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Inbound Tourism Industry

The Obama effect  Mar 09, 2009

The inauguration of America’s 44th president and its first-ever African-American leader, Barack Obama on January 20 is set to bring about many changes, not only in the US, but across the globe, given this nation’s super-power status.

Many are waiting with baited breath to see if Obama will follow through on his promises, which could see phenomenal changes to the world in which we live given his commitments to tackling issues such as the current recession, global warming and conflict in the Middle East.

Hopes are high and for the first time in many years, the US is regarded as a friend by many, as opposed to a foe.

This fresh perception will have repercussions on the travel industry at large.

Firstly, travel trade professionals worldwide believe that America’s new ‘friendly’ image will encourage more tourists to travel there.

In addition, the US travel trade hopes that Obama’s administration will put measures in place to help inbound visitor numbers reach their pre-9/11 highs.

Figures from the US Department of Commerce, the Office of Travel and Tourism Industries and the US Travel Association reveal there were 35 million more people around the world travelling overseas in 2007 than in 2000, but not only did the US fail to capture any of these new travellers, it lost two million overseas visitors.

In 2000, 122 million people travelled overseas, including the 26 million who visited the US and in 2007, 157 million people travelled overseas, 24 million of whom visited the US.

In other words, global overseas travel grew 28% between 2000 and 2007, while overseas travel to the US declined by 8%.

Further research by the same sources reveals that visitor numbers to the US from most of its key source markets slumped between 2000 and 2007, which could be attributed to many factors including the 9/11 terrorist attacks and the subsequent visa-tightening processes enforced, which made it so difficult for some nationalities to visit that many didn’t bother.

In addition, even residents of countries subject to a joint visa-waiver programme with the US complained of being treated with suspicion and even contempt when entering the country.

As a result, while long-haul travel from the UK increased by 32% between 2000 and 2007, travel from the UK to the US decreased by 4% over the same period.

Other European markets such as Germany, France and the Netherlands followed similar patterns and visitor numbers from Japan and Brazil to the US also dipped.

However, the country did witness good arrivals increases from Australia, China, India, Russia, South Korea and Spain.

US trade plea

The US Travel Association (formerly the Travel Industry Association or TIA) has made it clear to the US Government that more needs to be done to entice international travellers to the country’s shores.

In a letter to US Senate leaders, the association stressed the views of economists that “increasing international travel to the United States represents one of the country’s best opportunities to stimulate broad-based economic growth”.

The letter notes that a 1% increase in US market share of world international travel would result in 8.8 million extra visitors to the country and more than $15 billion new economic activity.

The association also quotes statistics from Oxford Economics projecting that a $100 million promotion programme for travel would yield “hundreds of thousands of new visitors” and $2.5 billion in visitor spending.

The Travel Promotion Act, which is pending approval from the US Senate, would create a not-for-profit entity, called the Corporation for Travel Promotion, which would be responsible for the international promotion of the US as well as distribution of travel information to foreign visitors, a report by Euromonitor International Americas travel and tourism manager Michelle Grant reveals.

Its budget could range from $10 million to $100 million, funded by private donations and a $10 fee levied on visitors who do not pay the $131 required for a US visa.

Obama is a co-sponsor of the act and has endorsed overseas destination advertising if it proves to offer a return on investment.

Grant is confident that even if this act is not passed immediately, government investment in transportation infrastructure is likely to remain a top priority.

“President Obama has expressed his support to modernise the air traffic control system in the US and to develop high speed rail networks,” she says.

“He proposed the creation of a National Infrastructure Reinvestment Bank to supplement federal funding of these projects.”

Grant’s recent report, The Impact of the New US Government on the Travel Industry, also reveals that the US Visa Wavier Program (VWP) is expected to continue to expand after seven new countries (Czech Republic, Hungary, Estonia, Latvia, Lithuania, Slovak Republic and South Korea) joined the scheme in October 2008.

“Obama has been a strong supporter of the VWP and, as Chicago has a large Polish community, it is expected that he’ll work closely with the Department of Homeland Security to help Poland make it onto the list,” says Grant.

“He has also mentioned that countries such as Greece and Brazil should be included in the program.”

