How Might President Trump’s Recent Travel Ban Impact The Various Stakeholders Of The Travel Industry?

by Trefis Team
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The recent travel ban put forward by the US President, Donald Trump, has brought forward some concerns by the various stakeholders of the travel industry with a few companies filing a federal lawsuit against it. The impact of the ban on the US travel industry is yet to be seen, but there seems to be a concern among the global travel community that restrictive policies such as these might hamper travel related businesses adversely.

What Is The Travel Ban All About?

The President of the United States, Donald Trump, signed an executive order on January 27th temporarily banning immigrants from seven Muslim majority nations from entering the United States. The ban currently holds for at least four months and includes the following countries: Iran, Iraq, Sudan, Syria, Libya, Yemen, and Somalia. We look into the possible ways in which this ban can impact the US travel industry. President Trump’s travel ban, which according to him will be effective in combating terrorism, impacts travelers on all kinds of visas (except the diplomatic and UN ones) and refugees (the ban holds indefinitely for Syrian refugees). Whether the ban applies to individuals with dual citizenship or to green card holders is still not clear, however, people who have visited the aforementioned countries in the recent past will be subjected to extra scrutiny.

How Might US Tourism Be Impacted?

The inbound tourists from these countries to the US is a very small number and hence the direct impact on the US tourism business due to lack of travelers from the aforementioned countries might be negligible. In fact, America’s top 20 inbound countries do not include a single Muslim majority nation. However, this ban might impact global travelers at large who might think twice before making their travel plans to the United States. According to leading travel experts, this might be too early to determine the sentiment of the global travelers. However, according to a survey conducted on 1,500 European travelers by PhocusWright, right after the US Presidential elections, one in every five travelers from the UK and France and one in every three travelers from Germany said that they are less likely to travel to the US.

 

Phocuswright-PostElectionPolling2016-sm

(Source: PhocusWright)

The ‘less likely to visit‘ percentage might show an increase in light of the recent executive order. However, there were respondents and also travel executives from the European countries who feel more hopeful about visiting the United States, given President Trump’s business background in the hospitality industry.

How Might Business Travel Be Impacted?

There are also the corporate travelers who need to visit the United States for business.  This segment make up for around 15% of the total travelers according to the Department of Commerce. Though these corporates might not be concerned about the banned countries, the economic standing of the US will be of importance to them, including factors such as the ease with which their employees might enter or exit the US. Additionally, if the visa interviews become more stringent, more companies might prefer hosting their events or relocating their employees to other countries.

What About The Hospitality Industry?

According to the U.S. Bureau of Labor Statistics, the  hospitality industry employs close to 2 million people in the US and in 2015 the nation witnessed a record of close to 76 million international tourists who came to visit the country. The restricted travel policies by the current President might lead to a decline in the enthusiasm of the global travelers leading to slow growth for the US hospitality sector. Such concerns have led to leaders from the industry writing to the President and urging him to consider introducing some travel friendly programs.

What About The Airlines?

Due to certain unclear aspects in the ban, the global airlines seem to be struggling to meet with its requirements. Airlines such as Delta, Emirates, and British Airways are offering rebooking and refund options to the affected passengers. Confusion reigned at the airports, too. The International Air Transport Association (IATA) informed the air carriers that the rules might also be applicable to the the flight crews. As a result, Emirates needed to alter the flight attendant and pilot roster to the US. Airline industry stakeholders fear that the ban might adversely impact travel demand thus slowing down air ticket sales.

How Are Some Of The Key Leaders Of the Travel Industry Interpreting The Ban?

The travel industry is not too pleased with the ban with companies like Expedia, TripAdvisor, AirBnb, Lyft, and Uber publicly condemning the ban. Expedia’s CEO Dara Khosrowshahi, who himself is an Iranian immigrant, sent an internal memo to his employees where he said that rulings such as these might result in the US being perceived ‘as a smaller nation, one that is inward-looking versus forward thinking.‘ Airbnb’s co-founder Brian Chesky has announced on Twitter that his company will provide free accommodation to the refugees. Amazon and Expedia have joined a group of companies to file motions in a federal lawsuit challenging the executive order. The companies argued that their businesses will be adversely impacted as a result of the travel ban.

The US Travel Ban Has Generated The Possibility Of Reciprocal Bans

Currently, the governments of Iraq and Iran are considering reciprocal bans for the US travelers as a retaliatory measure. If more countries start following suit then obviously the global traveling arena might be adversely impacted by the restrictions in travel.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
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