The reversing of Donald Trump’s decision to lift a number of international travel restrictions and the introduction of stricter testing procedures will now make matters worse for the US tourism sector. However, these changes, among others, will create long-lasting benefits that will ensure a more robust sector in the coming years.
Immediate changes may have negative implications
Shortly after taking his seat in the White House, Joe Biden reinstated travel restrictions that former President Donald Trump recently lifted. Restrictions include travel to the US from Brazil, Ireland, the UK, and much of Europe, as well as South Africa. Although demand from these source markets has been severely reduced due to the pandemic, the latest change will make matters even worse as vital source markets such as the UK are shut out. According to GlobalData, the UK was the US’s fourth most important source market (in terms of visitation) in 2020, with arrivals already having decreased by 80.2% (YOY) last year. The last thing the US travel sector needed was further restrictions in 2021, which evaporates remaining demand from important source markets.
The Biden administration also announced that travellers to the US must provide proof of a negative test within three days prior to departure, which includes all people boarding planes. The necessity of a negative test will put many off travelling to the US in the short-term. According to GlobalData’s Week 11 COVID-19 Recovery Survey (fieldwork undertaken 2-6 December 2020), 79% of global respondents were either ‘extremely’ or ‘quite’ concerned about the global outbreak of Covid-19. This means that many travellers may think that booking a flight to the US could be too risky, in case they test positive just before the departure date and then the ticket is rendered useless.
Long-term benefits will create a stronger sector
Even these changes that will negatively impact the US tourism sector in the short-term will be beneficial in the long-term. Proof of a negative test before arrival and reinstating international travel restrictions will slow the spread of the virus, which means that harsher travel restrictions will be less likely to be implemented further down the line, which will benefit recovery.
Additionally, the US Travel Association has already praised Biden’s proposed $1.9tr Covid-19 relief plan. The stimulus package calls for investing $20bn in a national vaccination programme and allocating $15bn to develop a new grant programme for small business owners – separate from the existing Paycheck Protection Program. Accelerating vaccine distribution programmes will be vital in speeding up the recovery of the US tourism sector as traveller confidence will increase and restrictions will be lowered. The new grant programme will also enable small business owners such as independent hotels to sustain operations and keep employees on the payroll for when travel demand returns in a meaningful way.
President Biden was also involved in the reversal of an executive order by Donald Trump that banned travellers from seven Muslim-majority nations from coming to the US. The opening up of these source markets should increase international arrivals to the US in the coming years. Additionally, travel advisors are hoping that Biden could ease Cuba travel rules. Barack Obama made travel to Cuba much easier during his administration and Biden said that he would go back to the thinking of Obama. It would be highly beneficial for US airlines, which would certainly be interested in setting up routes to and from a destination that holds great intrigue among travellers.
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By GlobalDataThe long-term benefits of a Biden administration outweigh the temporary suffering being felt by tourism companies operating in the US. As the situation of the pandemic hopefully improves due to the mass rollout of vaccines and a stimulus package, companies will emerge from the other side stronger and in a political environment, which will continue to benefit them.