Chicago in the spotlight

Obama’s election is also set to increase the popularity of Chicago as a tourist destination according to Grant.

Despite having the second busiest airport in the world, Chicago ranks tenth in international arrivals to the US, with 1.3 million foreign visitors in 2007, compared to New York City and Miami, the top two cities for arrivals, which received 8.8 million and 5.4 million respectively the same year.

“Many foreign visitors, when touring the US, skip over the Midwest and visit only the East and West coasts,” says Grant. “Obama’s election and his rally in Grant Park have generated invaluable international publicity for the city. It is expected that the number of visitors to the city will rise accordingly as foreign visitors visit the adopted hometown of the United States’ first African-American president, and the source of a dramatic shift in US governance and foreign policy. It is anticipated this will encourage more domestic tourism.”

She says Obama’s election is also expected to place Chicago at the top of the list for the 2016 Summer Olympics.

“With a direct link to federal funds to improve its transportation, the city is at the epicentre for infrastructure in time for the Games,” she adds.

Looking beyond 2016, Grant believes Obama’s presidency will have a long lasting impact on the city in terms of tourism.

“It is likely that his presidential library will be built in Chicago, giving the city a historic tourist attraction that will draw visitors for generations,” she says.

Chicago is also set to be linked directly to the Middle East when the UAE’s national carrier, Etihad Airways, starts operating flights to the US city on Wednesday September 2.

The Abu Dhabi-Chicago route will be served three times weekly initially, increasing to daily flights from Thursday October 1.

This marks Etihad’s second US destination after New York .

The US Ambassador to the UAE, Richard Olson, said it was “very fitting” that Etihad’s second destination in the US was home to America’s 44th President.

“The inauguration of this new service is another very positive example of the strong and expanding commercial relationship that Emiratis and Americans share,” he says.

Chicago is the third largest US market for air travel to the Middle East and GCC after New York and Washington and the state of Illinois is home to one of the largest Arab American communities in the US, with an estimated Arab-American population of more than 230,000.

Positive outlook

The outlook for travel from the Middle East to the US is good given the number of airlinks opening up between the two continents operated by Gulf carriers such as Emirates, Qatar Airways and Etihad Airways and US airlines such as Delta and United. In addition, unlike many areas of the world where currencies are struggling against a strong US dollar — which could impede travel to America from those markets — there is no such impact in the Gulf where the currencies of GCC states are linked to the dollar.

From an international perspective, travel agencies and tourism professionals in many countries are reporting a renewed interest in travel to the States.

Swiss travel agency M-Travel Switzerland says the US is expected to be a “boom destination” for 2009.
“It might be the ‘Obama effect’, but there are also other reasons including a backlog of people wanting to visit the US,” says the company’s manager for corporate communications and media, Prisca Huguenin-dit-Lenoir.

“By that I mean, that after 9/11 and the ‘Bush years’ [when travel to the US declined], tourists feel the need to visit the US again.”

She says that more clients are booking US trips than they were five years ago.

Tourism Australia’s distribution manager GCC, Andrew Oldfield, claims that although Australians never stopped travelling to the US during the Bush years, he thought they were more likely to travel there now.

“That’s not just because of Obama, but because there will be two additional airlines taking to the skies — Delta and [Virgin Atlantic’s] V Australia — on the Pacific route (Australia to the US) in 2009,” he says. In addition, Australian flag carrier Qantas now operates its A380 on its Sydney to LA service.

Back in the US and at a local level, tourism players believe the ‘Obama Effect’ will benefit their state.

Greater Houston Convention and Visitors Bureau vice president of tourism Jorge Franz says: “Obviously with the change we’ve seen recently in the White House we expect that to stimulate tourism and trade for us with a wave of optimism encouraging more travellers to think positively about visiting the States.”

Echoing Franz’s sentiments, Royal Caribbean International senior vice president international Michael Bayley adds: “From my own perspective, during my travels I have sensed a definite optimism about Obama and America, even though we are in the worst global recession for a long time. I think we are entering into a new era with Obama and like most optimists I can only believe its going to be good for travel and leisure”.

The Obama effect
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