International Tourist Drought Hits Some States Hard

By: - June 28, 2021 12:00 am

Beachgoers enjoy Siesta Key Beach in Sarasota, Florida. Domestic tourism is booming while international visitors are restricted from coming to the United States, hurting some state economies. Phelan M. Ebenhack/The Associated Press

Read Stateline coverage of the economic effects of the COVID-19 pandemic.

Beaches, hotels and casinos nationwide are filling up again as COVID-19 vaccination rates climb and closure orders lift. But the surge in summer tourism is being driven almost entirely by U.S. residents.

Because of international travel restrictions imposed to slow the spread of the coronavirus, foreign tourists who used to visit in droves—such as Europeans and Chinese nationals—can’t yet enter the country.

That’s a problem for hospitality businesses, because international tourists tend to stay longer and spend more money than domestic visitors. International tourists comprised about 15% of travel spending in the United States in 2019 though they made just 3% of trips, according to the U.S. Travel Association, a group that advocates for the travel industry.

“International tourism is hugely important,” said Vijay Dandapani, president and CEO of the Hotel Association of New York City. “I cannot overstate the importance.”

Although dollars spent by domestic tourists make up about 60% of total money spent by travelers in the United States, industry experts say that all types of customers need to return—including international tourists and both domestic and international business travelers—for the tourism sector to return to normal.

“From a revenue generation perspective, domestic leisure really can’t make up for the losses in international and business,” said Tori Emerson Barnes, executive vice president for public affairs and policy at the U.S. Travel Association.

The stakes are highest for states with more tourism-dependent economies, such as Nevada and Hawaii. Although tax revenues have risen in many states thanks to trillions of dollars in federal COVID-19 relief and a quicker-than-expected economic recovery, tourism-dependent states are lagging.

Hawaii collected 17% less tax revenue from April to December 2020 than it did during the same period in 2019, according to the nonpartisan Urban Institute, a Washington, D.C., think tank. Nevada and Florida collected about 11% less tax revenue, the report showed.


Spending by international travelers is a small but important part of overall tourist spending in those states. Casino earnings from baccarat, a popular card game in East Asia, are one bellwether for international tourist spending in Nevada. Baccarat earnings dropped by nearly half between May 2020 and April 2021, according to state tax data.

“For Nevada to fully recover, we need large trade shows, conventions and special events to return at pre-pandemic levels, and we need international travel to resume,” said Virginia Valentine, president and CEO of the Nevada Resort Association, which advocates for the state’s gaming and resort industry, in an emailed statement to Stateline.

“It’s not as simple as increasing the number of domestic leisure visitors to offset international visitation,” she said.

Several governors have announced plans to set aside federal COVID-19 relief aid this year to promote tourism of all kinds. In Florida, state lawmakers this session appropriated $75 million in state and federal funds for Visit Florida, the state’s tourism marketing agency.

Dana Young, Visit Florida’s president and CEO, last month told board members that the agency is planning a trip to Mexico in June and a possible trip to England later this summer to work on trade and airline partnerships, the Orlando Sentinel reported.

Visit Florida declined to make anyone available for comment on the importance of international tourism to the state. Agency statistics show that overall, domestic and international travelers made 39% fewer visits to Florida in 2020 than they did the year before.

President Joe Biden this summer may begin lifting travel restrictions that have prevented many foreign nationals from entering the U.S. Last month, for instance, he and British Prime Minister Boris Johnson announced a task force to discuss lifting travel restrictions between the two nations.

But the Biden administration hasn’t set a firm date for ending restrictions, frustrating advocates for the hospitality industry. “We don’t have a date. We don’t have that blueprint we’ve been asking for,” Emerson Barnes said.

For now, U.S. hospitality businesses that depend on international visitors are feeling their absence.

Hawaii retailers are eager for well-heeled international travelers to return, said Pattie Herman, vice president of marketing and product development at the Hawaii Tourism Authority, a state agency.

“They can’t wait for the international travelers to come back,” she said. “Because [international visitors] do want to shop. That’s one of their priorities.”

Rigid International Barriers

Layers of COVID-19 travel restrictions imposed by the United States and other governments have blocked many foreign nationals from coming to the states. Visits from nonimmigrants dropped more than 75% last year, from about 79 million arrivals to about 19 million, according to the International Trade Administration, which is part of the U.S. Commerce Department.

