Consider the importance of travel to the economy and lives of U.S. citizens, as well as the trends and value of international travel.
Most Americans are unaware of the transient occupancy tax (room tax) impact or its significance on their lives because it is paid for by visitors who stay in America’s hotels. Those of us in the hospitality industry know how important tourism is, and so we celebrate National Tourism Week 7-13 May along with the United States Travel Association.
Hotels and destinations are “demand creators,” and hoteliers are usually in prominent positions with their local destination marketing organization to encourage and support the branding of their city.
Hotels as revenue and tax generators
Direct spending by resident and international travelers in the U.S. averaged $2.7 billion a day, $113.1 million an hour, $1.9 million a minute and $31,400 a second, according to USTA. Tax revenue alone from tourism generated over $157 billion last year.
A significant portion of the taxes are used to supplement each city’s general fund and underwrite basic municipal services, such as road repair and park maintenance, to hire police officers, train firefighters and promote economic development.
Most importantly, the 15.3 million jobs created by the tourism industry cover a broad array of skilled labor, unskilled labor and management.
USTA reported in 2016 that U.S. travel exports (including general travel spending, international passenger fares and international traveler spending) totaled $246 billion. Of the approximately 75 million international travelers in 2016, approximately half came from Canada and Mexico and the other half came from other destinations overseas—with the top overseas travelers in 2015 from the U.K., Japan and China. International travel from China will likely double from 100 million to 200 million between 2015 and 2020. If the U.S. gets just 10 million of those travelers, international spending will increase by more than $50 billion.
The U.S. share of total international arrivals is 6%, down from 7.5% in 2000. International travel spending directly supported about 1.2 million U.S. jobs and $32.4 billion in wages. Each overseas traveler spends approximately $4,360 when they visit the U.S. and stay on average 18 nights. While overseas arrivals represent 50% of all international arrivals, they account for 85.3% of total international travel spending. As the most valuable visitors to our nation, they enjoy shopping, sightseeing, fine dining, national parks/monuments and amusement/theme parks.
There are those who claim that administration policies have had a negative impact on tourism here. Actually, all negative impacts to date are most likely due to the strength of the U.S. dollar, not any negative perception of the U.S. by international travelers. As President Donald Trump is a pro-business hotelier himself, I believe he will support our efforts to increase international tourism back to 2000 levels.
Impacts of tourism
According to Philip Kotler, “tourism’s most visible benefit is direct employment in hotels, restaurants, retail establishments and transportation. A second but less visible benefit consists of support industries and professions such as finance, insurance, legal, accounting, utilities, education, caterers, florists, agriculture, wholesalers, telecommunications, construction and many more throughout the economy. Many of these indirect jobs pay considerably more than the visible employment opportunities such as restaurant personnel.”
Tourism shifts the tax burden to non-residents. U.S. attractions like Disney stimulated the development of resorts and amenity packages to serve locals and visitors alike.
In addition to direct jobs in hotel, airlines and travel service companies, there are a myriad of jobs created both upstream with suppliers such as aircraft construction and border services, and downstream in areas such as retail, service stations, clothing manufacturers and food suppliers.
Travel spending in the U.S. comes from both international visitors and domestic travelers alike, and results in an expansion of our economic base. International visitors spend about three and a half times as much as domestic travelers and stay in our hotels.
How do we get more business?
Hoteliers must figure out how to support current levels of international tourism and increase it. Receptive operators (tour wholesalers who represent travelers from outside the U.S.) are a great resource for hotel sales teams. While many hotel operators reject the notion that online travel agencies have a value, they are effective at generating international travelers. Additionally, we must work with DMOs to promote travel to each U.S. city and work together to win market share from other countries.
Providing “wow” customer service for each of our key guest profiles is paramount. Millennials may like one thing, baby boomers another and international travelers yet another. It’s all about personalization—then they will come back. Eventually the dollar will come back down from its perch, and we can regain some of those lost travelers.
Robert Rauch is an internationally-recognized hotelier, CEO, and founder of RAR Hospitality, a leading hotel management and consulting firm based in San Diego, California. RAR Hospitality’s hotel collection includes independent, boutique and branded properties throughout North America.
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