A marked decline in international travel to the United States is raising new questions about the outlook for travel companies, investors, and tourism-dependent sectors in 2025.

Industry leaders and analysts are closely monitoring this trend, with travel bookings, airline data, and economic signals suggesting that the U.S. may be falling out of favor with international tourists—despite strong domestic travel intent and some bright spots like cruise lines and luxury tourism.

This shift was first publicly emphasized in March by Accor Group CEO Sebastien Bazin, who told Bloomberg that bookings by European travelers to U.S. destinations were down 25% compared to the previous year. This was despite global increases in travel overall, suggesting the U.S. market may be facing unique headwinds.

Key Indicators Show Declining International Travel to the U.S.

Data released from various agencies reinforces Bazin’s concerns. According to a February report by the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO), non-resident travel to the U.S. was down 2% year-over-year, and more tellingly, down 9% from 2019 pre-pandemic levels. Similarly, Statistics Canada reports that Canadian travel to the U.S. was down 12% in February year-over-year.

Air passenger data from the U.S. Department of Transportation (DOT) also supports these findings. Air travel to the U.S. was down 9.7% year-over-year in March and down 13% from pre-COVID benchmarks. This sustained downturn over multiple months points to more than seasonal fluctuations.

Why Tourists Are Avoiding the U.S.

Mike Dragosits, Portfolio Manager at Harvest ETFs, says that several overlapping factors are contributing to this phenomenon. These include:

• Stronger U.S. dollar: A rising dollar makes U.S. travel more expensive for foreign visitors, especially those from Europe and Canada. According to the Federal Reserve, the U.S. Dollar Index was up significantly in early 2025.
• Political climate and trade policy: Ongoing tensions related to tariffs and residual sentiment from the Trump-era travel policies are impacting international perceptions of the U.S. as a travel-friendly destination.
• Safety and visa concerns: Travelers from some regions remain wary about entering the U.S. due to past detainment incidents and stricter entry procedures implemented in previous administrations.
• Global economic uncertainty: Sluggish growth forecasts, particularly in European and Asian economies, are influencing consumers to either delay or reroute their travel plans to more affordable destinations.

Together, these factors contribute to an environment where international tourists may view other global destinations as more accessible and welcoming than the U.S.

Implications for Travel Stocks and ETFs

Dragosits, who helps manage Harvest’s travel-focused exchange-traded funds (ETFs) TRVL and TRVI, says the decline in international travel to the U.S. is already visible in earnings commentary from both airlines and hotels. However, he cautions that the impact varies across sectors and regions.

“The travel industry is inherently cyclical and closely tied to macroeconomic trends,” Dragosits explains. “With economic uncertainty and lower global consumption, especially in non-U.S. markets, travel-related stocks—particularly those heavily reliant on inbound U.S. tourism—may face short-term challenges.”

This includes companies focused on international air routes and major urban U.S. hotels catering to global tourists. However, not all travel companies are equally affected. Dragosits highlights that U.S. domestic travel remains strong, a factor which may provide stability for companies like Delta, Hilton, and Marriott, which have significant domestic operations.

Resilience in Cruise and Luxury Travel Sectors

While some travel subsectors face headwinds, Dragosits points to cruise lines as an unexpected bright spot. Cruise companies such as Royal Caribbean and Norwegian Cruise Line have continued to perform well in early 2025. One explanation is that cruises are generally booked up to a year in advance, insulating the industry from immediate economic volatility.

Moreover, many cruises operated by U.S.-based companies travel internationally or embark outside the U.S., reducing reliance on U.S. entry. This appeals to international travelers who are hesitant to enter the country but still want the experience of cruising with a major brand.

The luxury travel segment has also shown resilience. According to recent U.S. Travel Association data, high-net-worth individuals are continuing to spend on luxury hotels and flights, relatively unaffected by inflation or currency fluctuations.

Domestic Travel Remains a Silver Lining

Despite declining international arrivals, American consumers appear eager to travel in 2025. A Bloomberg industry survey found that while expectations for increased travel spending slightly dipped, the majority of Americans still plan to spend more on travel than in 2024.

In a UBS survey, 83.1% of U.S. consumers indicated plans to spend on air travel this year—the highest rate since 2016. This domestic demand could help balance some losses from foreign visitors, particularly in mid-range and budget segments.

Domestic occupancy rates at U.S. hotels, according to STR Global, are now at or near pre-pandemic levels, and spending on weekend getaways and national park visits continues to rise, supported in part by remote work flexibility.

What This Means for Investors and the Broader Economy

From an investment perspective, Dragosits says that diversification remains crucial. Within the Harvest ETFs’ portfolio, holdings include budget, mid-market, and luxury hotels, helping smooth out region-specific or income-level-based disruptions. Exposure to airlines, cruise lines, booking platforms, and experience-based travel services allows for greater resilience across travel trends.

For policymakers, these trends emphasize the need to make the U.S. more accessible and welcoming for international tourists. The U.S. Department of State and Department of Homeland Security (DHS) may need to reexamine visa and entry processes, while the U.S. Travel Association continues lobbying for initiatives like expanded visa waiver programs and improved airport infrastructure.

Additionally, rising prices from inflation and tariffs—highlighted in consumer reports from the U.S. Bureau of Labor Statistics (BLS)—may require broader fiscal and monetary measures to support economic growth and consumption.

Long-Term Outlook: Travel Industry Remains Strong

Despite near-term uncertainty, Dragosits remains optimistic about the long-term trajectory of the travel industry. He notes that demographic trends such as the aging of the Baby Boomer generation, the experience-seeking priorities of Millennials and Gen X, and the rise of remote work are all powerful tailwinds for the sector.

“The travel industry has transformed since the pandemic. People value experiences over goods, and the ease of digital booking has made travel more accessible than ever. Long-term, the demand for travel is only going up.”

While 2025 may present obstacles for U.S.-centric travel stocks due to weaker international demand, the broader global travel sector is still expected to grow. The International Air Transport Association (IATA) projects steady passenger growth over the next decade, and hotel groups are expanding in emerging markets to capture new demand.

Conclusion

The recent decline in international travel to the U.S., driven by currency strength, political sentiment, and economic uncertainty, is impacting hotel bookings, airline revenues, and investor sentiment. However, strong domestic travel, continued luxury spending, and growth in cruise bookings provide critical offsets.

For investors, strategic diversification and a long-term view remain key. And for the U.S. tourism industry, addressing global perceptions, improving affordability, and simplifying travel processes will be essential steps to reverse the trend and restore growth.

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