In the competitive global travel industry, America has lost its edge with the world’s highest-spending travelers due to long visa wait times, gun violence and geopolitics. But here’s the silver lining in the clouds.
By Suzanne Rowan Kelleher, Forbes Staff
Two weeks ago, China announced it is lifting restrictions on group Travel to the United States and several other countries, a move that U.S. Commerce Secretary Gina Raimondo hailed as “a significant win for the U.S. travel and tourism industry.” Then she cut to the heart of the matter: U.S. tourism officials are pining for the return of Chinese tourists, by far the biggest spenders among global travelers.
“Before Covid,” Raimondo said, “as many as three million Chinese travelers visited the United States annually, contributing more than $30 billion to the U.S. economy.” In 2019, 2.8 million Chinese visitors accounted for only 4% of all inbound foreign travelers to the U.S., yet they accounted for 13% of spending. This year, fewer than 850,000 Chinese will travel here, according to the National Travel & Tourism Office (NTTO), the agency within the U.S. Department of Commerce that tracks tourism statistics. That 68% drop in traveler volume translates to more than $20 billion that Chinese visitors will not spend in the U.S. this year.
Three months after the official end of the pandemic, the U.S. tourism industry is still in recovery mode. Before Covid, 79.4 million international visitors to the U.S. injected roughly $239 billion into the national economy, accounting for nearly 10% of America’s total exports and services. In 2023, the U.S. expects to welcome 62.8 million foreign visitors–a 21% year-over-year jump but still 21% below pre-Covid numbers. Inbound travel volume to the U.S. is not expected to hit pre-pandemic levels until 2025.
Meanwhile, record numbers of Americans are traveling to Europe and spending money there. “We’ve benefited from international visitation exceeding outbound travel for as long as I can remember,” says Geoff Freeman, president and CEO of the U.S. Travel Association. “It’s only in recent memory–really, post-pandemic–that we’ve seen those numbers shift.”
The fall-off has taken an especially big toll on San Francisco, where Chinese visitors injected over $1.2 billion into the local economy the year before the pandemic.
To be clear, the U.S. has seen a drop in visitors from many countries, but not in equal measures. Just over half of inbound tourism to the U.S. comes from Canada and Mexico, whose visitation is down 19% and 8%, respectively, compared to 2019. Travel volume from the United Kingdom, the No. 3 pre-pandemic visitor source, is down 11%. Much more problematic are the sluggish numbers from what were the fourth- and fifth-biggest tourism sources in 2019. Visitation from Japan and China is down 61% and 70%, respectively. “There’s definitely a dynamic where Asian travel, at least to the United States, is not what it once was,” says Freeman.
Raimondo’s agency has set a national goal of welcoming 90 million international visitors by 2027. Though few officials say the quiet part out loud, the most prized tourists are those who stay longer and spend more at hotels, restaurants, shops and attractions. The average Chinese tourist traveling independently (versus a group tour package) spends $10,445 on a trip to the U.S., according to data collected by the NTTO. Comparatively, the typical visitor from the United Kingdom or Brazil spends $2,576 and $3,269, respectively, while the average Japanese tourist spends $3,783. In other words, it takes roughly three Brazilian tourists or four U.K. tourists to make up for every Chinese tourist who travels elsewhere.
The fall-off has taken an especially big toll on West Coast cities such as San Francisco, where 518,000 Chinese visitors injected over $1.2 billion into the local economy during the year before the pandemic. “It was a significant piece of our visitor mix in 2019,” says Huburtus Funke, executive vice president and chief tourism officer at the San Francisco Travel Association. “Last year, we had about 48,000 visitors and the spend was just about $286 million. So, still somewhat significant but obviously no comparison to 2019.”
Tourism, of course, is an inherently a competitive industry, as destinations battle for the hearts and minds of travelers–and their share of the $855 billion global travel and tourism market. That pie is expected to grow by 4.42% annually and exceed $1 trillion by 2027.
In that context of global competition, tourism officials acknowledge that the U.S. recovery–in terms of visitation and spending–has been slower than expected. “This while at the same time Canada is at 102% of their recovery,” Freeman says. “Clearly travelers are making a decision and too many are deciding not to come to the United States.”
Freeman points to Canada’s decision in June to waive visa requirements for 13 different countries for whom the U.S. still has requirements. “Other countries see our strengths and weaknesses and they adjust their strategies accordingly,” he says. “It may not be the only factor in Canada’s success, but it certainly has to be a contributing factor.”
Freeman believes the United States can and should be more competitive. “We need to look at travel as a path of least resistance. That’s what travelers tend to follow: Who makes it easy? Who makes it comfortable?” At the top of Freeman’s wish list would be for the U.S. State Department to drastically reduce visa wait times that create unnecessary obstacles for would-be visitors. Appointments for visa interviews for inbound travel to the U.S. can often take more than a year and sometimes more than two years.
Last fall, for example, the United Kingdom dropped its visitor visa requirement for Colombia, a top inbound market to the U.S. where travelers currently face average wait times of nearly 800 days. And travelers from the Philippines, who were recently granted visa-free entry to Canada, are looking at an average of 183 days for a visa interview for the U.S.
These initiatives make a difference. “Among non-visa waiver countries, visa wait times and the visa process is the top deterrent to visiting the US in these markets—above safety and even costs,” says Erin Francis-Cummings, president and CEO of Destination Analysts, one of the travel industry’s top research firms.
“The visa wait times have been a big concern,” says Funke at San Francisco’s tourism organization. “Keep in mind that in China, this is not just a visa issue. A lot of Chinese passports have lapsed and expired during the pandemic and we know from sources on the ground that the Chinese government has not kept up with the demand in issuing new passports to its citizens. So it’s a double whammy there.”
