Strong dollar, travel bans could hurt Nevada tourism

After breaking its record with 42.9 million visitors in 2016, Las Vegas was forecast to surpass 43 million this year.

But with a strong U.S. dollar making it more expensive to travel here and fallout internationally from two travel bans enacted for several Muslim-majority countries by President Donald Trump’s executive orders, Las Vegas runs the risk that tourism and business travel from abroad could be affected.

No one foresees a decline like the one caused by the Great Recession, but Southern Nevada could fall short of the growth forecast for 2017. A half-percent gain to 43.2 million visitors was expected.

Kayak, a travel search engine, issued a report that said the British for one “are falling out of love with the USA in a major way.” It reported searches for summer flights to Las Vegas are down 36 percent. The searches for many American destinations, with the exception of Los Angeles, were down more than 50 percent.

Suzanne Perry, a travel expert at Kayak, said the story of the summer is the declining interest in travel to the U.S, and that only happened after President Trump came into office.

“It seems like this is a longer-term trend,” Perry said. “The U.S. has historically been one of the most popular countries for Brits, but searches to popular destinations falling by over half in one year is a massive shift. It will be interesting to see if it can bounce back in 2018.”

In 2015, the latest estimates available from the Las Vegas Convention and Visitors Authority, international visitors accounted for 5.8 million out of the 42 million-plus visitors to Las Vegas. The United Kingdom was No. 1 among overseas visitors with 737,120. Europe in total had more than 1.5 million visitors.

The U.S. and Las Vegas face a fallout from business travel as well at a time Las Vegas had 6.3 million in convention attendance in 2016, beating a record in place since 2006.

Oxford Economics predicted foreign travel to the U.S. could decline 8 percent, or more than 6 million visitors.

The Global Business Travel Association has released a forecast that reported European companies will plan significantly fewer meetings and events in the U.S. It reported the initial ban against seven Muslim majority countries on Jan. 27 cost $185 million in business travel bookings because of the uncertainty of travel and the effect on traveler confidence.

After Trump earlier this month rolled out a revised executive order, one that was placed on hold as the first one was by a federal judge, the GBTA survey found that 47 percent of European travel professionals said they expect a reduction in business travel for their company. In addition, 17 percent reported their companies have already canceled business travel to the U.S. because of the executive orders. Some 38 percent said they would be less willing to send business travelers to the U.S. in the future because of the executive order, and 45 percent said their company will be less willing to plan future meetings and events in the U.S.

“There’s always the risk that closing our borders sends the message that the United States is closed for business, and the results of this poll show the perception of the United States as a welcoming destination for business travel has been altered,” said Michael McCormick, the executive director and chief operating officer of the GBTA that represents companies that buy travel and hotels, airlines, rental car companies and others who sell travel.

“To what degree all of this will materialize in terms of bookings is too early to tell, but we have changed the perception where companies are concerned about doing business. It’s headwinds we don’t need to create.”

The travel industry isn’t against measures that improve safety and security, but there’s no indication the executive orders make a difference in that regard, McCormick said. While transient business travel of meeting customers is resilient and likely to remain unaffected, meeting and event business can be affected over time with uncertainty, he added.

Business travel and meeting travel help drive the economy not only for destinations such as Las Vegas but for other cities as well, McCormick said. For every 1 percent that business travel is affected, that’s a loss or gain of 71,000 jobs, $5 billion in GDP, $3 billion in wages and $1.2 billion in tax collection, he said.

“It’s so important for the economy in places like Las Vegas that thrive and grow off this travel,” McCormick said. “It can take months and years to play out in terms of bookings, but decisions are being made now about whether to have a meeting or event in Las Vegas, and we won’t know the impact until it’s too late.”

Jonathan Grella, executive vice president of public affairs for the U.S. Travel Association, a national trade association for travel and tourism, said the only numbers available at this time that show an impact are from the travel search engines. Those point to a dip in bookings and cancellations.

What’s the exact cause, however, can’t be determined, Grella said.

It will take time and more data to gauge the impact from the travel ban, but a strong dollar looms as a deterrent from those overseas traveling to the U.S., Grella said. It makes it more expensive for people to travel here.

