Travel to the US is about to fall through the floor – or so the headlines say across mainstream media. Let’s pick out a few.
From Fortune, “Foreign tourism to U.S. will fall due in part to ‘polarising Trump Administration policies and rhetoric’”. The Guardian writes, “US tourism industry faces drop-off as immigration agenda deters travellers”.
The Economic Times added “Economic crisis in the making: Damning report says U.S. tourism faces $64 billion blow as Trump administration’s trade wars drive away foreign visitors and cut spending”.
While The New York Times said, “‘Trump Slump’ Looms as Foreign Visitors Rethink Travel to U.S.”.
A common thread here is that these are not headlines from sensationalist media outlets, but generally balanced and respected global media.
The trade media has not been shy of a few US tourism headlines either, particularly this week, as the ‘Liberation Day’ tariffs were partially paused…for 90 days anyway.
Unfortunately for the US, when it comes to Australian visitors, it is facing a triple whammy – politics, PR, and economics. On the latter, for most of the week, dollar watchers were predicting the AUD would dip below US$0.60 – some sort of line in the sand, as it were, that a few tried to make us believe would signal the end of tourism to the US.
On 08 April it did dip to US$0.59 but quickly recovered and subsequently enjoyed a significant boost towards the end of the week when Trump backflipped and paused his “beautiful” tariffs.
But while it is easy to jump on the doom-and-gloom bandwagon, let’s talk about ‘spin’ – something the media and our communications and PR counterparts can be great at. Is this potential US tourism implosion real, or is it just a beat up by the media and a small group of industry experts great at giving a soundbite as opposed to balanced analysis?
Admission: this was not necessarily an original question from myself. I took a couple of calls this week from industry executives genuinely asking why there was so much fuss about tourism to the US – it came after we had covered the unfolding situation in a fair bit of detail.
As one put it, “we’ve seen this before, but surely if you want to go and play 18 holes at Augusta, you’re still going to do that”.
Perhaps that is a little bit of a basic analysis, but the point of ‘seeing it before’ was a solid one. Remember that in the early noughties, the value of the AUD sat at under US$0.50. More than 10 cents lower than it is now. Its record low was US$0.4775 in Apr of 2001, while in Jul 2011, the dollar hit a record high since floating, at $1.1080.
In the space of just over a decade, our dollar more than doubled in value against the US – so indeed, we have seen this all before. US$0.60, slightly north or south, isn’t really a line in the sand for anything.
And having seen it all before, that means we have data about it, which begs the question, how has the AUD’s value against the USD affected Australians travelling to/from the US over time?
I dug out data from 2000 to 2020 and charted the AU dollar value against the number of Australians visiting the US short-term to provide a visual representation of the relationship between the two.
Caveat: the visitation statistics are from the ABS, and up to 2016, it recorded short-term movement of Australian resident departures to the US. From 2017 onwards, it recorded short-term movement of Australian resident arrivals from the US. It did provide historical short-term resident arrival data, but only back to 2007.
So, to make things more balanced, I have created two separate graphs. The first is 2000-2010 which uses resident departures plotted against the US dollar value of the AUD, while the second is 2011-2020, which uses resident returns data, again, plotted against the US dollar value of the AUD.
The graphs chart month by month and on both, the USD value of the AUD is the red line.
A few things straight off the bat – we see at the start of the noughties that when the dollar sunk to record lows, travel to the US sunk as well, but even when the dollar began to recover, travellers remained a bit shy in the short-term.
This can be explained in part by the time between booking and actually travelling.
During the global financial crisis of 2008, travel to the US dropped in line with the drop in value of the AUD against the USD but also shot back quite quickly as it became evident that our dollar was becoming increasingly strong against the Greenback.
It also seems reasonable to suggest that, even as the dollar began to drop back down under parity and then around the US$0.70 mark, travel to the US remained strong – Australians became comfortable with the exchange rate and what it would buy them.
This also coincided with some very good airfares. Remember $999 return to the US? Even the UK notched up a few fares at that rate from mainline carriers.
Of course, as illustrated by the graph, this was all reset somewhat by the pandemic. With the recovery and the game of Trump PR versus actual economics currently in play, how travel to the US for Australians shapes up over the next 12-24 months is difficult to predict.
If recent history is anything to go by, it is unlikely that there is a trap door that is suddenly going to open up and all potential Australians looking to visit the US fall through it before they step on a plane.
It also feels likely that PR damage has to be factored in and any drop due to the dollar will be increased to an extent by traveller sentiment towards the current administration and its actions.
Side note: Aussie traveller numbers to the US were high during President Trump’s first term, and with US carriers like American Airlines increasing their flights to Australia, travel to the US has never been so interesting to monitor.
The rest of the week
It was a big week for breakers this week, with the Travel Daily team putting out four of them while Cruise Weekly also got in on the action.
On the Travel Daily front, AKTG celebrated the return of the Cox & Kings brand to Australia after a six-year hiatus, in what it called a “carefully calibrated” move.
ATIA joined forces with 19 peak business organisations in an unprecedented call to all political parties to prioritise Australian businesses ahead of the federal election.
A good move considering that over 90% of ATIA’s members are small businesses, collectively booking over $30 billion in travel services in 2024 and directly supporting nearly 17 million Australian travellers every year.
Virgin Australia discovered an error in its pricing system affecting around 61,000 customers over a five-year period who were overcharged for booking changes.
We had a back and forth with VA on Thu to get to the bottom of it – the airline has all of the customers’ details and will be proactively reaching out. It is also cooperating with the ACCC. A masterstroke in PR and communications, frankly. Well done, VA.
And Helloworld got in on the breaker action by acquiring 100% of Barlow Travel Group in New Zealand.
On the cruise side of things, Scenic Group brand Emerald Cruises is introducing two new luxury yachts and one new luxury river ship, beginning next year.
And Viking has ordered two hydrogen-powered ships capable of zero emissions, with the power units being built by a group within Fincantieri that used to run a World Endurance Championship racing team.
That’s a wrap. Enjoy the weekend – I’m sure like me, some of you will be on the side of a sports field watching the final round of a ball game before two weeks of school holidays.
