Ever since last November, when UK operators at the World Travel Market told us of sluggish booking activity, and through last winter and into early March at ITB in Berlin when we heard more reports of flat business growth in Germany as well as a slowdown in other European markets, we’ve waited for some sort of statistical corroboration of what the trade was telling us.
It came last week, in a torrent of red ink—the font color that the U.S. National Travel and Tourism Office (NTTO) uses to record a decline from one measuring period to another—that was spread throughout NTTO’s first report on international arrivals for the First Quarter of 2015. (NTTO has been hampered in providing monthly and quarterly numbers in more timely fashion by the behind-schedule release of data collected by the U.S. Department of Homeland Security.) More than half the Top 15 overseas inbound source markets experienced year-on-year decreases in arrivals to the United States for the First Quarter of 2015, while six markets experience a year-on-year decline for the month of March.
Notable among the numbers were those indicating a drop-off-the-cliff decline in arrivals from France and the Netherlands for both the First Quarter and for March 2015. It is challenging to find a single thesis that explains the decline except to suggest that the combination of a stronger dollar and a weaker euro (see rest of article below the tables) help to do so.
Following are tables that present the numbers for the USA’s top overseas markets for both Q1 and the month of March 2015.
Top 15 Overseas Source Markets
First Quarter Arrivals
2015 vs. 2104
| Country/Market | Arrivals | Arrivals | Change |
|---|---|---|---|
| First Quarter 2015 | First Quarter 2014 | 2015 vs. 2014 | |
| 1. UK | 705,942 | 731,927 | -3.40% |
| 2. Japan | 843,005 | 901,322 | -6.50% |
| 3. Brazil | 574,043 | 531,859 | 7.90% |
| 4. China† | 561,916 | 472,243 | 19.00% |
| 5. Germany | 356,071 | 354,149 | 0.50% |
| 6. France | 254,764 | 300,574 | -15.20% |
| 7. South Korea | 373,847 | 321,769 | 16.20% |
| 8. Australia | 228,755 | 235,590 | -2.90% |
| 9. India | 196,818 | 166,070 | 18.50% |
| 10. Italy | 143,203 | 162,751 | -11.90% |
| 11. Colombia | 168,513 | 146,425 | 15.10% |
| 12. Spain | 126,972 | 116,341 | 9.10% |
| 13. Argentina | 175,755 | 188,918 | -7.00% |
| 14. Venezuela | 120,817 | 150,998 | -20.00% |
| 15. Netherlands | 91,784 | 107,552 | -14.70% |
† Does not include Hong Kong
Source: U.S. Department of Commerce, International Trade Administration, National Travel & Tourism Office
Top 15 Overseas Source Markets
March 2015 Arrivals vs. March 2014 Arrivals
| Country/Market | Arrivals | Arrivals | Change |
|---|---|---|---|
| Mar-15 | Mar-14 | March 15 vs. March 14 | |
| 1. UK | 296,450 | 290,774 | 2.00% |
| 2. Japan | 320,670 | 355,041 | -9.70% |
| 3. Brazil | 156,026 | 164,861 | -5.40% |
| 4. China† | 149,039 | 125,448 | 18.80% |
| 5. Germany | 161,385 | 151,690 | 6.40% |
| 6. France | 87,510 | 120,214 | -27.20% |
| 7. South Korea | 106,441 | 95,627 | 11.30% |
| 8. Australia | 75,449 | 78,288 | -3.60% |
| 9. India | 67,496 | 59,343 | 13.70% |
| 10. Italy | 52,613 | 62,931 | -16.40% |
| 11. Colombia | 68,439 | 51,529 | 32.80% |
| 12. Spain | 58,106 | 46,457 | 25.10% |
| 13. Argentina | 62,774 | 50,923 | 23.30% |
| 14. Venezuela | 49,868 | 42,108 | 18.40% |
| 15. Netherlands | 31,962 | 41,445 | -22.90% |
† Does not include Hong Kong
Source: U.S. Department of Commerce, International Trade Administration, National Travel & Tourism Office
One Possible Explanation: There seems to be a strong correlation between the decline of the euro (and other currencies, for that matter) against the U.S. dollar during the booking window for First Quarter and March 2015 bookings—the six month period from mid July-2014 to mid-January 2015, which takes in both traditional advance booking windows as well as late (60 days or less before a trip) booking. During the six months from mid-July 2014 to mid January 2015, the euro plummeted in value by 17 percent.
| Changes in Selected International Exchange Rates During July 15, 2014-January 15, 2015 Booking Cycle | |||
|---|---|---|---|
| 15-Jul-14 | 15-Jan-15 | %Chg | |
| Euro | $1.36 | $1.16 | 14.70% |
| British Pound | $1.71 | $1.52 | 11.00% |
| Australian dollar | $0.94 | $1.82 | 13.00% |
| Brazilian Real | $0.45 | $0.38 | 16.10% |
| Japanese Yen | $0.01 | $0.01 | 13.20% |
However, the Chinese yuan and South Korean won remained at the same level against the dollar for the same period. Not surprisingly, arrivals from both China and South Korea.
How Have Receptives Been Impacted: While the Inbound Report and other analysts try to distinguish between and causation, we were able to see how the NTTO data, which is based on survey data, squared with the actual impact on the activity of one receptive tour operator—Tourico Holidays, one of the largest travel businesses in the United States. Uri Argov, Tourico’s founder and CEO, shared relevant data with the Inbound Report.
We learned that the percentage change in Tourico’s business volume in some top overseas source markets (the top eight are listed below) year-over-year differs in some respects from the percentage point changes in the NTTO arrivals data for the same markets, but also seems to confirm the notion that the strong U.S. dollar has indeed had an impact on markets where the exchange rate has favored the dollar.
| Country/Market | Year-on-Year Change (%) | |
|---|---|---|
| UK | -6.35% | |
| Japan | 14.03% | |
| Brazil | -23.04% | |
| China | 22.78% | |
| Germany | -16.55% | |
| France | 7.43% | |
| South Korea | 1.01% | |
| Australia | -20.81% | |
Source: Tourico Holidays
For another account of the actual impact on U.S.-based receptive tour operators, we turned to Stephan Forget, president and owner of San Francisco-based Go West Tours, which has a strong presence in France and French-speaking markets (it has sales offices in both Paris and Montreal). Forget told us that he found the NTTO figures on arrivals from France “interesting,” but said that his company had not experienced such a decline. In fact, overall, Go West Tours’ overall business is up 14 percent, while market from France is flat compared to last year—for both leisure and MICE segments.
Forget suggested that it will be more interesting to see if the trends suggested by the NTTO arrivals data continues beyond the first quarter of 2014. He also pointed out that the first quarter is not a very significant business period for Go West Tours, accounting for just nine percent of its annual revenue.
