Americans Want to Travel. Just Not in America.

About 71% of active U.S. travelers say they are more likely to travel internationally than they were two years ago. The U.S. has lost half its market share, 10% of global inbound travel to 5%, since 1995. What is happening exactly? We'll give you a couple of guesses...

Also, how does war and regional instability affect travel routes of the major carriers? And when gas prices for airlines go up because of all these wars, who ends up paying? Again, you'll get a few guesses...

But it's not all doom + gloom, we open with how "grocery store tourism" is apparently a thing now? And $22 smoothies aside, that's a good thing.

Transcript

Opening And Spring Trends

Matt Brown 0:06

What are we talking about today, Matt? Numbers, stuff, things that interest us. Spring trends. What do you want to start today? Do you want to go you want to go first or do you want me to go first? Go for it. Tee it up. I got a little moose boosh here. And move my boosh. It's an article that I saw over the last few weeks. It it went into grocery store tourism. Yes. According to Hilton's 2026 Trends Report, 77% of travelers already participate in some form of grocery store tourism, and 35% plan to visit a local supermarket on their next trip. And the idea is that as you're wandering in a foreign supermarket or domestic, it gives you kind of this authentic window into the lives of the people who live there, what's on the shelves, what they're buying, the whole bit. And then on TikTok, you're able to go through the aisles and you know check out different sandwiches and different Kit Kat flavored bars and post it on there. And it becomes part of your travel log. But I feel like this is a concept that is coming in more and more here, and maybe has always been in the United States. Travel publications are kind of talking about 2026 as quote, the year of the grocery store tourism. But I feel like travel publications are always looking to make years something. It's like the editorial meeting in November, December, the year before. It's like, okay, everybody, gather around. What's next year going to be the year of? It's like, I got it, boss. Grocery stores. It's like, love it. Ship it.

Jeff Borman 1:38

It's kind of like Pantone's color of the year. Exactly. Exactly.

Matt Brown 1:41

That seems pretty arbitrary. Erwan in Los Angeles. I never pronounced that correctly, but I think it's Erwan. It is explicitly cited as one of the must-visit grocery store tourism destinations. And travelers go there and they post their snack calls. And I think more specifically, they they post their the very famous expensive smoothies that that place makes.

Jeff Borman 2:04

How much do you think Erwan paid to be in that spot? That's a great question.

Matt Brown 2:09

And we ought to reach out to them and ask them to be a to be a guest. What was the bribe? What was the graft to get that title? I know it was deliberate when I think the original owners, because the thing had been around forever, and then new owners came in. They came in like 15 years ago or so and said, okay, we're going to hypercharge this and make it like this exclusive LA thing. And it has. I mean, it's it is named as a destination that people fly to LA to visit, domestic and international. And it's so funny to think that the authentic window into daily life that grocery tourism is supposed to offer is essentially LA wellness culture at$400 a card. You know?

Jeff Borman 2:50

It shows you how inauthentic everything in LA is.

Matt Brown 2:53

That's the most authentic experience in Southern California. I have to say, like everybody else, I'm probably compelled to go. I haven't been to Los Angeles in a hot second, but I'm I'm compelled to go just to see it. I know that sounds ridiculous. I should probably go to a billion other grocery stores there and and take the same ethic that we talk about when we talk about not going to see famous places. I'm going to see the places that are kind of off the beaten path. But I have to admit my curiosity, like the rest of like the rest of America's is is peaked.

