April 15, 2025 • 23 mins
Fear, money, and restrictions are a combustible mixture in any business sector, but in travel it can be a death knell for some businesses. The tariff situation is changing daily, and while the emphasis has been on physical goods, there is a growing shadow on tourism. Aran Ryan, Director of Industry Studies at Tourism Economics, an Oxford Economics Company, talks about how trade wars negatively affect US travel, how tourism is already taking a hit, and what we can do to ride this out.
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Episode Transcript
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Speaker 1 (00:07):
Hi everybody.
It's no Show.
I'm Matt Brown, joined asalways by Jeff Borman.
Our guest today, aaron Ryan.
He knows so much about tourismthat he can probably tell you
where you're going to go next onvacation before you even know.
Aaron is the Director ofIndustry Studies at Tourism
Economics, an Oxford economicscompany, and has over 25 years
(00:27):
of consulting experience relatedto lodging, casino gaming,
short-term vacation rentals,visitor activity and destination
development.
He assists everybody in hotels,owners, operators, and he helps
them to understand the impactof tourism industry trends.
He's an analytics geek, he's afather, he's a lover of the
outdoors, a cyclist.
(00:48):
He is the go-to conferencespeaker on tourism trends.
He's a Philly fanatic.
Aaron Ryan, welcome to no Show.
Good afternoon.
Like we were joking earlierbecause you live in Philadelphia
, he said what if it would be?
What if you really were thePhilly fanatic as your side job?
And it's be what if you reallywere the Philly fanatic as your
side job?
And it's like guys, I got toleave in 30 minutes.
Speaker 2 (01:07):
We've got Cardinals tonight.
I got to do photo ops, I got tomake it?
Speaker 1 (01:10):
That would be, yeah, that would be great.
That would add or already add alot onto your very, very busy
schedule.
Speaker 3 (01:16):
Instead of talking baseball.
That's way too much fun.
Let's talk about tariffs.
Yes, yes, yes.
Let's talk about torching theeconomy.
Can we do that for a while?
Speaker 1 (01:24):
Speaking of your day job.
It's been in the news a lotrecently.
Tariff situation in America andoutside of America is changing
daily, and while the emphasishas been on physical goods,
(01:46):
there is a palpable shadow ontourism, not just from tariffs,
but from a lot of factors thatare going on right now with
America and its place in theworld.
Tourism economics has beencited in many articles over the
last couple of weeks.
A report that recently came outby tourism economics expected a
9.4% decline in internationalvisitor arrivals for 2025.
International visitor spendingin the US is set to decline by
5%.
That is a loss of $9 billion inspending, $6.4 billion of
(02:09):
decreased spending indestinations, plus $2.5 billion
of lost transportation spending.
Every day there are updates tothis.
I don't know how you keep upwith it, Aaron.
Can you take us down the roadsof what is negatively affecting
tourism in America?
Speaker 2 (02:27):
So I think our our views on this have had to evolve
as sort of some of the news hascome forward and so, yeah,
we're thinking about it, framingit as those channels, because
it's useful for people tounderstand the types of effects
that we think are going to beslowing that international
inbound travel that we think aregoing to be slowing that
international inbound travel.
So, if I summarize it briefly,we're looking at negative
(02:47):
sentiment effects, which isbasically Canadians and others
are angry at us now.
Immigration and borderuncertainty.
It can be scary to crossborders and stories of
detainments don't help.
Third, we have a situation witha very strong US dollar, so the
US is about 20% more expensivethan normal.
(03:08):
So that's another headwind thatwe're seeing.
And then two more we'reanticipating weaker economies in
Canada and Mexico, as thesetariffs particularly impact our
neighbors.
And now we're taking it homehere and looking at
uncertainties around thedomestic economy and concerns
about how the domestic travelermay pull back.
Speaker 3 (03:27):
You know it may not be directly related to travel,
but the sentiment I thought thathas captured the market, the
global market, so well was whenFrance asked for the Statue of
Liberty back and we said you cantake it.
Is there a more illustrativeway you could describe the
feeling outside of America?
Looking in right now, youroutfit put together a number
(03:51):
that I really grabbed onto thatthe US is expected to lose one
and a half percentage points ofglobal market share by 26.
And that is a massive number ontop of an existing trade
deficit right the tourism tradedeficit.
Massive number on top of anexisting trade deficit right the
tourism trade deficit.
Does that continue from?
