According to GlobalData’s Week 3 COVID-19 Recovery Survey (July 8-12), 32% of American respondents stated that they will continue (or start) to reduce domestic and international travel. Additionally, 48% of Americans revealed that they will also now dine at home, instead of in restaurants. These significant changes in consumer preferences will be alarming for the domestic tourism industry in the US, as well as its hospitality industry and international destinations that rely on US tourism.
Tourism demand in the US may become even weaker before it improves
According to GlobalData, domestic trips in the US will fall by 31% YOY in 2020 and outbound international trips will drop by 43% YOY. These sizeable projected drops in visitation caused by a mixture of safety fears, decreases in consumer confidence and mass cancellations could decline even further as the COVID-19 situation in the US does not appear to be improving. Last week, The United States reported a daily global record of more than 77,000 new infections, illustrating that the effect of the virus will impact outbound and domestic tourism flows in the US for months to come.
Valuable domestic source markets and destinations are at the heart of the issue
To emphasize the issue for the US tourism industry, infection rates have been surging in states that either act as valuable source markets for other US destinations, or are themselves reliant on tourism as an economic contributor. California is an example which fits both of these descriptions. It is the most visited state in the US, whilst also acting as a valuable source market for other states, as it boasts the largest economy in the US. It recently, became the second state after New York to report more than 400,000 COVID-19 cases, rising by an average of 8,300 cases a day. According to Visit California, the value of the California travel industry was US$84.6bn in 2019, which represents approximately 2.5% of the total GDP of the state. The industry segment which receives the most tourist expenditure in California is foodservice. With 48% of Americans now stating that they intend to dine at home instead of in restaurants, this change in demand will create huge implications for California’s tourism industry as a sustained slump in demand will cause restaurant closures, unemployment and its economy to shrink.
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