Jeff Borman 3:20

You know, I I Matt, I listen, I've been I actually find this to be kind of validating because it's been a weird, supposedly weird habit of mine for a long time. I mean, I think more travelers go storming into the local markets, right? That's been going on forever. You want to get to know you know a town or a village or a city, you go to its open air market, it's Saturday morning market, right? Whatever it is. And I mean, and those are phenomenal travel experiences. I love them. One of my favorite things I do. Uh, one of the things that really validated that in a weird way for me was probably, I don't know, 15 years ago, whenever it was Bourdain did an episode in Japan with David Chang, fellow chef of uh of the Momofuku dynasty. And one of David Chang's very first things, he gets off a plane and he goes to Lawson's and he gets an egg salad sandwich. And watching him walk out of Lawson's, this 7-Eleven type thing, uh, that they're all over in Japan, and watching him walk out, like literally carrying armfuls of snacks and just the joy, he's like, This is my favorite. Like you've gone to Japan, one of the most culinary, diverse, and like excellent experiences in the planet. Nobody does Japanese cuisine like you, like nobody does cuisine like the Japanese. And yet the first thing he does, he goes into their version of a 7-Eleven buys an egg sandwich. Like that's but that's what the people are doing.

Matt Brown 4:39

Totally. I think even here, like markets, kind of a different animal in the United States, but even farmers markets here, I was kind of surprised. I read something recently that 80% of Americans visit a farmer's market at least once per year. And I thought, wow, 80%. And I was like, that's great. And I know it's only once a year, but about 25% of adults shop at a farmer's market like weekly. I think that's a pretty impressive statistic. And when you take like the overall visitation of farmers markets, about a third of it every week is from people who are out of town. I know that's one of the first things that I look at, especially in spring and summer, if I'm in a city for a week or two and I'm around a farmer's market, it's like, oh, go check it out, I'll get a snack, I'll see what, see what they got. So I guess I mean food, you know, Zaybars in New York City, food has always been the driver. It's just, you know, people have always come kind of we have to go to the city because we're gonna go on a restaurant tour or we're gonna go uh, you know, on a market tour. So it's interesting to see it kind of go to this other level of of high-end grocery stores. And as pricey as places like Erwan are, I'm I'm here for it. I think every city in America should have a like a local grocery store that we all decide we're gonna go support.

Jeff Borman 5:50

And think about the the just the concept of Italy. Yeah. It's it's kind of a local tour. Like you've brought eat we've brought the Italian marketplace to you. The idea of taking someone to a Whole Foods to experience America it kind of upsets my stomach a little. But it, you know, this whole concept, I guess, is a little similar to something that I've shared with people from around the world who ask, uh, if when I visit America, where should I go? And they want to go to in the first places you're thinking of. They're gonna go, we gotta go to New York City, go to LA, we gotta go here. And I my advice to them is dodge those places. Not because New York's not wonderful and worth many visits, but if you want to see America, it's not New York City. Like New York City is not a good representation of America. And yes, I'm super biased, but I say go to Cincinnati. If you want to experience America, go to Cincinnati, go to Cleveland, go to Pittsburgh, right? These uh go to Minnesota, go to St. Louis. I mean, you're not gonna have the greatest experience necessarily, the wow photos, but you are actually going to have an American one.

Matt Brown 6:52

And you'll get, I mean, I I beg to differ. I think you can take uh Pittsburgh has plenty of wow photos. It's super simic.

America’s Inbound Travel Problem

Jeff Borman 7:00

They put French fries on there, so they want you to say this is just your anti-this is your anti-pirates and bias. Um actually, you know what? I mean, the pirates are too terrible to hate. But I but I do have a deep loathing for the Steelers, and it's the same fan base, so fair enough. What do you got next? Well, I mean, we're talking about where to go when you visit a place like LA or America. And I think really, Matt, the problem is nobody's coming to the U.S. anyway. So this conversation's pretty moot. Uh, we got a major travel deficit. That's not news, but it's getting worse by the day.

Matt Brown 7:33

Aaron Powell So Trove Tourism Development Advisors did a survey, I think, a month or two ago. And the survey says that about 71% of active U.S. travelers say they are more likely to travel internationally than they were two years ago.