Speaker 2 (04:11):
2026, or is it just too early to say right now,
since you're measuring sentiment, I think we're viewing it as a
reset downward, but that, yeah,it probably dissipates over time
.
I'm not sure when it's going tobe the stiffest headwind, but
yeah, eventually that eases.
Speaker 3 (04:24):
When you do this research, who do you survey to
get this kind of insight?
How's that done?
Speaker 2 (04:29):
Yeah.
So some of it early on has beentalking to people in the
industry and hearing about whatthey're hearing, so groups that
are canceling for this winter,some of those sort of leading
indicators, and then it'squickly become some actual hard
data coming in.
So for today we just receivedthe preliminary March
international inbound numbers.
(04:51):
So it's really exciting anddisappointing to see.
So.
Total overseas was down 11.6%in March relative to a prior
year.
Western Europe down 17%,central America 23% down,
caribbean 26% down.
I mean those are major shiftshere in just a short period of
time.
Speaker 3 (05:12):
I heard Accor quote they're seeing 25% down from
Europe into the US right now.
I mean it's staggering.
Are you seeing or hearing anindustry voice that is revolting
against this movement, againstthis trend?
Speaker 2 (05:27):
It's yeah, it's a mosaic of responses, right, I
think, as people.
Speaker 1 (05:32):
That's a poetic way of putting this.
Speaker 2 (05:35):
There's somebody leading the charge in the whole
effort that I don't know that isinterested in hearing those
voices Well, said when did itdawn on you and your research
team that this was not going tobe a blip?
Speaker 1 (05:49):
I mean, I can't imagine what your information
processing structure has beenlike and I was also kind of
thinking we were talking aboutbefore this interview.
You know, I think this is apitfall of every forecaster and
economist in the world, but youdid this bulk of research last
year that was talking about 2025.
And then in the span of a fewdays, I feel like it's almost
(06:12):
all gone.
When moments like this comealong after a year or longer of
hard work and research, do youembrace the zen of it all?
Do you kick over trash cans?
Do you have like a whole teamof people working 24 hours?
What do you do when models blow?
Speaker 2 (06:30):
up.
Well, I think the story hasshifted and you kind of got to
be on the story.
So when the story shifts, youstay with it, and so that's been
the piece here.
Originally, in December, we putout a note after the election
saying this is what we saw inthe first Trump administration
and we expect some headwinds totravel.
We expect some of thesesentiment effects, but at that
(06:51):
point in time we didn't expectit would go this far.
So since that point we've beencontinually updating that view
and trying to stay on top ofwhat that latest expectation is.
Speaker 3 (07:11):
Last summer, when you were on the hotel data circuit
giving updates andprognostications, you had a
slide that I remember very well,going through a Biden-Harris
victory and then the header wasfull-blown Trump.
Does this exceed all of yourprognostications and all the
modeling for full-blown Trump?
Speaker 2 (07:28):
Yeah, it's been off the charts and that's for us as
well.
So we rely on our broaderOxford economics views on the
economic outlook.
And so they had done some ofthose scenarios or pre-election,
and said here's what we thinktariff rates could be under a
full, full blown Trump scenario.
(07:49):
And now they've done updatedslides that just show you know,
are we higher than sort of thehighest tariff scenario that
they had published.
Speaker 3 (07:59):
We keep hearing and reading that economists all
agree that tariffs are a badidea, but very few of us
actually hang out witheconomists.
You do.
Do you know any economist thatthinks that this trade war is
smart, and particularly fortravel?
Anybody, anybody.
Come back.
You don't even have to saytheir name.
Actually, please say their name.
(08:19):
They're our next guest.
Speaker 2 (08:22):
No, I have not seen folks underscoring this, saying
this is the banner year coming,okay good, well, I can keep
saying I don't know a singleeconomist.
Speaker 1 (08:30):
Thank you, We've been wondering what, just on the
street level, hotels andtourism-related businesses are
going to do.
How are they going to ride thisout?
Have you seen any data thattalks to how all this is going
to affect building a hotel or anairport or any kind of
tourism-related business forthat matter?
I mean, when you start talkingabout steel, tv monitors,
(08:51):
furniture, transportation, it'slike I wonder what the slowdown
is going to be on the on the onthe stuff side, on the product
side.
Speaker 2 (09:00):
Yeah, I think on the on the first thing about
pivoting, um, it does maybe goback to that individual traveler
a little bit.
