President Donald Trump, accompanied by Environmental Protection Agency (EPA) Administrator Scott Pruitt, third from left, and Vice President Mike Pence, right, signs an Energy Independence Executive Order, Tuesday, March 28, 2017, at EPA headquarters in Washington. Pablo Martinez Monsivais / Associated Press
Skift Take: Confusion and uncertainty have become the new reality for the U.S. travel industry, and travelers around the world, following President Trump’s first 100 days in office. Only time will tell whether his policies will inflict lasting damage on U.S. travel companies and the image of the U.S. as a preeminent international destination.
When Donald Trump was elected U.S. President in November, there was quite a bit of optimism in the travel industry that having a luxury hotelier in the Oval Office would help advance the goals of both the U.S. as an international destination and U.S. travel companies.
Trump’s first few months in office, however, seem to have dispelled the notion that his administration would be tourism and tourist friendly. Following one failed travel ban executive order, with another still tied up in the appeals process, the tenor has changed completely.
Travelers, particularly those who are Muslim or hail from predominately-Muslim countries, have reported strenuous customs screenings at U.S. airports that skirt legality. A ban on large cabin electronics on select routes from the Middle East and Africa to the U.S. has also caused confusion for international business travelers.
There have been a few positive developments. The nomination of Elaine Chao as Secretary of Transportation is one; she served as labor secretary during the George W. Bush administration, and is known to be an especially effective bureaucrat. A supposed $1 trillion infrastructure investment plan is also purportedly still in the works.
Given the developments during President Trump’s first 100 days, what should the U.S. travel industry expect for the remaining four years of his term? We asked Skift’s industry specialists about the reality, and potential ramifications, of President Trump’s travel policy.
If hotel CEOs initially thought that having a fellow hotelier in the White House would be good for business, they may want to recalibrate their expectations following Trump’s first 100 days in office.
At the outset, a few expressed hope and optimism that a business-friendly chief executive would bring lower corporate tax rates and stimulate business travel — often considered the bread and butter for most U.S. hotel chains.
Hilton CEO Christopher Nassetta told Skift in mid-January, “As we come into this year, my reason for optimism is not, and I think I said this, not trying to be a Pollyanna, I do think that sentiment, particularly in the U.S., in corporate America is more positive. That can certainly move from here up or down, depending on things that happen. But from my point of view, I think it’s hard to debate that, post-election, the psychology has changed in a more positive way.”
Nassetta wasn’t alone in his positive outlook either, as signs of a slight “Trump Bump” in corporate travel business immediately following the election gave hotel executives some hope of a brighter 2017. But others, like Marriott CEO Arne Sorenson and Best Western CEO David Kong, weren’t as positive in their viewpoint. Both CEOs said they didn’t interpret the post-election increase in business travel as a foreshadowing of corporate travel business in 2017.
And then came the travel ban on January 27. While other travel companies such as Expedia and Airbnb were quick to publicly denounce the ban, hotel companies, for the most part, remained silent with the exception of Choice Hotels, which issued a statement, and the American Hotel & Lodging Association (AH&LA).
Marriott CEO Sorenson expressed concern about the kind of message Trump’s travel ban was sending to the rest of the world. He also noted that, anecdotally, some groups are choosing to bring their meetings and events to destinations outside of the U.S. for fear that not all their attendees will be able to convene in the U.S.
For the most part, however, hotel executives said that Trump’s travel ban did not have a significant financial impact on their businesses.
As for Trump Hotels itself, the company has had its fair share of scrutiny, especially following the first travel ban. And given its unprecedented circumstances — having its namesake and founder in the White House — Trump Hotels is now shifting its strategy purely to domestic growth over international to avoid potential conflicts of interest, of which many still remain.
Skift interviewed Trump Hotels CEO Eric Danziger in January to talk about the future of the Trump Hotels business. During the interview, Danziger stressed that Trump the President “has another job now” and that the hotel business is its own separate entity.
A March statement from the General Services Administration, the federal agency that is the leaseholder for Trump’s new Washington, D.C. hotel stated that Trump is not in violation of his lease as a “government official” but there are still plenty of organizations and business who believe his D.C. hotel represents a major ethical conflict, and gives Trump Hotels an unfair advantage over other hospitality businesses in the area.
Looking ahead, the first quarter earnings from the major U.S. hotel chains should shed some light on whether Trump’s pro-business policies are actually helping business travel and although the travel ban may not have had an immediate financial impact, it remains to be seen whether its ramifications will have lingering effects. Hoteliers will also need to pay close attention to Trump’s policies on immigration and H-2B visas for temporary and seasonal workers.
— Deanna Ting, Hospitality Editor
U.S. airline CEOs had high hopes for the Trump Administration, and while they may eventually get some of what they had wanted, not much aviation policy has changed yet.
