Domestic travel may be on the rise as international arrivals decline, but is the U.S. living up to its potential?
The U.S. Travel Association’s Travel Trends Index shows that travel grew in the U.S. 4 percent year-over-year in June—the 102nd straight month that the index has shown an overall expansion. However, some concerns have been raised on the international front and whether or not this growth can be sustained throughout 2018.
Domestic travel is one of the biggest bright spots.
Overall travel volume grew at a faster rate in June 2018 than in May 2018, due in part to solid gains in both domestic business and leisure travel.
“For the first time in the history of the Travel Trends Index, both the business and leisure segments of domestic travel expanded every month during the first half of the year,” said David Huether, senior vice president, research. “Continued growth in leisure travel was joined by a resurgence in business travel, a trend that is projected to continue in the second half of the year.”
Results showed that gains in domestic leisure and business segments were driven by solid income growth, upbeat demand, and lower taxes. High consumer confidence and positive growth in forward-looking bookings and travel searches provide an optimistic outlook for the domestic travel market.
Domestic travel is anticipated to grow an average of 2.6 percent year-over-year through December 2018.
International inbound tourism did not perform as well as in the previous month, however, it is still up overall for the year.
While inbound travel is still expected to grow, its pace is slower than domestic travel and projected at 2.2 percent through the end of the year. U.S. travel economists are cautious due to negative perceptions abroad of President Donald J. Trump, whose rhetoric and policies continue to pose risks to the sentiment of the international traveler. The index also takes into consideration that mounting trade tensions and higher oil prices could affect international growth.
“Rising oil prices and trade uncertainty—particularly with regard to tariffs—have the potential to dampen consumer confidence,” Huether noted.
Overall, the results were a net positive for the industry.
“Solid economic activity has supported travel gains for businesses and consumers alike through the first half of 2018. Looking ahead, continued momentum should advance both domestic and international travel through the end of the year,” said Adam Sacks, president of Oxford’s Tourism Economics group.
Weighing down these results is the fear that the U.S. isn’t living up to its potential and continues to lose out on its share of the global travel market. Travel is booming around the world and the country is falling far behind the growth rates of other nations. While the U.S. is projected to grow at a rate of 2.6 percent domestically and 2.2 percent internationally, other country’s are projected to see travel growth of up to 6 percent in 2018.
Heuther called for policies that would have a positive impact on the travel industry.
“Facing these potential headwinds, we urge officials to support policies and messaging that will make clear to the world that the U.S. is open and eager for business,” he said.
Efforts are already underway to combat the loss in market share with a coalition of industry insiders promoting tourism to the United States.