I mean, you've seen some of thedestinations try to position
themselves in the minds of, say,Canadian visitors as being you
know, it might have been PalmSprings with some banners up
saying this is Palm Springs,identify with us as the
destination rather than the USas the country, in a sense
(09:26):
operators.
The same thing that if somebodyhas come to your property
before and you remind them ofthat relationship and the trust
they had and how they weretreated when they were there,
that's really powerful stuff andI think that travelers remember
that and can latch on to thatand make a decision in this
chaos.
Speaker 1 (09:43):
I think it was stunning for us to see the
numbers associated with canadiantourism.
I think we kind of takecanadian tourism for granted and
the billions of dollars it putsin this economy.
This came up.
We kind of foreshadowed this.
About a year ago, jeff and Idid spring training and went to
Blue Jays game.
All these snowbirds who camedown from Canada, it's like, oh
wow, this must just begenerating a lot for wherever
(10:06):
we're done eating or wherever wewere, it's like, oh right, this
is happening all over in waysthat we don't realize.
Quick trips to New York City,to Seattle, to the American
Southwest ways for Canadians tokind of get sun, and I had not
realized how big of an impactthat they actually had.
Speaker 3 (10:24):
I saw numbers from Booking and Expedia that into
Seattle Canadians are down 50%roughly.
One was like 45, 155, somethinglike that.
But it's a massive market onthe border right.
And specifically to baseball,though, the Toronto Blue Jays
are the biggest demand draw forthe Seattle Mariners.
(10:44):
People from Canada come to seethe Blue Jays play Down 32% for
Blue Jays weekend.
How long will the hotelcommunity, the travel industry,
the hospitality industry it goeswider and wider and wider Put
up with this?
Eventually it's going to comeand maybe Aaron this is the
question Eventually it's goingto come to.
(11:05):
These are real jobs on the line.
I think we can measure thedollars a bit easier.
Speaker 2 (11:08):
We watch market caps just blowing up, we watch
investment drying up, buteventually this has got to hit
jobs, right, yeah, I mean, ifthis is the approach to fixing
the trade deficit, it's notgoing in the right direction.
Speaker 3 (11:22):
In tourism, we're fixing Canada's trade deficit.
Speaker 1 (11:26):
Aaron, is there anywhere in America that's
exempt from this?
Is Vegas tariff-proof?
I know you've done a lot onkind of casino gaming.
Do the Vegas and Orlando's, dothey get a little bit of
insulation from some of thisstuff, you think?
Speaker 2 (11:40):
I think some of that repeat traveler, you know, if
they know the location, maybethey come back to it.
Maybe there's a bit of that forsome people in Vegas.
I mean, the thing that concernsme is that it's yeah, broad
strokes.
International travelers areaffected, and then domestically,
if folks are spending thatdiscretionary money that was
previously available for travel,if that's now getting spent to
(12:02):
pay tariffs and higher costs foritems, I think it's going to
affect a lot of places.
Speaker 3 (12:08):
Are there countries that are benefiting from the
decline of inbound US travel asstaying at home in Canada or
staying at home in Europe?
Are you seeing any trend thatwe are actually helping other
tourist destinations?
Speaker 2 (12:21):
It's hard to see the data yet, but I think that is
the view that it likely helpsmaybe Western Europe to agree.
For example, I think Canada isa little bit dependent on these
follow-on trips that somebody'svisiting both the US and Canada,
and so if those fall back, thenit also hurts Canada.
Is there a silver lining tothis?
I don't know if I'll call it asilver lining, but I think it is
(12:42):
a little bit along the lines ofwhat you're asking.
And you may have seen me use aslide before that looked at
durable goods purchases overtime and said, as we came out of
the pandemic, right, there wasdurable good purchases soared
and spending on recreation andbroader services was taking
longer to recover.
And I kept looking at that slide, you know, quarter after
(13:04):
quarter, and you're saying, likeyou know, this has got to shift
right.
This I mean we have enoughpatio furniture and these other
items, this clutter that we'vebuilt up.
We got to switch back to thoseexperiences that we all loved,
and we did.
It just didn't shift thenumbers as much as I thought it
would.
But you know, the things thatare getting tariffed right now
(13:25):
are goods.
So some of that patio furnitureyou know is sort of insanely
cheap, like right.
It doesn't seem to catch theexternalities of what do we do
with that garbage when it's done?
You know where?
Where are those resourcescoming from?
So I think it's, you know, nota terribly bad thing that some
of that stuff costs a bit more,and maybe some people direct
(13:48):
their spending to you know someof those yoga classes or go to
see a local live band orsomething.
