The travel industry — particularly airlines, but also hotels — is in a state of flux until a final decision is made on U.S. President Donald Trump’s order to ban travel from seven African and Middle Eastern countries. Until the issue is resolved, travel plans remain up in the air for perhaps thousands of people with plans to come to the United States for business, leisure or to visit family.
Revenue strategists, especially those at hotels in gateway cities or that host many international visitors, need to closely monitor the situation and the business on their books and be ready to adopt alternative tactics if these guests ultimately aren’t able to travel to the United States.
On January 27, President Trump signed an executive order barring entry to the U.S. for citizens of seven countries — Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen — and suspended entry of all refugees for 90 days and barred Syrian refugees indefinitely.Uproar over #travel ban could dampen #hotel demand Click To Tweet
Several federal courts have put the ban on hold until a final resolution, perhaps by the Supreme Court, is made. As of this writing, a unanimous decision by the United States Court of Appeals for the Ninth Circuit stands, effectively rejecting an appeal by the White House to reinstate the executive order.
Almost immediately after the executive order was signed, hotels and other U.S. travel providers experienced cancellations and dips in future reservations. Since then, several studies have quantified the current and potential effects the controversy could have on travel:
- Research firm ForwardKeys said travel bookings from the seven named countries were down 80% on the week following the announcement. Bookings from other countries to the U.S. were also down — ranging from a 2.9% decline from southern Europe to a 37.5% dip from the Middle East.
- The Global Business Travel Association said that, as of February 8, $185 million in business travel bookings had been lost, and January bookings were down 8% compared to December 2016.
- Airline industry analyst Hopper reported a 17% decrease in flight searches on international routes bound to the United States between the three weeks before Trump’s inauguration and the two weeks after. Flight searches from the seven countries mentioned in the ban fell 33% following issuance of the order.
It will probably take weeks or months to determine the full extent of the impact of the ban and uncertainties around it, but until then it will be hard for hotel operators and revenue strategists to accurately measure the impact.
And of course, the hotel industry is a street corner business, so some markets could be hurt much worse than others if this ban persists or, worse, if uncertainty about international travel to the United States becomes a recurring theme throughout the Trump presidency.
Markets with gateway airports serving international destinations would be the first to feel the potential effects from the situation. The same goes for resort destinations such as Orlando, Arizona and California and markets with concentrations of high-tech businesses or medical facilities.
The New York City market is particularly vulnerable, given its place as the primary gateway city for travel from Europe, Africa and the Middle East. And the New York market is under pressure from a disturbingly high supply pipeline. According to STR, 15,333 rooms are under construction in the city. Once opened, they will represent a 13% increase in supply.
And while demand remains strong in New York (occupancy rose 0.7% to 85.9% in 2016), rates have suffered: down 2.5% last year. Revenue managers in the market need to especially vigilant and be ready with alternative strategies if uncertainties persist.
Gabriela Guevara, senior manager of managed services for Duetto Research, oversees revenue management at several hotels in the New York City market. She believes the issues are more complicated than just the possible effects of the ban.
“We’re keeping an eye on the political situation to see how it’s going to affect demand,” she said. “I haven’t seen any major red flags yet, but we’re keeping an eye on corporate business. Not necessarily as a result of the travel ban, more as a result of people just being in the pits about traveling to the U.S. under the new immigration policies. That, combined with the currency fluctuation as the dollar gets stronger — the potential for a slowdown in international demand is on our radar.”
The news isn’t all bad for U.S. hotels, however. A recent 2017 travel forecast from AAA shows that 35% of Americans plan to take a family vacation 50 miles or more away from home with two or more immediate family members.
While that percentage is about on par with 2016, family travelers seem prepared to vacation more often than in the past. According to the research, 28% of families plan to take three or more vacations this year, up a whopping 13 percentage points over 2016.
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Tags: domestic travel, Donald Trump, Duetto, ForwardKeys, Gabriela Guevara, Global Business Travel Association, hotel demand, hotel distribution, hotel pricing, Hotel Revenue Management, hotel revenue strategy, hotel sales and marketing, hotel supply, hotel technology, hotel yielding, inbound travel, New York City, occupancy, politics, RevPAR, RMS, STR, travel ban