For decades, the U.S. has been able to sell itself almost effortlessly to international travelers hoping to indulge in different varieties of Americana—the views of New York’s skyline or the pleasures promised by the Las Vegas Strip proving a bright green light to visitors from all over the globe.
But in 2025, this appeal appears to have dimmed, with American hotels and the wider tourism industry finding themselves at an inflection point amid a notable drop in inbound travel, and economic uncertainties at home sapping the appetite of domestic vacationers.
“For a country that offers a vast and exciting array of tourism experiences, and a world-class hospitality industry that is very welcoming to domestic and international travelers, it is a pity that tourism is getting hit, perhaps serving as the proverbial canary in the coal mine foretelling tougher times ahead,” said tourism professor and hospitality expert Chekitan Dev
“If we do not turn things around to support the livelihood of millions of workers, and protect the trillions of dollars invested in millions of hospitality businesses, we run the risk of forcing many small and medium business owners to shut down.”
Cracks Emerge in Vacation Hotspots
The cracks have already emerged for some America’s marquee vacation markets. Orlando has seen an 8 percent decline in international visitors so far this year, according to market research firm Capital Analytics Associates, threatening the fortunes of the Disney and Universal resorts located there.
Total occupancy in Vegas, meanwhile, tumbled to 76.1 percent in July from 83.7 percent a year ago, according to the Las Vegas Convention and Visitors Authority. Combined with a 3.4 percent year-over-year decline in average daily rates, this has translated to a 12.1 percent drop in revenue per available room (RevPAR).
Hotels themselves are also spooked. Last month, Marriott International, the largest chain in the U.S. and the world, trimmed its full-year RevPAR guidance, with executives pointing to “ongoing economic uncertainty” in a subsequent earnings call. Research firms CoStar and Tourism Economics have similarly downgraded U.S. hotel growth forecasts for both the remainder of 2025 and 2026, confirming earlier warnings that this year would prove rocky.
Much of this has been attributed to the dwindling inbound travel to the U.S.
An Attitude Problem
Travel from Canada, once one of the most reliable markets for visitors, has plummeted this year, with Statistics Canada reporting a 36.9 percent and 25.8 percent drop in air and automobile return trips from the U.S. in July, respectively. In May, the World Travel & Tourism Council (WTTC) projected that the U.S. would be the only country among 184 tracked economies to see a decline in international visitor spending in 2025.
“Just as friendly people attract more admirers, friendly places attract more tourists,” Dev told Newsweek, noting that the prospect of a vacation to the U.S. had been “tarnished by our attitude towards other countries in matters of trade and diplomacy, as well as the many instances of heavy-handed interdiction by border authorities.”
As well as the economic and geopolitical rifts between the U.S. and its neighbors, hassles faced by those at the border have prompted numerous countries to issue travel advisories, warning their citizens to prepare for delays or even detentions if their paperwork is anything below perfect.
Regardless of the cause, the economic blow for hotels is expected to be severe. Analysts Tourism Economics projects a loss of $8.3 billion for the industry in 2025, WTTC places it at $12.5 billion and Forbes, factoring in adjustments to earlier rosy forecasts, warns the shortfall could be up to $29 billion this year.
These contemporary shifts in travel habits promise to exacerbate longer-term headaches for the hotel sector, such as chronic staff shortages and labor costs that have outstripped revenue growth.
Eva Stewart, global managing partner at tourism intelligence firm GSIQ, told Newsweek that hotels are scrambling to fill positions, forcing them “to raise wages or limit service,” but that even doing so cannot fix the problem of “major visa bottlenecks and a tight labor market.”
Restricted Flow
This labor crunch has been compounded by ballooning visa backlogs, and other restrictions on the inflow of foreign-born workers. Despite promises of a “common sense” reprieve for the farming and hotel industries, some believe President Donald Trump‘s immigration agenda could put particular strain on hospitality.
“We have clear evidence that mass deportations will be generally disruptive to the economy and to the U.S. labor market—and specifically hospitality will be hard hit,” Michael Clemens, a senior fellow at the Peterson Institute for International Economics, told the Los Angeles Times in June.
“The tariffs, staffing shortage, perception of it being difficult to emigrate to the USA, and any possible anti-USA sentiment all go into the ‘ingredients of the soup’ as I call it,” Peter Ricci, Director of Florida Atlantic University’s Hospitality and Tourism program, told Newsweek.
Ricci also noted the waning emphasis placed on courting foreign visitors. The budget reconciliation bill signed by Trump in early July cut 80 percent of the federal funding for Brand USA.
Created by Congress in 2010 through the Travel Promotion Act, Brand USA serves to promote the U.S. as a premier holiday destination, encouraging foreign visitors to spend money at American hotels and attractions. The funding cuts have led the agency to lay off 15 percent of its staff, according to a report from travel news site Skift.
“A reduction in spending on tourism promotion and a simultaneous cut in workforce to Brand USA, which is the national destination marketing organization (DMO) for the United States, is troublesome at best,” Ricci said. “We’re cutting at a time when we already need an increase in visitation.”
Domestic Downturn Adding to Worries
But a decline in international visitors may be less concerning for hotels than changes in internal U.S. travel, which accounted for nearly 90 percent of all tourism revenue in 2024 according to WTTC.
Amid growing macroeconomic uncertainties, fears over a potential recession and notable declines in measures of consumer confidence, Americans appear to be holding off on—or at least altering—their vacation plans.
“American consumers are still traveling in 2025, but they are traveling differently,” said Stewart of GSIQ, telling Newsweek that the firm’s research had revealed “a shift towards shorter breaks, sharper value-hunting, and alternative stays,” as well as growth in less revenue-generating “micro-cations.”
“Domestically, economic uncertainty is putting the brakes on travelers’ enthusiasm for spending on travel,” said Dev. “Leisure travel, typically a discretionary purchase, is one of the first expenses to be curtailed in times of economic uncertainty.”
The country’s iconic attractions will continue to appeal to foreign and domestic visitors, and next year’s FIFA World Cup promises an additional boost for U.S. tourism.
However, with international visitors hesitant and domestic vacationers tightening their belts, Dev believes the “clouds” that have formed over American tourism, and the resultant pressures on the hotel industry, are “expected to linger for the foreseeable future.”
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