Last January, as COVID-19 cases were spiking in China, then-President Donald Trump banned people who weren’t U.S. citizens or permanent residents from entering the United States if they’d spent the preceding 14 days in China.

In the early months of the pandemic, Trump ordered similar restrictions on travel from other nations with major COVID-19 outbreaks, such as Iran, the United Kingdom, Brazil and members of the European Union. Trump also banned most border crossings from Mexico and Canada by non-U.S. citizens and non-U.S. permanent residents.

Biden extended all those emergency orders this year and added restrictions on travel from South Africa and India.

There are some exemptions. Foreign nationals studying at U.S. universities can get permission to enter the country, for instance. But collectively, the emergency orders make it nearly impossible for tourists to visit from the same countries that, in 2019, supplied most overseas arrivals.

Many would-be travelers to the United States also face restrictions imposed by their home countries. While the U.S. allows Australians to visit, for instance, Australia has effectively banned its residents from traveling abroad. Returning citizens must quarantine for two weeks in a designated facility before going home.

Travel restrictions also have altered the mix of international visitors. Excluding Canada and Mexico, the top five nations that sent travelers to the U.S. in 2019 were the United Kingdom, Japan, South Korea, China and Brazil, according to the International Trade Administration.

This year, the top five nations (excluding Canada and Mexico) have been, in descending order, Colombia, Peru, Ecuador, the Dominican Republic and Argentina, according to the latest data, which runs through May.

Domestic Travel Rebounds

Luckily for U.S. tourist hotspots, travel restrictions also are making it hard for Americans to go overseas.

So Americans are vacationing closer to home, whether that means heading to the nearest beach or road-tripping to a major national park.

National parks such as Yellowstone and Grand Teton in Wyoming and Arches in Utah are reporting record numbers of visitors and long lines at entry points this summer. State parks also are booming.

In Florida, vacationers are packing the state’s beaches. “The domestic demand has been extraordinary,” said Geoff Luebkemann, senior vice president of the Florida Restaurant and Lodging Association, a hospitality trade group.

People are eager to travel after a year of staying home, Luebkemann said. “The fact that people have been kind of sequestered by these multiple factors has built some serious pent-up demand, with some serious ability to spend behind it.”

Businesses in the Orlando area are probably hit hardest by the loss of international visitors, Luebkemann said, since Disney World and other central Florida theme parks are global tourist destinations.

Tens of thousands of visitors are arriving in Hawaii every day, all from other U.S. states, Herman said.

“We won’t necessarily break records for total visitors, but we may get very close this summer,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization. “And it will be because of the growth in the U.S. market.”

Bonham said Hawaiian businesses that catered to international visitors in the past, such as hotels and restaurants that serve many Japanese tourists, will have to shift their focus, such as changing the type of cuisine they offer.

“There are plenty of tourists here for them to draw on,” he said. “It’s just a matter of them having to pivot.”

Before the pandemic, about 80% of guests at the two luxury Waikiki hotels owned by the Halekulani Corporation came from other countries, said Peter Shaindlin, the corporation’s chief operating officer. “Our two hotels have an exceptionally high mix of Asian, Japanese and international travelers,” he said.

The flagship Halekulani hotel has been closed for renovations during the pandemic and has yet to reopen. But Americans are making reservations at its sister property, which opens for business this week. “This year, it’s all about the U.S. traveler,” Shaindlin said.

It’s a similar story in Nevada, where hotels are packed on the weekends with domestic visitors. But resorts are eager for international and business travel to return.

“Casinos are a little bit different from other businesses, because you do have those extremely high-end customers, the high-rollers, who could gamble millions in a trip,” said David Schwartz, a gaming historian at the University of Nevada, Las Vegas. From that perspective, he said, losing a few international high rollers can have an outsized impact on a casino’s business.

New York City’s hospitality sector faces perhaps the longest road to recovery, with many downtown office towers still empty and Broadway theaters closed. More than a third of hotel rooms are vacant and hoteliers have cut room rates by $140 per night on average, Dandapani said.

He added that he’s confident travelers will return. “There’s a reason why there’s a pent-up demand for tourism,” he said: People like to experience things in-person. “Video doesn’t cut it.”

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Sophie Quinton

Sophie Quinton writes about fiscal and economic policy for Stateline. Previously, she wrote for National Journal.