Before inbound travel from China can fully bounce back, the volume of flights between the two countries–a number mutually decided by the governments–must increase dramatically. Right now, Chinese airlines are operating just 12 scheduled passenger flights each week to the United States while three U.S. airlines–American, Delta, and United–also operate only a dozen flights in total to China. By the end of October, those numbers will double in each direction–but still will be a fraction of the 366 flights that flew between China and the U.S. in August 2019.
When he steps back and looks at the big picture, Freeman sounds far more positive. “The U.S. is still the world’s number one most desired nation to visit,” he is quick to point out. “Interest in traveling to the United States remains quite high.”
That’s true, according to a recent survey of 12,000 global travelers across 15 markets by Destinations Analysts, where three in 10 likely international travelers cited the United States as the destination they most wanted to visit in the next year. Still, there are signs that America’s competitive edge may be slipping. The U.S. currently performs 11 and 14 points better than Spain and France, the nearest competitors – but that gap is closing.
“Aspiration to visit the United States globally declined 16.3% in the last year to reach its lowest in a decade, and three points behind pre-pandemic levels,” says Francis-Cummings, noting that desire to visit the U.S. is down across all markets surveyed. Perhaps of greatest concerning, she says, is that the other North American markets–Canada and Mexico–are up 34.4% and 22.9%, respectively.
Three factors stand out as now as top deterrents to traveling to the U.S.: “Concern over gun violence is at the statistically same level as costs, with general concern about their personal safety in the U.S. not far behind,” says Francis-Cummings, who notes that America’s gun violence is the No. 1 disincentive named by Chinese, Australian and Canadian travelers.
Last September, a Morning Consult survey of Chinese travelers found that media coverage of U.S. mass shootings was integral in driving these fears. The study’s authors recommended that American destinations emphasize safety and stability in their marketing messages. “When we filtered the data by just those Chinese travelers who said that they would be potentially interested in traveling to the U.S., 93% said violent crime is a reason that they would avoid traveling here,” says Lindsay Roeschke, Morning Consult’s lead travel and hospitality analyst and one of the study’s authors.
“We’ve been sort of grappling with this for years. This is not a pandemic issue,” says Funke. “I think it is a very nuanced issue yet an issue that is persistent, especially given that there have been so many mass shootings in the U.S. over the last few years. So it’s a challenge, because I think it is essentially a brand tarnish for the U.S. as a country.”
Even so, the issue is complex because people tend to make travel decisions based on a combination of factors. “There are very clear reasons why travelers are not coming, and why we’re running into problems with a variety of travelers,” Freeman says. “Public safety is a concern. Then compound that with maybe a central government that is encouraging travel to other locations. Add on fewer flights, add on visa wait times.”
Likewise, it may be tempting to blame the drop in Chinese tourists entirely on the pandemic, when the slowdown actually began before Covid. Driven by rising levels of disposable income in the 2000s, Chinese visitation to the U.S. tripled in the decade between 2000 and 2010 to more than 800,000, and then tripled again in the five years between 2010 and 2015. As Chinese consumers’ spending power grew, the number of passport holders more than tripled from 2012 to 2016. But in 2017, the growth of inbound Chinese travel to the U.S. slowed to just 4%.
The next year, the U.S.-China trade war also brought an escalation of harsh rhetoric between Washington and Beijing as well as a series of tit-for-tat punitive measures that impacted tourism. The U.S. State Department began restricting visas for Chinese graduate students to one year, rolling back an Obama-era policy that allowed Chinese citizens to secure five-year student visas. (The Biden administration has continued restrictions.) The same year, the Chinese embassy issued a “summer travel reminder,” telling its citizens that “the law and order in the United States is unstable, with frequent shootings, robberies, and thefts” and warning of high medical costs. In another advisory, China warned its citizens against what it called “harassment” by U.S. law enforcement and said that visitors should “fully assess the risk of travel.” Amid these geopolitical tensions, the flow of Chinese tourists fell in 2018 for the first time in 15 years.
Once baked into travelers’ psyches, negative sentiment about another country can be hard to change. In the Morning Consult poll, 43% of Chinese travelers said the relationship between governments is a major reason they would avoid traveling to America. “Maybe it’s not in the front of people’s minds,” Roeschke says. “But the way that it plays out is, for example, through increased negative media coverage.”
“In the case of China, I think there is truth that the central government does have greater control over where people travel and how they travel, whether it’s in groups or individual or otherwise,” Freeman says. “And we’ve certainly seen in the United States that as the spigot opened up, we welcomed more visitors. And as the spigot was tightened, we welcomed fewer. So there is something to explore there.”
Meanwhile, as U.S. tourism organizations wait eagerly for inbound Chinese travel to rebound, they are tasked with trying to replace the lost tens of billions of dollars with tourists from other markets. One silver lining has been India, whose travelers spend an average $4,926 per trip and have already returned to the U.S. at pre-pandemic levels.
It’s a bit of a head-scratcher, admits Freeman. “India is exceeding pre-pandemic volume with some of the worst visa wait times in the world,” he says. “Maybe a lot of those travelers already had their visas long before the pandemic.”
Or perhaps Indians are simply more likely than average to see the United States in a positive light. In a Pew Research Survey from June, 59% of more than 27,000 people surveyed across 23 countries expressed a favorable view of the U.S. But in India, about two thirds of respondents (65%), six points higher than average, held a positive view. The findings were even more pronounced in the most recent survey from Destination Analysts, where 84% of Indian travelers said they were “very likely” or “certain” to visit the U.S. within the next two years, handily beating the next keenest U.S.-bound travelers, Brazil (77%), Mexico (76%) and Canada (63%). As for China, it came in a distant fifth, at still not-so-shabby 55%.
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