One problem is that the CEOs don’t agree on that many issues. There is general consensus the U.S. should reform its air travel control system, turning it from a government-run enterprise into a non-profit private corporation. That’s how the system works in many other countries, including Canada, and it likely eventually will happen here. Trump supports it, and the White House put privatization in its proposed budget. Among large U.S. airlines, only Delta Air Lines is opposed, with the carrier saying the system works fine as it is.
Other stuff is more contentious. The CEOs from Delta, as well as American Airlines and United Airlines, want the public to think all U.S. airlines oppose the largest Middle East airlines — Etihad Airways, Qatar Airways, and Emirates Airline — because the carriers may accept some subsides from their governments, which may violate Open Skies agreements the United States has with Qatar and the United Arab Emirates.
The big three U.S. airlines are upset that these Open Skies permit Etihad, Emirates and Qatar to operate nonstop routes between Europe and the United States, including Emirates’ new Athens-Newark service. They would like the Trump Administration to stop those Europe-U.S. routes, which compete directly with some of their flights, and perhaps even cap the number of nonstop departures the airlines can offer from the Middle East to the United States.
But many other airlines do not agree. JetBlue Airways and Alaska Airlines have robust and profitable codeshare agreements with Emirates. Emirates relies on JetBlue to shuttle passengers to Boston and New York, where they connect to flights to Dubai. Alaska does the same for Emirates in Seattle. Both low-cost airlines do not want the Trump Administration to renegotiate Open Skies agreements with Qatar and the United Arab Emirates. JetBlue and Alaska have an important ally in Federal Express, which operates a regional hub in Dubai and takes advantage of the same agreements that American, United and Delta dislike. Fedex needs that hub — and the global air traffic rights that go with it — to efficiently ship packages around the world.
United, American, and Delta did receive an indirect bump from the Trump Administration in late March when the U.S. Department of Homeland Security banned travelers flying to the United States from 10 airports in the Middle East and North Africa, including Dubai, Abu Dhabi and Doha, from bringing laptops, iPads and e-readers in aircraft cabins. The U.S. government said it was reacting to a security threat, but it shared few details. The same week, the United Kingdom issued a similar restrictions on UK-bound flights from some countries in same region, but its ban did not include airports in Dubai, Abu Dhabi and Doha.
The electronics ban is almost certainly a commercial problem for the three big Gulf carriers. Their lucrative business travelers in business and first class don’t want to stop working for 10 to 16 hours on long-haul flights, and many do not feel comfortable putting laptops in checked luggage. All three airlines are giving loaner electronics to premium passengers, but that’s not a perfect solution, as many business travelers do not want to put company information on a machine their employers do not own. No one is yet sure how much business the Gulf three are losing to other airlines, but Air India recently said its U.S.-bound business had improved considerably, according to reports. It makes sense, since a business traveler flying Air India from Mumbai to Delhi to San Francisco can use electronics and work during the flight, while a customer flying Emirates from Mumbai to Dubai to San Francisco cannot.
— Brian Sumers, Aviation Business Editor
While it’s still early to measure the long-term effect of President Trump’s short presidency and often controversial rhetoric on U.S. and international tourism, so far the White House’s messaging has told international travelers that the U.S. isn’t as welcoming as it was when Trump’s predecessor, Barack Obama, held the Oval Office.
During the 2016 campaign, then-candidate Donald Trump promised voters he’d build a wall along the U.S.-Mexico border and ban all Muslims from entering the U.S. Sure enough, just one week after he was inaugurated on January 20, Trump signed an executive order barring non-U.S. citizens from seven predominantly Muslim-majority countries from entering the U.S.
Almost immediately after, CEOs from across the travel industry weighed in on the travel ban criticizing the Trump Administration’s actions and called for security policies that embraced the freedom of travel rather than restrained it. Travel CEOs feared the travel ban would concern travelers from other countries not part of the ban simply for the mixed messages it sends.
At the same time, many destination marketing organizations across the U.S. began hitting roadblocks as an uncertain future under a Trump Administration called their funding levels into question. Tourism boards have always had to fight to maintain their funding or receive more but a sweep of Republicans taking control in many statehouses and city halls across the country during the November 2016 elections made this year’s budget battles more contentious, as is the case with Visit Florida.
John Percy, president and CEO of Niagara USA, the destination marketing organization for Niagara Falls, New York, said that he’s in a “wait and see mode” regarding his marketing budget for the coming year in light of national politics.
Coming off an eight-year Obama Administration in which Obama prioritized personal travel while on official state visits, President Trump has also made clear he won’t skimp on traveling and has spent most of his weekends since taking office at his Mar-a-Lago resort in Palm Beach, Florida. Trump’s Florida visits could help attract more tourists to visit Florida but other destinations aren’t anticipating any Trump bump.