That money's, you know stayinglocal and going directly into
people's pocketbooks.
Speaker 1 (14:00):
Do you think there's a possibility that people will
stay closer to home and thatlocal tourism economies will get
like a little bit of a boostfrom this Maybe?
Speaker 2 (14:08):
Yeah, and I think, yeah, I think some people will
stay close to the home.
As you get a little bituncertain about things, you, you
revert to that planned trip orthat local, regional trip.
Um, and we should keep in mindthat, even if, even if we're
talking about, say, out of ahundred guests that typically
showed up on a on a givenweekend night, that you know
we're talking about a dip thatsay 96 or 98 of them still come,
(14:29):
and that's the sort of impactthat you know we're talking
about a dip that say 96 or 98 ofthem still come, and that's the
sort of impact that you knowcan freak out hoteliers, but
most people are still traveling,so it's not all going away.
Speaker 3 (14:41):
You know, I did see, and I apologize I don't have the
number handy, but the nationalrestaurant association put out,
I think, their Q1 report,something like this, that showed
dining in restaurants inAmerica down 5% year to date,
something to that effect and acorollary metric the opposite
direction of cooking at home.
It may have been a survey, butwe're seeing or at least I've
(15:05):
been reading that there is ashift of less dining out, more
self-service at home right now,and food price being supposedly
the real driver of that.
I saw an article written it wasan op-ed by a gentleman named
Martin Ferguson.
I've never heard of him before.
I read this just yesterday andit was kind of a silver lining
approach to this.
(15:25):
He said, on the face of thismeaning trade war, it's about
steel, semiconductors and solarpanels, but really, if you pivot
away from how this is going toaffect travel, it's going to
regionalize.
Globalization is not finished,it's not over with, but it will
more regionalize economies Withthat, though, because it will
(15:48):
become more difficult tointeract in a cross-border
manner with service.
Who knows local regulations,which are probably going to get
(16:14):
more disparate from place toplace to place, more difficult,
more challenging.
That it could put more emphasison the need for business travel
in the long run.
I love the optimism.
How does that resonate with you?
Speaker 2 (16:27):
I don't know.
I'm pretty optimistic too and Ilove scraping for the positive
in things.
I don't know that that one'sjiving with me.
Speaker 1 (16:36):
Yeah, I wonder where the rubber really hits the road
is when we start getting awayfrom physical products, and I'm
thinking about the impact onhotels, even for this or any
kind of tourism.
Once you start getting awayfrom physical imports, like the
steel and the semiconductors,and you start moving into tech
products, sas products, it'slike OK, now we're going to have
tariffs.
And like what if Europe comesback and says OK, here's 25
(16:59):
percent tariff on Salesforce, onNetflix, on MailChimp, you know
, let's go down the list of allthe things that are exports from
the US, but then also thingsthat I think are part of the
travel experience and the salesexperience for travel companies
in the US.
You know they're used every day, every minute.
I wonder how far this tariffsituation is going to go when it
(17:22):
comes to what is a product andwhat's not.
Speaker 3 (17:25):
You know, matt, I mean Europe has notoriously been
going after our tech industrywith fines, going after Google,
you know, billion dollar finesfor antitrust issues, apple for
tax issues in the tax haven inIreland, right, and the EU is
trying to suck some cash out ofthat, right.
So I think our tech industry,which is frankly without rival
(17:47):
globally, has been a target andI think again, just opinion the
tariffs that we're seeing onmanufactured goods are probably
retaliatory, even to yourquestion.
Right, you're attacking ourindustry, we're going to attack
your industry in some way.
I'm not at all trying tojustify the action, but I think
(18:08):
what you're saying, matt, isalready kind of playing out
right now, just in a little bitof reverse.
Not will they come afterservice industries?
It's they already have, and sonow we're going after the stuff
they make too.
One thing that really stands outto me I'd still love to hear
Aaron's take on here is lastweek's bloodbath was historic in
the marketplace S&P 10% plungeon a two-day cycle a Thursday
(18:35):
and a Friday to lose 10%, $11trillion since the Trump slump
began on Inauguration Day $11trillion.
Can you help us put intoperspective how the immensity of
an $11 trillion stock marketequities wipeout.
Doge is only going to claw backa few billion 20, 30, 40
(19:01):
billion, max 100 billion.
Right, we're still so far froman $11 trillion stock market
wipeout.
How does this come together?
Can you make sense of it for me?
Speaker 2 (19:13):
Yeah.
