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Resilient economy, fragile demand: The 2025 U.S. travel outlook

  • phocuswright.com
  • 22 August 2025
  • 2 minute read
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This article was written by Phocuswright. Click here to read the original article

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Outbound travel from the U.S. sustained robust activity in 2024, with total departures exceeding 107 million and surpassing pre-pandemic peaks, according to the U.S. Department of Commerce. A strong U.S. dollar and a continued appetite for international experiences helped fuel the surge, supported by smoother passport processing and stable airline capacity. Early 2025 data shows a modest deceleration, driven by geopolitical tensions and tighter immigration policies in some markets—though outbound travel is still growing year over year. That said, this growth primarily benefits airlines and, to a lesser extent, packaged tour providers as most in-destination spend occurs abroad, representing a lost opportunity for U.S.-based travel suppliers.

After growing by 9% in 2024 (to 72.4 million), U.S. inbound travel appeared to be on a recovery path, though it still fell short of pre-pandemic highs. While the upward trajectory held, challenges persisted: Visa wait times remained lengthy, and regional destinations increasingly drew travelers away from long-haul options—particularly in Asia Pacific. In the first half of 2025, the rebound had all but stalled, with arrivals declining from several key markets, including vital neighbors Canada and Mexico. The U.S. government’s increasingly unwelcoming tone, including its stance toward specific nationalities and communities, stands in stark contrast to global trends, as other destinations aggressively court international tourists. In June, a sweeping travel ban affecting 19 countries added to the headwinds for inbound travel. While not the primary cause, actions like these contribute to a broader narrative that, per WTTC estimates, may cost the U.S. $12.5 billion in international visitor spending in 2025.

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The U.S. travel industry is navigating a highly volatile policy landscape, with sweeping regulatory shifts impacting multiple sectors. Airlines and tour operators are dealing with stringent entry restrictions and intensified border scrutiny, driving up operational load. Hotels, short-term rentals and OTAs are adapting to new FTC transparency rules on fee disclosures, which may impact distribution and competitive dynamics. Persistent labor shortages across airlines, hotels and car rentals have exacerbated staffing expenses, complicating operations. Efforts to revive America’s image among international travelers face hurdles, worsened by a planned 80% cut in Brand USA funding—from $100 million to just $20 million. Despite these challenges, ongoing investments in infrastructure, rapid adoption of generative AI to boost efficiency and personalization, and Americans’ unwavering enthusiasm for travel promise continued resilience and growth.

Please click here to access the full original article.

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