. Our view? Focusing on issues closer to home is no bad thing, but doing so at the expense of relationships with the wider world and prospective travellers is something to be avoided. At a time when the world has never been more connected, and when the problems travellers and citizens alike face are global in nature, divisive politics isn't going to do anyone any good.

We'll be keeping up with Trump's travel ban as he works through the courts to try and get it reinstated. We will also be monitoring the wider impact of his actions, on the travel industry at home and abroad. Stay tuned.