So there's one piece is howdoes the equity decline impact
household wealth and householdspending?
I think this episode is alittle bit different Sort of.
The focus is like we've seenthese stock market declines and
it's almost a message of howbusiness leaders are starting to
view the situation.
And some of that is even morethreatening than the sort of the
(19:36):
loss of numbers on a screen orin a retirement account that are
a little bit more abstract.
I mean, the stock market wasdoing pretty well, right?
So some of this is almost housemoney, right, yeah?
And so in and of itself,economists might say, look, the
economy can take that sort ofbump in the road, but if it's at
(19:57):
the same time, if it'shappening because everybody's
become a lot less certain aboutthe environment, then that's the
piece that gets me is moreconcerning.
Speaker 3 (20:04):
I see two things to that that bother me, and I don't
mean your answer by any means.
It's yes, the economy couldhave very well been overheating
At the same time, there was noreason to set fire to it, right?
If it was going to lose acouple of points, it didn't need
to lose 10 points in two days,right, we didn't have to do that
.
The other part that I findreally difficult is the treasury
(20:30):
secretary said I see no reasonthat we have to price in a
recession to all of this talk.
And I said well, but it'shappening.
That's the reason why you haveto.
It's already underway.
Radio silence, except for thedog.
Speaker 1 (20:47):
It's time for the lightning round.
A palate cleanser here afterall this tariff talk.
What's the best under-the-radarrestaurant in Philadelphia?
Speaker 2 (20:57):
If I get a choice, that's not a restaurant.
I'd say underrated lunch is tograb a sandwich and eat it in
Rittenhouse Square sitting onthe wall.
That's the best sandwich in mymind.
Speaker 3 (21:08):
Would it be a DeNicks sandwich, because then I'll
join you my mind Would it be aDanik sandwich Cause?
Speaker 2 (21:13):
then I'll join you.
Yeah, that's a little bit of awalk to do that.
You'd probably have to breakinto the sandwich before you got
there.
Speaker 1 (21:17):
As I mentioned earlier, you've done uh, you've
done a lot of work and a lot ofresearch on casino hotels.
What is the casino game you'vebeen luckiest at?
Speaker 2 (21:27):
I've probably lost money.
The slowest of craps.
Speaker 1 (21:34):
I hear you, I hear you and I see you.
Aaron, is it?
Speaker 3 (21:38):
impossible for people who are statistically minded to
enjoy gaming in a casino?
I think so.
Yeah, okay, wow, you can turnit off.
Speaker 1 (21:48):
So yeah, okay, wow.
Speaker 2 (21:52):
You can turn it off, you can leave the office and go
straight to a casino and thenactually enjoy doing what you
know is bad for you.
Yeah, I mean, it is primarily awork endeavor.
This is less about personalrecreation, but sure, of course.
Now I had somebody read my biolately and they said experience
and they named several sectorsand then casino gaming, and then
(22:19):
they sort of chuckled becausethey pictured that as being like
yeah, I just thrown in personalhobby there too.
Speaker 1 (22:21):
What is your favorite hotel amenity?
Speaker 2 (22:22):
I don't know, what am I happiest about when I see it.
Sure Gosh, I don't know, notgreat at these kinds of
questions.
No, I get it.
I get it.
I'll think of three answershere in two minutes, I know.
Speaker 1 (22:36):
Totally.
I thought you were just goingto be easy, like pool.
I was hoping for somethingreally obscure, the pool Like oh
right, there's a certain kindof coffee that's downstairs.
I'm going to really see that Iget it.
Speaker 3 (22:51):
I really love it when they give me two keys and I'm
only one person.
I just, I just love that, aaron.
Speaker 1 (22:57):
Ryan, thank you for being a guest.
Thank you for laying some truthdown in an era that needs truth
.
Speaker 2 (23:06):
Great.
Thank you, John.
Hi everybody.
It's no Show.
I'm Matt Brown, joined asalways by Jeff Borman.
Our guest today, aaron Ryan.
He knows so much about tourismthat he can probably tell you
where you're going to go next onvacation before you even know.
Aaron is the Director ofIndustry Studies at Tourism
Economics, an Oxford economicscompany, and has over 25 years
(00:27):
of consulting experience relatedto lodging, casino gaming,
short-term vacation rentals,visitor activity and destination
development.
He assists everybody in hotels,owners, operators, and he helps
them to understand the impactof tourism industry trends.
