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Welcome To America, Please Wait 400 Days

• Jeff Borman and Matt Brown

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Tariffs, shutdowns, "integrity" fees, H2-B visa caps, FAA staffing and hardware issues, airport restrictions ... it all begs the question: Does the U.S. government hate its own travel industry?

International travel is predicted to drop by 6.3% from 72.4 million in 2024 to 67.9 million in 2025, according to U.S. Travel Association. This year we are poised to be the only country in the WORLD where inbound tourism decreased. Travel and tourism accounts for approximately 2.5-3% of the U.S. GDP, supports 15 million American jobs, and via taxes accounts for almost 7% of all government income. So, we should take global competition for travel dollars a bit more seriously, no?

SPEAKER_00:

Hi everybody, it's No Show. I'm Matt Brown with, as always, Jeff Forman. This is Thanksgiving week. Thankfully, the government got its act together, at least until January, to get planes in the air, but it got us thinking. You may have uh noticed that in recent episodes we've been on a little bit of a tear about uh the government and how the government treats tourism and hospitality. Let me lay some numbers on you. International travel is predicted to drop by 6.3% from 72.4 million to 67.9 million this year. That's according to the U.S. Travel Association. Canadian travel alone to the U.S. was down by approximately 24% overall in the first half of 2025, and the forecast for the remainder of the year does not look good. In 2024, travel and tourism produced an economic output of$2.9 trillion, accounting for approximately 2.5% to about 3% of the U.S. GDP, and it supports about 15 million American jobs. International tourism is considered a services export, and it's deemed as such because foreign visitors come here and they spend money on U.S. goods and services. That's wow, you don't hear that much anymore. It is the largest single services export for the United States. And the tourism and hospitality industry generates substantial federal, state, and local tax revenues, accounting for almost 7% of all government income. Nothing to sneeze about. So my question, Jeff, to you is does the federal government take tourism for granted?

SPEAKER_01:

Unequivocally, yes. Wrap the show. Sure. Okay, see you later. Happy Thanksgiving. I mean, there's there's there's no question. I mean, the U.S. federal government uh inexplicably hates its own travel industry. Doesn't an absolute zero to support it. Let's run down that. Let's run down all the ways.

SPEAKER_00:

Statistically factual, of course. Let's it sounds like fun. Let's talk about how federal policies kind of work on hotels.

SPEAKER_01:

Well, you started off with international demand, which still remains more than 20% down to pre-COVID levels. So we've never, you know, you're talking about year over year drops. Uh, we are in decline from a number we never actually made up in the first place. International hotel visitors spend four to five times as much. They stay one and a half to three times longer when they're here. And so let's start with the visa dysfunction that removes the highest yield segment for hotels. India, one of our supposed friends and trade partners, visa wait days, two to four hundred days. How are you supposed to visit here when you have to plan your trip two to four hundred days in advance? Colombia, again, supposedly an ally and a friend. Wait times, 400 to 700 days. U.S. travel lost 39 million visitors and 150 billion in loss spending over the last decade just because of visa delays.

SPEAKER_00:

That's interesting, too, particularly with India, because for 10 years, every hospitality expert in the world has been talking about the coming boom in India travel to the U.S.

SPEAKER_01:

It and it hits in a couple of different sectors. I mean, we started with leisure travel. Yes, India travels here for leisure, for sure, but it is also a major trade partner in business travel with the lack of return from the Chinese market. I think it's still down more than half to pre-COVID, right? Chinese business travel to the US. Now, India, again, our supposed friend and ally, uh, we were basically telling them not to bother coming here. Uh, you know, Zoom's better for you folk, is kind of the message we're giving. Visa wait times are not the only way our government works against our industry. During the shutdown, or more importantly, as a result of the shutdown, uh, holiday travel is supposed to decline. It's expected to decline. Deloitte put out a study a week ago for Americans during holiday season, budgets are down 18% year over year. The average number of trips is going to decline, 17%. And 80% of households earning over 100 grand are expected to opt for less expensive travel. That's an important demographic because that's the group that has carried the travel industry, at least the hotel industry. Actually, airplanes too, because all you read about anymore is purchases of premium cabins for at least six quarters now has been what's been driving growth for America's domestic airline carriers. Luxury travel is the only hospitality or hotel stay that's really been growing. So even the demographic that has been kind of propping up a fragile tourism business, even that's starting to feel the pain, again, entirely because of this shutdown. On the other side of the business, operating our businesses, there are hard visa caps that are getting worse and worse. So 66,000 visas allowed this year. The hotel industry is 200,000 workers short. And yet we're putting caps on visas. Makes no sense whatsoever. These are both travelers and workers. Hits us on both sides of the tourism economy. Tariffs. Can't hear enough about tariffs, or maybe we hear too much about tariffs. But in order to improve our hotels, right? The pips, the product improvement, renovating hotels, tariffs have increased the cost of doing that by 20 to 40 percent. So thank you, government. Guests will have worse stays. Hotels are not going to get renovated as well or as often.