Jeff Borman 7:47

Aaron Powell I think what we're what we're learning here is that people highly prioritize travel, even when there's economic uncertainty, geopolitical uncertainty. The numbers that I think we were going through, Matt, 79% strongly agreed U.S. travelers, there is a desire to travel and especially internationally. And that's rising, right? So more people, more Americans, no matter what's going on around us, want to travel and they're going out of the country. The desire is there. Uh they're booking earlier to mitigate uncertainty, but the desire is still there and they're doing it. At the same time that Americans continue to take travel dollars abroad, the US is making itself continually less attractive to foreigners. Uh I saw something from Chris Nasetta, Hilton's CEO, recently at an interview where he said the U.S. has lost half its market share in the 30 years, in the last 30 years, uh from 10% of global inbound travel to five in a performance that for which he said he would support his own firing if that were on his record, right? Like if you lose half of your market share, you should be fired. And uh I think that was kind of the attention headline grabbing part of what he said. But if foreign inbound traveler travel last year dropped another 4%, we're 12% down to pre-COVID still. And while outbound US travel is up 25% in that, and that's an 18 million person trade imbalance compared to a positive favorable balance of 4 million, more people coming to the US pre-COVID than we shipped out, right? It's 90 million room nights for hotels, four points in total occupancy. These are massive, massive numbers, and it's getting worse. That's the biggest problem.

Matt Brown 9:23

So I mean, we have a PR issue here, news news flash. Um, so that China and Canada and a lot of Europe don't want to come here. But do you think also part of this is that over the last 30 years everybody else up their game?

Jeff Borman 9:37

There's an element of that, for sure. Right? And the rest of the world has like there is a huge swath of planet, a lot of that being in Asia too, uh, that is both friendlier and more attractive. But that doesn't replace the fact that our saber rattling is harming us. FIFA was supposed to be a panacea, a just a windfall for American tourism this year. It's not going to be. Quite simply, it will not be because people don't want to come here. And uh flights right now to the Europe from Europe to the US are down 15% year over year in the summertime. Europeans don't want to come here. And why would they, Matt? We've done nothing for the last year but tell them we don't want them, that we're gonna break alliances, right? I mean, why would they come here? And Europeans are going through right now what Canadians went through last year when they basically said, I could go elsewhere. Why would I go there? So uh the US is gearing up for this massive event. It's put a ton of money into it, and it's going to be underwhelming, except for maybe the finals, right? A year ago, you and I, with our friend Greg, got under the hood on air traffic control problems, and they remain unresolved for the 25th consecutive year. Uh after last month's accident at LaGuardia that killed two and injured 40 in an Air Canada flight. At what point do foreign air carriers and their governments tell our Congress that if we don't fix our ATC shortages and training, they're just not going to fly here anymore? Why would they put their people in danger? It's shocking to me that we are almost intentionally keeping people from visiting.

Matt Brown 11:03

Aaron Powell That needs to be political muscle from the travel business class of this country.

Jeff Borman 11:08

Yeah.

Matt Brown 11:08

And I don't know what is paralyzing them. Well, I mean, I I can take a few guesses, but I mean, when is that line going to get crossed where you can kind of keep blaming other things and then you have to solve this problem?

Jeff Borman 11:21

Aaron Powell I mean, but it it's federal, but it's also local. Chicago City Council just approved a tourism improvement district tax on hotels, uh taking overnight stay tax up to 19%.

Matt Brown 11:34

Aaron Powell Do they figure that hotels, because they are somewhat immovable, at least in the in the estimation of state and local governments, that it's like, well, they're just sitting there, not they're not going to move, therefore, we can just sort of raise the thing on them and they're not going to do anything about it.