He's an analytics geek, he's afather, he's a lover of the
outdoors, a cyclist.
(00:48):
He is the go-to conferencespeaker on tourism trends.
He's a Philly fanatic.
Aaron Ryan, welcome to no Show.
Good afternoon.
Like we were joking earlierbecause you live in Philadelphia
, he said what if it would be?
What if you really were thePhilly fanatic as your side job?
And it's be what if you reallywere the Philly fanatic as your
side job?
And it's like guys, I got toleave in 30 minutes.
Speaker 2 (01:07):
We've got Cardinals tonight.
I got to do photo ops, I got tomake it?
Speaker 1 (01:10):
That would be, yeah, that would be great.
That would add or already add alot onto your very, very busy
schedule.
Speaker 3 (01:16):
Instead of talking baseball.
That's way too much fun.
Let's talk about tariffs.
Yes, yes, yes.
Let's talk about torching theeconomy.
Can we do that for a while?
Speaker 1 (01:24):
Speaking of your day job.
It's been in the news a lotrecently.
Tariff situation in America andoutside of America is changing
daily, and while the emphasishas been on physical goods,
(01:46):
there is a palpable shadow ontourism, not just from tariffs,
but from a lot of factors thatare going on right now with
America and its place in theworld.
Tourism economics has beencited in many articles over the
last couple of weeks.
A report that recently came outby tourism economics expected a
9.4% decline in internationalvisitor arrivals for 2025.
International visitor spendingin the US is set to decline by
5%.
That is a loss of $9 billion inspending, $6.4 billion of
(02:09):
decreased spending indestinations, plus $2.5 billion
of lost transportation spending.
Every day there are updates tothis.
I don't know how you keep upwith it, Aaron.
Can you take us down the roadsof what is negatively affecting
tourism in America?
Speaker 2 (02:27):
So I think our our views on this have had to evolve
as sort of some of the news hascome forward and so, yeah,
we're thinking about it, framingit as those channels, because
it's useful for people tounderstand the types of effects
that we think are going to beslowing that international
inbound travel that we think aregoing to be slowing that
international inbound travel.
So, if I summarize it briefly,we're looking at negative
(02:47):
sentiment effects, which isbasically Canadians and others
are angry at us now.
Immigration and borderuncertainty.
It can be scary to crossborders and stories of
detainments don't help.
Third, we have a situation witha very strong US dollar, so the
US is about 20% more expensivethan normal.
(03:08):
So that's another headwind thatwe're seeing.
And then two more we'reanticipating weaker economies in
Canada and Mexico, as thesetariffs particularly impact our
neighbors.
And now we're taking it homehere and looking at
uncertainties around thedomestic economy and concerns
about how the domestic travelermay pull back.
Speaker 3 (03:27):
You know it may not be directly related to travel,
but the sentiment I thought thathas captured the market, the
global market, so well was whenFrance asked for the Statue of
Liberty back and we said you cantake it.
Is there a more illustrativeway you could describe the
feeling outside of America?
Looking in right now, youroutfit put together a number
(03:51):
that I really grabbed onto thatthe US is expected to lose one
and a half percentage points ofglobal market share by 26.
And that is a massive number ontop of an existing trade
deficit right the tourism tradedeficit.
Massive number on top of anexisting trade deficit right the
tourism trade deficit.
Does that continue from?
Speaker 2 (04:11):
2026, or is it just too early to say right now,
since you're measuring sentiment, I think we're viewing it as a
reset downward, but that, yeah,it probably dissipates over time
.
I'm not sure when it's going tobe the stiffest headwind, but
yeah, eventually that eases.
Speaker 3 (04:24):
When you do this research, who do you survey to
get this kind of insight?
How's that done?
Speaker 2 (04:29):
Yeah.
So some of it early on has beentalking to people in the
industry and hearing about whatthey're hearing, so groups that
are canceling for this winter,some of those sort of leading
indicators, and then it'squickly become some actual hard
data coming in.
So for today we just receivedthe preliminary March
international inbound numbers.
(04:51):
So it's really exciting anddisappointing to see.
So.
Total overseas was down 11.6%in March relative to a prior
year.
Western Europe down 17%,central America 23% down,
caribbean 26% down.
I mean those are major shiftshere in just a short period of
time.
Speaker 3 (05:12):
I heard Accor quote they're seeing 25% down from
Europe into the US right now.
I mean it's staggering.
Are you seeing or hearing anindustry voice that is revolting
against this movement, againstthis trend?