SPEAKER_00:

Even coming down to something like HVAC replacements, you know, just even even like the things that we don't do completely take for granted. And even those things are affected by this.

SPEAKER_01:

You name it. I mean, we could go into airlines, FAA failures, slot controls, cabotage. We could talk about each one of these things. The FAA staffing crisis goes back to a federal government problem because the first one is we're landing planes with 1980s technology. Uh, with it's like Atari Pong systems. We spoke with Greg Aratakis about this. The mindset of the decision makers is only the length of a news cycle. And so these generational problems, these decade-long solutions that we need to keep our travel industry moving forward are purely ignored. 77% of FAA facilities are understaffed. There is a 3,000 controller shortage right now. And not only is that bad enough, the FAA then has to spend$200 million a year on overtime. Every way you look at it, they ignore the problems in the industry.

SPEAKER_00:

It's easy when you start talking about uh the government's relationship to business to blame an administration. And while I don't think this administration is doing, current administration is doing any particular favors to the industry, I think some of the things we're talking about here are pretty systemic, right? And I wonder, is it because travel and tourism doesn't have a singular voice? Do we need more lobbyists? Do we need a stronger lobbyist? I can't believe I'm saying that. But do I wonder how a business that is so expansive and so important doesn't have more weight in DC and elsewhere? And maybe they do, and I'm just not seeing it.

SPEAKER_01:

The complexity of the travel industry, I think, is certainly uh a hindrance to having a clean, clear voice. Uh, it does touch so many economies, it touches so many verticals, so many businesses, so many types of people. It touches like travel touches everything.

SPEAKER_00:

I would not say one of America's strengths is uh updating things before they need to be updated. On a consumer level, when it comes to apps, sure. But when it comes to baseline technology that we use, I think the the FAA, like the control systems that are used in in towers, I mean, that's a perfect example. These things should have been updated 20, 30 years ago, and in fact, they should probably be updated as hardware every 10 to 15 years at minimum. It's tough to commit the money and the time and the consistent research and implementation to do that because the current system works. So if it ain't broke, don't fix it. And which but it's also why when you look at photos of any air control tower setup, it it looks like something, as you said, from 1979.

SPEAKER_01:

You ask the question about do we need more lobbyists? And what a repulsive thought, but uh you'd have to also ask who they're lobbying for. Right. And so think of these two examples, right? Airport slot controls. And let's just take DC in New York. Uh at JFK, there is an estimated 25 to 35 percent capacity lost at that airport because of the slot control limitations. That's just a rule. You could change a rule. LaGuardia, 20% capacity loss is what's estimated. DCA, uh, not so much a capacity loss. Uh there may be that, I don't know. Uh, but there's a limit on long hauls and international flights uh, because you don't want, and I think that's more of a security thing, probably, you know, especially post-9-11. You don't want certain kinds of flights coming that close to sensitive places in Washington, D.C. But nonetheless, these are examples where the economies of these places, the relaxed and pleasurable travel experience that you have in these places could be far better with better regulation. Uh, ultra-low-cost carriers have less than 3% share in New York and DC. What do you think that does to pricing, right? Now, if legacy carriers have 85 to 95% of those slots, it's estimated that airfares are 10 to 25% higher because of the controls they have over those markets. So, I mean, who's lobbying for that? It's not the consumer. And the economic loss that's associated with that, 35,000 jobs not created in those two markets, 3 billion almost in lost activity was a port authority study, 7 million visitors suppressed to Washington and New York, just on that one policy issue to limit slot expansion and competition. Take it to Cabotage, one of our favorite subjects.

SPEAKER_00:

One of our favorite subjects.

SPEAKER_01:

Right.

SPEAKER_00:

And cabotage, just as a reminder for everyone, that is essentially a policy where foreign carriers are barred from operating domestic U.S. flights. And the rationale forever ago, it kind of reminds me of this uh 99% invisible episode that I listened to the other day. And I found out that all U.S. Army clothing is made in the USA. That's been the rule for a long time. And the rationale way back when was uh we don't want to be uh dependent on any kind of foreign entity for basics for a military, which I think makes sense. And you could apply some of that logic to airlines in the US, that we don't want to be over-reliant on foreign entities. Of course, like so much else of our transportation economy, I mean, you know, when it comes to things like gasoline, I think that ship's already sailed. So that it's it's it's we're certainly kind of pick and choose where Capotage works and where it doesn't. It's unbelievable to me that even for big routes that we don't have like a Laftanza LA to New York option.