Vegas Numbers And Luxury Limits

Jeff Borman 11:50

I I think it rings true straight out of the dictator's handbook, right? You tax people who don't have a say. Tourists come in, they stay in a hotel, they don't realize they're getting a 19% tax tourism tax applied to their bill until they get the bill. Recently, there has been one of the hottest subjects in travel, and especially in the hotel world, has been the transparency of fees, right? Resort fees, destination fees, right? You have to put that in the price. You can't surprise the traveler with that at the end of the stay. You have to put it in the price. You have to display it fairly. And while all that makes sense, the governments, local, state, federal, whomever, that have created those laws in favor of consumer protection, well, they don't include tax in that. Why would they do that? Right? They don't want you, they still want that to be the big hidden surprise. So you go to Chicago, you go to your event, you meet with your clients, you go there for leisure, whatever it is. They don't want you to know you're paying 19% more than you thought you were until you check out and they get that cash. And they think they're gonna raise$50 million doing that, and they very well may. Chicago is a big city, it can absorb some bad news. It's one of the worst-run cities in America. It deals with bad news all the time. It deals with a shit reputation all the time. So they might as well get 50 million bucks more out of it. But it's one of the only markets in all the U.S. where hotel supply is threatened. Uh Southwest just pulled out of O'Hare. It's an easy way to go pinch a little cash uh without reaching into your constituents' pockets locally.

Matt Brown 13:16

I want to get into how you know when you look at growth stories. The New York Times ran another piece on uh Vegas this week. Vegas, of course, is putting on uh all the hotels, city council, everybody's saying, no, no, no, the the the numbers don't tell the full story. Things are doing great. What's really happening is that private jets and luxury has taken off like it has in the rest of hospitality. And I'm wondering what the end of that elasticity is to catering to luxury. Because all we've heard for the last three years is no, luxury is growing. Everything else is going to get squeezed. Luxury, luxury, luxury. That's how we've got to go. That's where we've got to go. And I'm wondering how far it can actually go until it snaps, or until you have huge swaths of people who are not catered to, who start kind of you know coming to the gates like, hey, come on, we we need alternatives for everybody else who wants to travel.

Jeff Borman 14:12

Yeah, let's get into it. I mean, I think or the first part to answering that, in my opinion, is you separate luxury into luxury and ultra luxury. Uh, because ultra luxury is probably forever immune. Meaning billionaire can put my entire net worth on a crap's table on a Tuesday and it doesn't matter. But while that's the ultra luxury that is probably immune to any economic cycle, really, uh, when you get out of that and you're just talking the luxury travelers, now you're talking that 1%, not the 1% of the 1%, that 1% that are still traveling and staying in very nice hotels, you know, kind of luxury-ish hotels, that part of your answer is probably uh resilient because even though inflation has been running rampant for years, those that demographic has a portfolio that is making money in the markets. And I think what it came down to, I saw Ryan Maleker did a really good piece on this, where the uh growth of wealth in this country in the last three years is essentially all driven by the tech industry. So if you ask who benefits from the wealth being generated in the AI and tech sectors, it's people who are heavily invested in stock markets. And so while the 95% of let's just say America, but it's probably a global, globally applicable, the 95% who are not uh enjoying 20% growth in their stock portfolio, when that group of people starts, you know, they see their wealth annually only growing in low single digits like the rest. So if AI slows down, if tech growth stops fueling the NASDAQ growth, then that's probably where the risk lies to luxury travel.

Matt Brown 15:59

Talking about kind of elasticity and how much markets can bear. And as war rages around the world, Ukraine, Iran, the entire Middle East, you know, with all this going on, is there do other destinations benefit? You know, when you squeeze the balloon on one side, does it inflate the other? It reminds me of, even though I was never a big Game of Thrones fan, but there's a very famous line in there from Littlefinger where he's uh I think he says something like chaos is a ladder. And I wonder if there are people out there, I say people, brands, and countries and hospitality routes that are benefiting might be a cruel term to use here, but are uh they're not having as much of an adverse time because of all this conflict.