Speaker 2 (05:27):
It's yeah, it's a mosaic of responses, right, I
think, as people.
Speaker 1 (05:32):
That's a poetic way of putting this.
Speaker 2 (05:35):
There's somebody leading the charge in the whole
effort that I don't know that isinterested in hearing those
voices Well, said when did itdawn on you and your research
team that this was not going tobe a blip?
Speaker 1 (05:49):
I mean, I can't imagine what your information
processing structure has beenlike and I was also kind of
thinking we were talking aboutbefore this interview.
You know, I think this is apitfall of every forecaster and
economist in the world, but youdid this bulk of research last
year that was talking about 2025.
And then in the span of a fewdays, I feel like it's almost
(06:12):
all gone.
When moments like this comealong after a year or longer of
hard work and research, do youembrace the zen of it all?
Do you kick over trash cans?
Do you have like a whole teamof people working 24 hours?
What do you do when models blow?
Speaker 2 (06:30):
up.
Well, I think the story hasshifted and you kind of got to
be on the story.
So when the story shifts, youstay with it, and so that's been
the piece here.
Originally, in December, we putout a note after the election
saying this is what we saw inthe first Trump administration
and we expect some headwinds totravel.
We expect some of thesesentiment effects, but at that
(06:51):
point in time we didn't expectit would go this far.
So since that point we've beencontinually updating that view
and trying to stay on top ofwhat that latest expectation is.
Speaker 3 (07:11):
Last summer, when you were on the hotel data circuit
giving updates andprognostications, you had a
slide that I remember very well,going through a Biden-Harris
victory and then the header wasfull-blown Trump.
Does this exceed all of yourprognostications and all the
modeling for full-blown Trump?
Speaker 2 (07:28):
Yeah, it's been off the charts and that's for us as
well.
So we rely on our broaderOxford economics views on the
economic outlook.
And so they had done some ofthose scenarios or pre-election,
and said here's what we thinktariff rates could be under a
full, full blown Trump scenario.
(07:49):
And now they've done updatedslides that just show you know,
are we higher than sort of thehighest tariff scenario that
they had published.
Speaker 3 (07:59):
We keep hearing and reading that economists all
agree that tariffs are a badidea, but very few of us
actually hang out witheconomists.
You do.
Do you know any economist thatthinks that this trade war is
smart, and particularly fortravel?
Anybody, anybody.
Come back.
You don't even have to saytheir name.
Actually, please say their name.
(08:19):
They're our next guest.
Speaker 2 (08:22):
No, I have not seen folks underscoring this, saying
this is the banner year coming,okay good, well, I can keep
saying I don't know a singleeconomist.
Speaker 1 (08:30):
Thank you, We've been wondering what, just on the
street level, hotels andtourism-related businesses are
going to do.
How are they going to ride thisout?
Have you seen any data thattalks to how all this is going
to affect building a hotel or anairport or any kind of
tourism-related business forthat matter?
I mean, when you start talkingabout steel, tv monitors,
(08:51):
furniture, transportation, it'slike I wonder what the slowdown
is going to be on the on the onthe stuff side, on the product
side.
Speaker 2 (09:00):
Yeah, I think on the on the first thing about
pivoting, um, it does maybe goback to that individual traveler
a little bit.
I mean, you've seen some of thedestinations try to position
themselves in the minds of, say,Canadian visitors as being you
know, it might have been PalmSprings with some banners up
saying this is Palm Springs,identify with us as the
destination rather than the USas the country, in a sense
(09:26):
operators.
The same thing that if somebodyhas come to your property
before and you remind them ofthat relationship and the trust
they had and how they weretreated when they were there,
that's really powerful stuff andI think that travelers remember
that and can latch on to thatand make a decision in this
chaos.
Speaker 1 (09:43):
I think it was stunning for us to see the
numbers associated with canadiantourism.
I think we kind of takecanadian tourism for granted and
the billions of dollars it putsin this economy.
This came up.
We kind of foreshadowed this.
About a year ago, jeff and Idid spring training and went to
Blue Jays game.
All these snowbirds who camedown from Canada, it's like, oh
wow, this must just begenerating a lot for wherever
(10:06):
we're done eating or wherever wewere, it's like, oh right, this
is happening all over in waysthat we don't realize.
Quick trips to New York City,to Seattle, to the American
Southwest ways for Canadians tokind of get sun, and I had not
realized how big of an impactthat they actually had.
Speaker 3 (10:24):
I saw numbers from Booking and Expedia that into
Seattle Canadians are down 50%roughly.
