Whether the direction taken by Donald Trump’s administration will result in positive outcomes for the US economy remains to be seen. The levels at which the stock market is trading would suggest that Wall Street is full of optimism, but if there are to be casualties, one sector that’s looking vulnerable is the travel industry.
Country branding is complex, but a large part of what makes up a country brand is tied-up in the ethos and values that reflect the national identity. This in turn is directly linked to the way it interacts with the rest of the world.
America is one of the world’s greatest and more inherently strong destination brands, but no country’s travel offer is immune from a constant stream of negative publicity. Research recently published by Pew*, looking at the impact of Donald Trump’s presidency and how the world sees the US, concluded that it has had ‘’a major impact’’, and that his policies ‘’are broadly unpopular around the globe’’.
This matters for those in the travel industry on both sides of the Atlantic.
In the UK, one of the biggest source markets for US tourism, there is much talk of a ‘’Trump Slump’’. This is difficult to quantify because there is a delay in collecting reliable tourism statistics, but according to a TravelMole poll, travel agents, who are a bellwether, are reporting a drop in demand. Further evidence comes from a decline in related searches reported by online flight comparison sites and aggregators such as Cheapfllights.co.uk and Kayak (Priceline Group).
It’s a combination of signals, but in particular constant talk of travel bans, whether upheld or not, that’s likely to be hurting prospects for inbound travel to the US the most. Whether these actions are restricted to mainly Muslim countries or not is almost irrelevant, because they send a message that works to diminish existing affinities and create the perception that America is not welcoming. Consider how much TV airtime and social media coverage that these actions receive and it is inconceivable to think that Brand USA is not damaged.
(On the flip side, imagine what all this exposure is worth in commercial terms and, how powerful it’s effect would be if the sentiment was, instead, overwhelmingly positive!)
The risks are significant. In 2016 UK holidaymakers spent £4.8 billion** in the USA, making it the second highest earner behind Spain although it ranks only fifth in terms of visitor numbers. This is because the average length of stay in the US is much greater than the majority of other destinations – each visitor has a higher average value.
Add in the weakness of sterling and an element of over-supply in transatlantic air capacity and all things considered, 2017 looks like it could be a tough year for US travel.
There are mitigating factors. The inherent brand strength that I’ve already mentioned provides a great deal of protection: the US is home to many iconic travel experiences and of course benefits from strong export brands and an arts scene that delivers constant injections of American culture to appreciative UK and European audiences. Increasing price competition driven by a growing number of low-cost transatlantic carriers will help to offset the pain of negative currency movements for sterling buyers and pull-in more independent travellers (mainly to big gateway cities such as New York) but its time to tighten your seatbelts for a bumpy ride.
Trevor Heley is a founding partner of mr.h, a multi-disciplinary advertising and marketing agency that specialises in the travel and luxury sectors. www.mrh.london