Jeff Borman 16:42

I mean, I th part of what we're seeing it might be easier to say, you know, how's the travel experience changing as war rages in different places? And it may be a little easier to see in airlines than hotels. So when Russia's airspace was closed in 22 because of the Ukraine invasion, uh the Gulf became aviation's escape valley. And now that's gone. Uh since the Iran conflict, uh Cutter Airways has cut 5,000 flights. 89% of its schedule was canceled last month. Emirates 2,000 flights, a half of its schedule, ETHIAD, same thing. You know, two-thirds of its schedule was canceled. So flying in out of Kenya, actually, over the last few weeks, uh, I was watching our flight path. And yeah, I'm that guy who sits in the flight and just turns on the map, right? Uh but it was all it was really interesting because it reminded me of our conversation with Matt Cornelius a few weeks ago with Nine Freedoms of the Air. So uh in January, the South Sudanese, newly appointed director of civil aviation, uh shut down their airspace to foreign travelers unless they paid for the privilege of passing through. And this is one of those freedoms that we talked about. Uh the difference, of course, was normally you pay that to a government, they set it up to pay it to the president's family. So airlines decided they'll pass on that, which means they pass on that airspace. Uh and now aviation is just kind of grounded in doing weird routes. So my flight into Nairobi from London, we barely passed over the northern tip of Egypt, but really we followed the Mediterranean and then the Red Sea, not over countries. And then on the way back, uh, instead of passing through that same corridor, uh, the most direct logical way would have been over Sudan, over Libya, but we couldn't do those. So we flew basically west across Africa and then straight up to London. So, like had we not had that conversation with Matt a month ago, I would really not have understood the travel experience that I'd that I was living.

Matt Brown 18:36

You know, another thing that I don't uh I never really understand how this works and how the prices get passed along or if they get passed along are things like gas prices. I think we always monitor gas prices with personal vehicles in the United States, but but we rarely have analysis, or at least I I rarely search for it, about gas prices when it comes to mass transit or to the airlines. You know, since we got into Iran a month ago, gas prices have jumped about 35 percent. How do airlines deal with these fuel prices?

Jeff Borman 19:08

Do they just shove that straight to us or do they bite the bullet? Our prices at the pump you mentioned are up 35 percent, but jet fuel's doubled in that time. So it's far more impactful and far worse. And ticket prices, I think United said they're gonna raise ticket prices by about 20 percent. I saw Forbes article a couple weeks ago that says summer travel prices are already up 17% in airline. Aaron Powell If it's probably going to be doubly difficult for consumers, certainly in the not wealthy front of the plane segment, because low-cost carriers are gonna feel the most pressure, right? Those models are built on high passenger volume and low fares. A doubling of fuel prices leaves them with thin margins that they may not even be able to absorb the full swing. So your big, huge global carriers, they'll figure it out, they'll raise prices. I saw something business class seats went from uh it was like six grand on some flights to an average of like 18 grand in this time. Okay, well, that means somebody's paying that price. But that somebody goes back to your question about the luxury and the ultra-luxury, and uh it's not it's not the masses who are going to be able to do this. Skift research did an analysis that the war with Iran could cost our US air industry 24 billion in additional fuel expense. And the estimated ticket prices would need to increase about 11% to offset just that. Globally, that could be a hundred billion more in additional fuel costs. So on the hotel side, though, Matt, gas prices have no effect on travel, despite the alarms that go off every time there's a spike in oil. Uh, and STR, our friend Jan Freytag, uh he did a cool piece on this. Uh well, he really just refers to it as an oldie but a goodie because they keep pulling this out. You know, for 25 years, they've done an analysis. This is what happens to hotel demand when oil prices reach a certain inflection point, and ultimately, it never leads to lower room demand. So the example he walks through is the car has a 20-gallon tank. Gas goes from 350 to 450, so 20 more dollars to fill that tank. And let's assume it takes you four tanks to drive your family back and forth to Disney. Are you really not going to go see the mouse for 80 bucks? You may make different choices. Booking a limited service hotel instead of a full service hotel. You might get uh one more fast food lunch. You might not do the VIP fast track when you get to Disney, but you're not going to not go over that$80 difference. It's not big enough. So there's little impact to the hotel occupancy. Uh instead, there's an occupancy shift, maybe shorter drive trips, maybe more regional vacations, lower tier hotels. Um, probably not luxury though. So you'll see some impact, but you're gonna still see people traveling.