“Travel was supposed to be on an uptick despite the strong dollar, but untangling the dollar from the executive order can be challenging, but it’s long been a concern of ours,” Grella said. “A lot of the indicators that point downward will very likely be blamed on the executive order, but with a strong dollar, folks have a choice to stay home or go somewhere else. We’re in a race against other countries that have a lot to offer as well. If it’s more expensive to vacation here or conduct business here, people can make other choices.”

Long term, however, Grella said the industry laments any fallout for travel to the U.S. if people from abroad don’t feel welcome, even though their countries aren’t part of the ban.

That includes countries such as Canada, which sent 1.5 million visitors to Las Vegas in 2015, and Mexico, which sent 1.2 million visitors. There were more than 700,000 visitors from Asia and nearly 300,000 from South America. More than 450,000 came from Oceania, with the bulk from Australia.

“Other countries were needlessly turned off by the chaos and confusion of the originally botched rollout,” Grella said about an executive order that gave no advance notice, included green card holders and trapped visitors in customs.

When the second executive order was announced earlier this month, Grella said it was a missed opportunity to issue a welcoming message to visitors from countries not affected. Since Trump is in the hospitality industry with his hotels and golf courses, Grella said he hopes that message is conveyed at some point.

Whatever happens, Las Vegas is in a better position than other U.S. cities because of its “remarkable brand” and work done by Nevadans and those with the LVCVA, Grella said.

“If anyone is positioned to weather the storm and be strong throughout it, it’s Nevada and Las Vegas,” Grella said. “We know they will make the moves and be attuned to the situation. Las Vegas has a ton to offer, but we can’t be complacent thinking as America our share is automatic and nobody else has anything to offer. People have the option to stay home. Other places around the world are licking their chops to pick up our market share, and we can’t let that happen.”

The LVCVA, meanwhile, said it’s too early to determine any impact of the travel ban.

Billy Vassiliadis, CEO and principal of Las Vegas-based R&R Partners whose company contracts with the LVCVA as an advertising consultant, said Southern Nevada is so dependent on the world’s and nation’s economy that anything that could have an impact, and that causes concern.

“We’re not sure we have seen anything that’s tangible, but obviously there are concerns,” Vassiliadis said. “Mexico was an emerging market for Las Vegas, and travel has been growing from there. Between the drop in the peso and public opinion in Mexico, that has become a concern.”

As for travel from other countries, Vassiliadis said other than reports from search engines such as Kayak, most of the evaluation is anecdotal. New York City is projecting it will take a big hit with 300,000 fewer foreign tourists. Economic issues have always been a primary deterrent to travel, he said.

“The fact that European economies aren’t doing that well right now obviously is concerning,” Vassiliadis said. “At this point, we can’t tangibly tell you we are seeing something particularly worrisome as much as we are being vigilant.”

Travel from England and Ireland is strong as is that from Asia, Vassiliadis said. Those Europeans and Asians who come to Las Vegas want to come here and view the city as an adult escape, and that might mitigate any concerns, he added.

“We’re out there letting the world know that we are welcoming, and we want them here,” Vassiliadis said. “We have convention authority travel offices throughout the world talking to our customers in both Asia and Europe. I’m hopeful that as time goes on visitors won’t feel they need to be concerned.”

The strong dollar and travel ban issue comes as Nevada has bounced back from the aftermath of the Great Recession.

Bethany Drysdale, chief communications officer for the Nevada Division of Tourism, said the most recent report revealed that tourism accounts for $3.23 billion in state tax revenue, about one-third of the state’s general fund revenues. Total travel spending topped $65.8 billion in 2016, an increase of $1.4 billion or 2.2 percent over 2015. Travel spending supports nearly 500,000 Nevada workers, or 29 percent of the state’s workforce.

Drysdale said what’s happening abroad is always a concern and might have an impact down the line, but so far Nevada hasn’t seen one.

“We’re fortunate that Las Vegas is so well-known for being welcoming to everybody, and Nevada is known to be a welcoming destination,” Drysdale said. “We’re already ahead of the curve by having the reputation of having our doors wide open.”

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