Tourism boards in New York City and Los Angeles, for example, have already said they anticipate fewer international visitors in 2017 than last year because of the travel ban and U.S. politics. Brand USA, the national tourism marketing arm of the U.S. government, said its recent survey found U.S. politics is increasingly a reason why international travelers are calling off or forgoing travel plans to American destinations.
Many Mexican travelers have already demonstrated that they’re choosing Canada this year over the U.S. and the United Nations World Tourism Organization said the U.S. has already lost $185 million in tourist spending from the travel ban and could lose more than a $1 billion by the end of 2017 depending on how other international travelers — those not from the banned countries — perceive the U.S. political climate.
Still, it’s too soon to understand the deeper economic impact of President Trump on the U.S. travel industry as the first 100 days is a fraction of a four-year term. International tourist spending in the U.S. in January, however, set a new record in January and U.S. travelers show no signs of halting their international travel plans this year.
Some U.S. tourism boards such as New York City have launched marketing campaigns to combat the Trump Administration’s unwelcoming message. But the person that international travelers want to hear from to reassure them of their safety and hospitality is first and foremost President Trump.
If the first 100 days are any indication, the next four years of the Trump White House will likely be one of setbacks for tourism legislation implemented under President Obama and more confusion for international travelers weighing mixed messages and a strong dollar as reasons to reconsider a U.S. visit.
— Dan Peltier, Tourism Reporter
Online travel agency officials from Expedia to TripAdvisor and executives from gig-economy companies such as Airbnb and Lyft were among the most vociferous corporate opponents of President Trump’s travel bans and building a wall along the U.S.-Mexican border.
Regardless of the political sympathies of their leadership, these travel companies see it in their economic interests to oppose presidential policies that would limit travel to the United States either by policy or the apparently unintended consequence of turning off international travelers because of the discordant rhetoric or the hassle of getting through U.S. Customs.
In addition to the adverse impact on travel demand, the travel bans made it really difficult for some of these companies’ employees to return after an international trip because they may been born in or were citizens of one of the banned Middle Eastern countries. So opponents viewed both the travel demand and operational side of the equation in opposing some of Trump’s policies during the President’s first 100 days.
On the immigrant and travel fronts, Expedia even trolled President Trump’s inauguration and paid for an advertisement that aired on CNN that encouraged people to “peek over your neighbor’s fence to see the other side.” Expedia has spent some $1.35 million airing the “Train” ad on national TV since the beginning of February, according to iSpot.tv.
The Expedia video encourages people to #traveltheworldbetter to break down barriers and explore foreign cultures.
TripAdvisor and its CEO Stephen Kaufer have been out-front in their efforts to aid refugees displaced by global conflicts, such as the war in Syria. TripAdvisor pledged to donate $2 million over two years to the International Rescue Committee and Mercy Corps.
And Kaufer wrote how the travel bans aren’t just a business issue but they speak to the United States’ identity as a country.
The travel industry has become more emboldened as the Trump administration’s travel policies come more clearly into view. You can expect more intense opposition if the new policies take the same direction.
— Dennis Schaal, Executive Editor
Business travel insiders seemed hopeful at first that Trump’s talk of infrastructure improvement and reduced regulations — as well as the stock market’s rise in the months following the election — would be positive for the industry.
But just a week after the inauguration came an executive order banning travel from seven Muslim majority countries, widespread chaos, and an element of uncertainty that threatened earlier optimism.
“It really comes down to uncertainty,” Greeley Koch, executive director of the Association of Corporate Travel Executives, said in late January. “Business travelers and their companies do not like uncertainty.”
The Global Business Travel Association turned to industry sources for data on business travel bookings, which included hotel, air, and ground transportation, and calculated that $185 million in bookings were lost in the week after the ban was announced.
News was full of stories of travelers pulled off flights and detained at airports, which forced companies to consider how their own employers might be treated. It was a disturbing prospect, polls found.
Surveys following the first (and, eventually, second) ban showed that travel managers expected to cut back on business travel to the U.S. An ACTE survey indicated 45 percent of respondents said the ban would pose travel difficulties for their company. In a GBTA poll, 45 percent of Europeans who responded said they were less willing to plan meetings and events in the U.S., and 38 percent were less willing to send business travelers to the country. ()
“There is always the risk that closing our borders sends the message that the United States is closed for business,” Michael McCormick, executive director and chief operating officer at GBTA, said in a statement in early March. “The results of this poll show the perception of the United States as a welcoming destination for business travel has been altered.”
To a lesser extent, the restrictions on large personal electronics in the cabin on flights from several countries in the Middle East and Africa presented another complication for business travel. Executives said frequent travelers are typically understanding about security crackdowns, but questioned the reasoning and transparency around the new measure — especially since many companies have policies requiring travelers to keep gear like laptops with them at all times.
While business travel had been foundering over much of the last year, the concern now is that any recovery is being threatened by actions the administration has already taken. It’s early still, but with uncertainty lingering, those fears could be justified.
— Hannah Sampson, News Editor