Introduction

The U.S. travel and tourism sector, a cornerstone of the national economy, is facing a projected $12.5 billion loss in international visitor spending in 2025, according to the World Travel & Tourism Council (WTTC). This decline, unique among 184 economies analyzed by WTTC and Oxford Economics, sees international visitor spending dropping to just under $169 billion from $181 billion in 2024, a 7% year-over-year decrease and a 22.5% fall from the 2019 peak of $217.4 billion. This downturn threatens jobs, local economies, and the U.S.’s position as a global tourism leader. This article explores the root causes, regional impacts, economic consequences, and potential strategies to mitigate this loss, drawing on recent data and industry insights.

Causes of the Decline in International Traveler Spending

1. Geopolitical Tensions and Policy Decisions

Recent U.S. policies, particularly under the current administration, have contributed to a perception of the U.S. as an unwelcoming destination. President Donald Trump’s rhetoric, including comments about Canada becoming the “51st state” and imposing tariffs on key markets like Canada and Mexico, has fueled negative sentiment. For instance, Canadian flight reservations to the U.S. are down 70% through September 2025 compared to the previous year, with early summer bookings down over 20%. Similarly, European visitors, particularly from the U.K. (down 15%) and Germany (down 28%) in March 2025, are deterred by high-profile border detentions and visa uncertainties. These policies have led to a “chilling effect,” as described by WTTC President and CEO Julia Simpson, making international travelers hesitant to visit.

2. Strong U.S. Dollar

The strength of the U.S. dollar has made travel to the U.S. prohibitively expensive for many international visitors. Julia Simpson noted that markets like Japan and Europe, once significant sources of U.S. tourism, are staying away due to unfavorable exchange rates. For example, the strong dollar has priced out Japanese tourists, who previously contributed significantly to U.S. tourism revenue. This economic barrier compounds the impact of negative sentiment, reducing the affordability of U.S. travel.

3. Border Policies and Visa Challenges

Stringent border enforcement and visa processing issues have further discouraged international travelers. Incidents of detentions at U.S. airports, affecting travelers from countries like France and Germany, have created a “bad buzz,” as noted by Accor SA’s CEO Sébastien Bazin. Additionally, a proposed increase in the Electronic System for Travel Authorization (ESTA) fee from $21 to $40 could further deter visitors from visa-waiver countries. Major Canadian institutions, including a pension management firm and a leading hospital, have advised against U.S. travel due to fears of immigration crackdowns, further impacting arrivals from Canada, the largest source of foreign tourists.

4. Global Competition

While the U.S. struggles to attract international visitors, other countries are capitalizing on the global travel rebound. Nations like India, China, and Middle Eastern countries are implementing digitized visa programs and aggressive marketing campaigns to attract tourists. For instance, UN Tourism reported that international tourism reached 98% of pre-pandemic levels in 2024, with the Americas at 97%, yet the U.S. is the only major economy projected to see a decline in 2025. This competitive disadvantage highlights the need for the U.S. to adopt more welcoming policies to regain market share.

Economic Impact of the Decline

1. Direct Economic Losses

The $12.5 billion loss in international visitor spending represents a significant blow to the U.S. economy. In 2024, travel and tourism contributed $2.6 trillion to U.S. GDP, supported over 20 million jobs, and generated $585 billion in tax revenue, accounting for nearly 7% of all government income. International visitors, who spend approximately $4,000 per visit compared to $500 for domestic travelers, are critical to this economic engine. The projected decline to $169 billion in 2025 will directly impact businesses in hospitality, retail, and transportation, particularly in major gateways like New York City and border regions.

2. Regional Disparities

The impact of reduced international tourism is not uniform across the U.S. New York City, a major tourism hub, is projected to lose $4 billion in tourism spending in 2025, with 800,000 fewer international visitors compared to 400,000 more domestic tourists. This imbalance is significant, as international visitors stay longer and spend more, contributing half of the city’s $51 billion tourism revenue in 2024. Upstate New York, particularly the “north country” near Canada, reports that 66% of businesses have seen a significant decrease in Canadian bookings, with 26% already reducing staff. Other regions, such as Oregon and Niagara Falls, are also bracing for losses, with businesses like Rainbow Air Helicopter Tours facing uncertainty after significant investments.

3. Indirect Economic Effects

The decline in international tourism has ripple effects beyond direct spending. The hospitality sector, which employs millions, faces reduced revenue, leading to job cuts and lower indirect spending by tourism workers. Goldman Sachs estimates that the combined impact of reduced travel and product boycotts could cost up to 0.3% of U.S. GDP, equivalent to $90 billion in a worst-case scenario. This loss exacerbates recession risks, especially as consumer sentiment weakens and travel-related companies like Marriott, Hyatt, and Delta Air Lines downgrade their 2025 forecasts.

