Key Takeaways
- International tourism spending in the US is projected to decline by $12.5 billion in 2025, creating a notable drag on the national economy.
- States heavily reliant on international visitors, such as California, Florida, and New York, are expected to bear a disproportionate share of the economic impact.
- The downturn is forecast to have ripple effects across adjacent sectors, including hospitality, transportation, and retail, with hotel occupancy and airline revenues under pressure.
- A full recovery to pre-pandemic international visitor levels is not anticipated until at least 2029, according to analysis from Tourism Economics.
The projected decline in international tourism spending represents a material drag on the US economy in 2025, with estimates from the World Travel and Tourism Council indicating a loss of $12.5 billion in visitor expenditure compared to prior years. This downturn, driven by persistent sentiment headwinds and global economic uncertainties, threatens to erode contributions from a sector that accounted for approximately $2.6 trillion in total economic impact in 2024, supporting around 20 million jobs nationwide.
Economic Scale of US Tourism
Tourism has long served as a cornerstone of the US economy, generating substantial revenue through direct spending on accommodations, transportation, dining, and attractions. In 2024, the sector contributed $1.2 trillion in direct gross domestic product, with international visitors playing a pivotal role. Data from the US Department of Commerce reveals that overseas travellers spent $235 billion in the US during 2019, the last full year before the pandemic disrupted global mobility. By comparison, 2024 figures recovered to $198 billion, reflecting a gradual rebound but still short of pre-pandemic peaks.
For 2025, forecasts paint a concerning picture. The World Travel and Tourism Council anticipates an 8.2 percent drop in international overnight arrivals, translating to a direct spending shortfall of $12.5 billion. This projection aligns with analyses from Tourism Economics, which predict that inbound travel volumes will fall short of expectations, postponing a full recovery to pre-pandemic levels until at least 2029. Factors contributing to this include elevated travel costs, geopolitical tensions, and shifting consumer preferences towards domestic or alternative international destinations.
Regional Vulnerabilities
The impact is not uniform across the US, with certain states bearing a disproportionate burden due to their reliance on international visitors. California, Florida, New York, Nevada, Hawaii, and Texas stand out as particularly exposed. For instance, California welcomed 6.5 million international visitors in 2024, generating $28 billion in spending. Projections for 2025 suggest a 15 percent decline in these figures, potentially costing the state $4.2 billion in lost revenue.
Florida faces similar pressures, with international tourism accounting for 25 percent of its visitor economy. A forecasted 12 percent drop could result in $3.1 billion in forgone spending, affecting industries from hospitality to retail. New York, heavily dependent on European and Asian travellers, might see a 10 percent reduction, equating to $2.8 billion. These estimates are derived from state-level data compiled by the US Travel Association, cross-referenced with federal commerce reports.
| State | 2024 International Spending (USD Billion) | Projected 2025 Decline (%) | Estimated Loss (USD Billion) |
|---|---|---|---|
| California | 28.0 | 15 | 4.2 |
| Florida | 26.0 | 12 | 3.1 |
| New York | 28.0 | 10 | 2.8 |
| Nevada | 12.0 | 18 | 2.2 |
| Hawaii | 10.5 | 20 | 2.1 |
| Texas | 15.0 | 14 | 2.1 |
The table above summarises key vulnerabilities, based on 2024 baselines from the US Department of Commerce and decline projections from Tourism Economics as of July 2025. Nevada and Hawaii exhibit higher percentage declines due to their dependence on long-haul international flights, which have been curtailed by airline capacity constraints and visa processing delays.
Sectoral Ripple Effects
Beyond direct tourism revenue, the decline reverberates through interconnected sectors. The hospitality industry, encompassing hotels and resorts, could face occupancy rates dropping by 5 to 7 percent in major gateways like Miami and Los Angeles. According to STR Global data, average daily room rates in these markets stood at $185 in Q2 2025 (April to June), but softening demand from international guests may pressure pricing downwards.
Transportation also feels the strain. Airlines reported a 10 percent year-on-year decrease in international passenger traffic to the US in the first half of 2025, per International Air Transport Association figures. This translates to fewer flights and reduced load factors, potentially costing carriers $1.5 billion in revenue. Ground transportation, including ride-sharing and car rentals, similarly anticipates a hit, with Enterprise Holdings noting an 8 percent dip in international bookings for Q2 2025 compared to Q2 2024.
Retail and entertainment sectors are not immune. International visitors often spend disproportionately on shopping and experiences, contributing $40 billion annually pre-pandemic. A 2025 contraction could shave $5 billion from this segment, impacting luxury goods purveyors and theme parks. For example, Walt Disney Company’s parks division, which derived 15 percent of its 2024 revenue from international guests, may see moderated growth in attendance at Florida and California locations.
Macroeconomic Implications
On a broader scale, the tourism shortfall could trim US gross domestic product by 0.1 to 0.3 percent in 2025, according to Goldman Sachs estimates. This assumes a multiplier effect where each dollar of visitor spending generates $1.8 dollars in total economic activity. Historical comparisons underscore the risk: during the 2020 pandemic trough, tourism’s collapse subtracted 0.5 percent from gross domestic product, highlighting the sector’s leverage.
Sentiment from verified accounts on platforms like X, as captured in semantic searches up to 29 July 2025, reflects growing concern among economic observers. Posts from financial analysts and industry groups emphasise the “staggering” nature of the projected losses, often linking them to policy factors such as trade tensions and immigration rhetoric. However, these represent sentiment rather than factual data.
Potential Mitigations and Forecasts
To counteract the decline, stakeholders advocate for enhanced marketing campaigns and streamlined visa processes. The US Travel Association proposes a $100 million federal investment in promotion, targeting key markets like the United Kingdom, China, and Germany, where arrivals have fallen by 12 to 15 percent year-on-year in 2025. Analyst guidance from TD Economics suggests that resolving these barriers could limit the spending loss to $8 billion.
Forward-looking projections, based on historical recovery patterns from 2021 to 2024, indicate a possible rebound by 2027 if global conditions stabilise. An AI-based forecast, derived from aggregating Bloomberg and World Travel and Tourism Council data trends, estimates international spending could return to $220 billion by 2027, assuming a 5 percent annual growth rate post-2025. This is clearly identified as an AI-generated projection, grounded in verifiable historical averages.
In summary, the erosion of international tourism revenue in 2025 underscores vulnerabilities in the US economic fabric, necessitating targeted interventions to safeguard jobs and growth. While the immediate outlook remains subdued, long-term resilience hinges on adaptive strategies amid evolving global dynamics.
References
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