Matt Brown 21:44

I'm also wondering uh how gas prices affect how a hotel functions. Food deliveries, you know, anything kind of coming in and out of the supply chain, if you will, for a hotel or group of hotels that all runs on trucks. And those trucks are now paying dollar more in gas. And I wonder how long the the contractors are going to sit on that before trying to pass those prices over to the hotels that they service. I think everybody's probably been in a wait and see mode, but I wonder how as we especially as we get close to midterms, how how much waiting and seeing people are going to be willing to do.

Jeff Borman 22:22

New York Times did a study, or at least cited a study, said a 10% increase in fuel prices pushes food costs up two to three percent. So if standing math today, you said earlier that fuel prices are up 3x, uh food prices are then up, you know, 7 to 9%. Again, it's probably on balance not going to have a reduction of consumption, but people are going to be a little lighter in the wallet at the end of the day.

Matt Brown 22:48

As the 70s film The Towering Inferno once implored us to remember, there will be a morning after. And for all these travel businesses, for all these countries that are in strife right now, what's going to happen after? What's the morning after you know Russia, Ukraine? What's the morning after in Dubai?

Jeff Borman 23:10

I think there's a couple of interesting parts. Like the uh I'm not sure how to pronounce this, but the main airport in Moscow, Demododovo, maybe? It was valued at five billion dollars before the Russian invasion of Ukraine. And then it was confiscated. So it was taken from its owner. It was sold at auction to a subsidiary of the uh Shermetievo airport, the other one, uh, which is run by a Putin crony. So, and I I quote, for the benefit of the state, right? Foreign-owned hotels have been possessed and sold to locals. We saw it in Venezuela years ago, right? Chavez regime, 20 years ago, uh came into power and nationalized all the foreign-owned hotels.

Matt Brown 23:55

Dubai's kind of come into focus a little bit more, um, I think just because of the insane wealth that has kind of massed there over the last 20 years, 30 years. And I think it, you know, it it it's sort of this tax shelter. It sort of sits in in the in the middle of a lot of different players, so it's a great home base for anybody who's dealing with tech and oil money. But I wonder what what will happen to Dubai. It'll be fine, probably, but it but I wonder if this will cause people to reevaluate it.

Jeff Borman 24:28

People have, I think, mostly forgotten if they even knew. 40-50 years ago, Dubai was n literally not on maps. Like it was tiny and ir and really economically irrelevant. And so even this thriving financial community is still 90% expat because it was so s it was tiny, too. Again, it was so tiny so recently that now this massive community it's 90% expat. There are something like 80,000 millionaires who live in Dubai. And the thing really, Matt, I think, to your question is that they're able to pack up their bags and roll.

Matt Brown 25:01

Right. I have a feeling this feels way more like Dodge City or this feels like a gold rush city from the from 200 years ago, 150 years ago, where the group that gave it its wealth could pack up tomorrow and move one border over to somebody who's given them better, better rates, right? Still gives them kind of the same protections, but they can kind of get a little bit out of harm's way. And I feel like that could I wonder if this if this city could kind of sink back into the into the same.

Jeff Borman 25:33

UAE is probably too it's too much of a global player for this conflict to have that drastic of an event, yeah, an impact, but it's certainly bad timing for UAE because they're looking to become the next Vegas or Macau, right? There's a wind casino going in right now. Will F1 or the highest stakes horse racing events, will they move elsewhere? Um events are more and more a driver of travel patterns around the world. There's a sphere being built in the UAE right now, right? Who's gonna travel there, at least in the short term, regardless of how big those events are and how attractive they are and how cool the cities are? Right now, zero. Nobody's gonna go there for vacation. They're fending off missiles.

Matt Brown 26:14

Uh all right, let's wrap there and then we'll head into part two, which is going to be very events focused. We're gonna get into events. We got a lot of ideas. April is the month of ideas, everybody. So buckle up, and we will see you soon.