SPEAKER_01:

The fair impact, what you and I are paying because of that is estimated to be 10, 30% more on the main what they call trunk routes, right? Here's a couple examples, like fortress hubs. Even the term just reeks of protectionism, right? Fortress. Yep. In Atlanta, 80% of flights are Delta. DFW, 85% American, uh, Houston, 75% United, right? On those domestic fares in and out of those places, 20 to 40% higher. Because you, me, I have no choice. I fly out of DFW almost weekly. I have no choice but to buy whatever American offers me. And the economic harm to that estimated at$25 to$35 billion a year.

SPEAKER_00:

And we haven't even talked about rental cars, which don't seem like they're particularly safe either, right?

SPEAKER_01:

No. Um fleets shrank 30 to 50 percent during uh semiconductor crisis. Uh because of COVID, rental prices went way up because the availability of cars went way down. Uh Hertz went bankrupt. It was taking two to three years for the whole fleet to recover. So again, consumers are the ones paying for this. Smaller fleets, less competition, higher prices.

SPEAKER_00:

You know, this is applied even to EV mandates. Without airport infrastructure, they're just they're DOA. You know, you've got tens of thousands of EVs purchased. Many airports had fewer than 10 chargers for a thousand plus vehicle fleets, and there's just no forward thinking about it at all. And I think we, regardless of what you think about U.S. energy policy, we need to get real about an electric vehicle future. But you know, Hertz was forced to unwind their EV strategy. They're going backwards when they should be charging forward at five times the speed.

SPEAKER_01:

Matt, you mentioned airport infrastructure in the way of uh EV chargers that can't live up to where we don't have the infrastructure to meet the Biden administration mandate, and we don't have the EV chargers to even supply the fleet with energy. Airport infrastructure, they have a passenger facility charge of$4.50. It's been frozen that way since 2000. Do you want airports to look nicer and feel nicer and operate more smoothly, Matt? I sure do. How is it that it's been stuck at the same price for 25 years? I think we can wrap here. We can do this all day long. The simple of it is that the U.S. global competitiveness has eroded. Uh, Euro Monitor ranked the U.S. 17th out of the 18 that it ranks in global travel competitiveness. Our share of long-haul flights to this continent is declining from 13.7 to 11.3. The fees and processing, ESTA went up, so we charge other people to come in. Visa integrity fee, we talked about that one day. That's a brand new fee, 250 bucks. If you want to come visit us, 250 to get a visa. Like it doesn't matter how long we talk, Matt, we're not going to run out of enough examples and enough statistics for how it hurts this business. ACI, uh Airport Council International, did a study that they released last year showing that every 1% of flights that we do not have, whether that's a government cut or unrealized because of other protection policy, is the equivalent of$33 million a day in that marketplace. Matt, here are the things we've hit, and it's the tip of the iceberg. Visa delays, government shutdown, FAA failures, uh H2B constraints, ADA lawsuits, we didn't even talk about that, uh, tariffs raising the costs, uh, suppressing demand. That's just hitting the hotel sector on the airline side. FAA staffing failures, outdated air traffic control system, slot controls, cabotage, more tariffs, reducing availability, rental cars, no help on a semiconductor crisis, FAA delays cause cascades for rental car problems. There are tariffs that are problems, EV infrastructure gaffes, inbound tourism. We've talked about it a few times. We didn't even talk about the passport failures. We haven't talked about how foreigners don't want to come here because of our saber-rattling approach to the rest of the world. Haven't even talked about that. You mentioned it a bit in the lead, I guess, with Canada, but other than Canada, the entire world has dropped in its desire to come here. So who's going to hold the federal government accountable on behalf of the travel industry? That's what I want to know. That's why we're talking about this. Maybe a leader should rise. Who would that leader be?

SPEAKER_00:

Could it be you? Oh no.

SPEAKER_01:

A voice from the plains leading us to sunlit uplands. Matt, I just want those planes to arrive and depart on time. Look, I just work here.

SPEAKER_00:

I don't I don't I don't want to be boss of anything. I would like to have a serious discussion on a national level. I wonder if, either in this administration or the next, if we'll if we'll get to a travel czar. And it can't just be somebody on the sidelines. I'm thinking, do we need a cabinet level secretary? And the answer might be yes. It's 3% of the GDP. Of course we do. Why not? So until that day, then I'll nominate you. But until that day, we're just gonna have to ring the alarm. Happy Thanksgiving. Happy Thanksgiving.