Inbound international travel to the United States has been steadily rising year over year since the COVID-19 pandemic, and 2025 figures to be more of the same.
Success with driving this travel has been market dependent. In Southeast markets such as Miami and Northeast markets such as New York City, international travel numbers have been solid. On the West Coast, in markets such as San Francisco and Hawaii, it's been a different story.
This year will be a continuation of these trends, hotel executives say.
Positive trends
Jason Reader, chief operating officer at Remington Hospitality, said his company expects a second consecutive year of double-digit growth in international travel in 2025. The strongest feeder markets for its portfolio has been Europe, Canada and Latin America.
"Those were the strongest areas that we saw that [growth]," he said. "We're continuing to see international travel improve."
Much was made of increased outbound international travel over the past couple of years, specifically to Europe and the Caribbean. The cost of traveling to these destinations has increased tremendously, which could bode well for U.S. markets, said Steve Contos, executive vice president at Davidson Hospitality.
"In a sense, the success of the last 18 months in Europe and the Caribbean and some of these markets is causing the price factor to become almost unattainable, where people now are saying, 'OK, well the exchange rate is even for the first time ever between the euro and the dollar, we don't get as much of a benefit. Therefore, maybe we should consider going somewhere else,'" he said.
While inbound demand from traditionally strong Asian feeder markets such as China and Japan are far below pre-pandemic levels, there's been a rise in travelers from India, Reader said. If the trend continues, it could offset the drop off in demand elsewhere.
This year, there could be double-digit growth numbers in travelers from India, he said.
"The Indian traveler is one that's kind of new. We certainly had some travel, but not the level that we've seen," he said. "You've got a rise in discretionary income and wealth with a certain part of the population, and then you've got an area of the world that they really haven't seen or explored."
A tailwind for inbound international travel is a shift in travel priority out of the pandemic, Reader said. After being couped up and restricted from traveling for an extended period of time, more people are going on trips because the future is perceived to be uncertain now.
"If you go back to the Great Depression, what that did was it created a generation of people who were very thrifty, because they knew what it was like to not have anything," he said. "There's a theory that COVID is going to do the same for travel in that nothing is ever guaranteed. You don't know what tomorrow is going to bring. Travel while you can."
Another tailwind is pent-up business demand from international travelers, said Gregg Forde, president and chief operating officer at Island Hospitality.
"Ultimately, the United States is always the No. 1 destination for travel, whether it's business or personal for leisure," he said. "International travel for business, there's still some pent-up demand for that, for people to get to the U.S. and do business in that way."
Negative trends
West Coast markets have historically been dependent on travel from Asian countries that have recovered fairly slow from the pandemic, such as China and Japan.
Ben Rafter, president and CEO of Springboard Hospitality, said Hawaii is expecting about 150,000 more arrivals from Japanese travelers this year, but the long-term dynamics don't bode well for inbound travel from the country.
Earlier this year, the value of the yen was at a 34-year low.
"The reality is, since 2019 we've seen the yen weaken. There's no real sign that we see that the yen is going to massively improve," he said. "Hawaii has become more expensive. Taxes are higher; products are higher. I see a scenario whereby Japan never comes back to the levels that it was prior to the pandemic."
Springboard Hospitality has 25 properties in California and Hawaii combined. Rafter said he thinks the future of the Japanese traveler could skew more toward upper-upscale travelers compared to the traditional upper-midscale.
Losing out on these travelers in the short-term could have a long-term effect. Destinations such as Hawaii will have to learn how to remarket to Japanese travelers in the future, he said.
"We have a real problem in Hawaii with long-term Japanese tourists with the yen at this level. Once people start exploring other destinations, it becomes more challenging to bring them back to where they travel historically, which is obviously Hawaii," he said.
Rafter said Springboard's projection for total travelers in 2025 is on par to 2019 levels, sitting at 9.91 million compared to 10.4 million. The international component is smaller, though, accounting for 2.5 million compared to 3.5 million in 2019.
South America and Latin America are some other feeder markets that haven't approached 2019 levels yet, Contos said. While it's looking like it'll improve in 2025, there's a large portion of Latin America business travel that is missing.
San Francisco continues to be an underperforming market across the board, with inbound international travel playing a role.
"San Francisco just continues to struggle and really hasn't even come anywhere close to what it was," Reader said. "The two primary reasons would be the Asian traveler not coming back to the levels they were pre-COVID and then just the lack of citywide/conventions that used to come to that city aren't coming."