Sector-Specific Impacts

1. Hospitality and Lodging

The hotel industry is particularly vulnerable, with companies like Marriott, Hyatt, Choice Hotels, and Wyndham reporting lower revenue per available room (RevPAR) expectations for 2025 due to economic uncertainty and reduced international demand. A Bureau of Labor Statistics report noted an 11% drop in hotel rates in the Northeast in March 2025, largely attributed to fewer Canadian visitors. This decline in demand is forcing hotels to lower prices, further squeezing profit margins.

2. Airlines and Transportation

Airlines are also feeling the pinch, with Delta Air Lines scrapping its 2025 forecasts due to stalled travel demand. Airfares, along with hotel rates and car rental costs, fell in March 2025, reflecting lower demand from international travelers. The decline in non-citizen arrivals by plane (down nearly 10% in March 2025) underscores the challenges facing the aviation sector.

3. Retail and Local Businesses

International tourists contribute significantly to retail spending, with an estimated $20 billion at risk in 2025. The decline in visitor numbers, particularly from high-spending markets like Canada and Europe, affects local businesses, from restaurants to souvenir shops. For example, Niagara Falls’ tourism-dependent economy is bracing for reduced Canadian visitors, impacting businesses that rely on cross-border day trips.

Case Studies: Regional Responses

1. New York City and State

New York City’s tourism agency, initially optimistic about a full post-pandemic recovery in 2025, revised its forecast to project 64 million total tourists, with 800,000 fewer international visitors. Governor Kathy Hochul highlighted the impact on upstate businesses, particularly in the “north country,” where Canadian bookings have plummeted. The state is exploring targeted marketing to domestic travelers but recognizes the challenge of replacing high-spending international visitors.

2. Oregon

Travel Oregon, led by CEO Todd Davidson, is maintaining efforts to attract international visitors despite the downturn. The commission recently pitched Oregon at an adventure tourism conference in Vancouver and plans to host marketing partners from the U.K., India, and Brazil. However, it is also considering a shift toward domestic tourism to mitigate losses, reflecting the broader strategic dilemma facing U.S. tourism boards.

3. Niagara Falls

Rainbow Air Helicopter Tours, which invested $25 million in new infrastructure, is facing uncertainty as Canadian visitors, a key market, decline by 70% in flight reservations. This case highlights the vulnerability of border regions to geopolitical rhetoric and policy changes, with local businesses awaiting the full impact of the summer season.

Potential Solutions and Recommendations

1. Restoring International Traveler Confidence

The WTTC, through Julia Simpson, has called for urgent action to rebuild international traveler confidence. This includes clarifying visa policies, reducing border detentions, and countering negative perceptions through targeted marketing campaigns. The U.S. could emulate countries like India and China, which have streamlined visa processes with digital platforms to attract visitors.

2. Policy Reforms

Reversing the proposed ESTA fee increase and simplifying entry requirements could make the U.S. more accessible. Additionally, addressing tariff-related tensions with key markets like Canada and Mexico could restore visitor flows. The U.S. Travel Association emphasizes that international visitors are a high-value segment, and policy reforms are critical to regaining their trust.

3. Enhanced Marketing Efforts

The U.S. must invest in international marketing to counteract negative sentiment. Campaigns highlighting the country’s diverse attractions, from national parks to cultural hubs, could rebuild its appeal. Collaborations with global travel organizations, like the WTTC, can amplify these efforts, leveraging data-driven insights to target key markets.

4. Diversifying Tourism Offerings

To offset losses from traditional markets like Canada and Europe, the U.S. could target emerging markets such as India and Brazil, which show growing interest in international travel. Tailored packages for adventure, cultural, and luxury tourism could attract these high-spending segments.

Global Context and Opportunities

The global tourism industry is rebounding, with UN Tourism reporting 1.1 billion international tourists in the first nine months of 2024, nearing pre-pandemic levels. Countries like Türkiye, through partnerships like TÜRSAB’s with the WTTC, are capitalizing on this growth by promoting sustainability and cultural tourism. The U.S. risks losing market share to these competitors unless it addresses its current challenges. However, this downturn presents an opportunity for the U.S. to innovate, adopting sustainable practices and digital tools to enhance its global appeal.

Conclusion

The projected $12.5 billion loss in international traveler spending in 2025 is a wake-up call for the U.S. tourism industry and government. Driven by geopolitical tensions, a strong dollar, and restrictive border policies, this decline threatens jobs, local economies, and the U.S.’s position as a global tourism leader. While domestic tourism has mitigated some losses, it cannot replace the high-spending international market. Urgent action, including policy reforms, enhanced marketing, and confidence-building measures, is needed to reverse this trend. By learning from global competitors and leveraging partnerships like the WTTC, the U.S. can restore its appeal and ensure long-term growth in its tourism sector.