One was like 45, 155, somethinglike that.
But it's a massive market onthe border right.
And specifically to baseball,though, the Toronto Blue Jays
are the biggest demand draw forthe Seattle Mariners.
(10:44):
People from Canada come to seethe Blue Jays play Down 32% for
Blue Jays weekend.
How long will the hotelcommunity, the travel industry,
the hospitality industry it goeswider and wider and wider Put
up with this?
Eventually it's going to comeand maybe Aaron this is the
question Eventually it's goingto come to.
(11:05):
These are real jobs on the line.
I think we can measure thedollars a bit easier.
Speaker 2 (11:08):
We watch market caps just blowing up, we watch
investment drying up, buteventually this has got to hit
jobs, right, yeah, I mean, ifthis is the approach to fixing
the trade deficit, it's notgoing in the right direction.
Speaker 3 (11:22):
In tourism, we're fixing Canada's trade deficit.
Speaker 1 (11:26):
Aaron, is there anywhere in America that's
exempt from this?
Is Vegas tariff-proof?
I know you've done a lot onkind of casino gaming.
Do the Vegas and Orlando's, dothey get a little bit of
insulation from some of thisstuff, you think?
Speaker 2 (11:40):
I think some of that repeat traveler, you know, if
they know the location, maybethey come back to it.
Maybe there's a bit of that forsome people in Vegas.
I mean, the thing that concernsme is that it's yeah, broad
strokes.
International travelers areaffected, and then domestically,
if folks are spending thatdiscretionary money that was
previously available for travel,if that's now getting spent to
(12:02):
pay tariffs and higher costs foritems, I think it's going to
affect a lot of places.
Speaker 3 (12:08):
Are there countries that are benefiting from the
decline of inbound US travel asstaying at home in Canada or
staying at home in Europe?
Are you seeing any trend thatwe are actually helping other
tourist destinations?
Speaker 2 (12:21):
It's hard to see the data yet, but I think that is
the view that it likely helpsmaybe Western Europe to agree.
For example, I think Canada isa little bit dependent on these
follow-on trips that somebody'svisiting both the US and Canada,
and so if those fall back, thenit also hurts Canada.
Is there a silver lining tothis?
I don't know if I'll call it asilver lining, but I think it is
(12:42):
a little bit along the lines ofwhat you're asking.
And you may have seen me use aslide before that looked at
durable goods purchases overtime and said, as we came out of
the pandemic, right, there wasdurable good purchases soared
and spending on recreation andbroader services was taking
longer to recover.
And I kept looking at that slide, you know, quarter after
(13:04):
quarter, and you're saying, likeyou know, this has got to shift
right.
This I mean we have enoughpatio furniture and these other
items, this clutter that we'vebuilt up.
We got to switch back to thoseexperiences that we all loved,
and we did.
It just didn't shift thenumbers as much as I thought it
would.
But you know, the things thatare getting tariffed right now
(13:25):
are goods.
So some of that patio furnitureyou know is sort of insanely
cheap, like right.
It doesn't seem to catch theexternalities of what do we do
with that garbage when it's done?
You know where?
Where are those resourcescoming from?
So I think it's, you know, nota terribly bad thing that some
of that stuff costs a bit more,and maybe some people direct
(13:48):
their spending to you know someof those yoga classes or go to
see a local live band orsomething.
That money's, you know stayinglocal and going directly into
people's pocketbooks.
Speaker 1 (14:00):
Do you think there's a possibility that people will
stay closer to home and thatlocal tourism economies will get
like a little bit of a boostfrom this Maybe?
Speaker 2 (14:08):
Yeah, and I think, yeah, I think some people will
stay close to the home.
As you get a little bituncertain about things, you, you
revert to that planned trip orthat local, regional trip.
Um, and we should keep in mindthat, even if, even if we're
talking about, say, out of ahundred guests that typically
showed up on a on a givenweekend night, that you know
we're talking about a dip thatsay 96 or 98 of them still come,
(14:29):
and that's the sort of impactthat you know we're talking
about a dip that say 96 or 98 ofthem still come, and that's the
sort of impact that you knowcan freak out hoteliers, but
most people are still traveling,so it's not all going away.
Speaker 3 (14:41):
You know, I did see, and I apologize I don't have the
number handy, but the nationalrestaurant association put out,
I think, their Q1 report,something like this, that showed
dining in restaurants inAmerica down 5% year to date,
something to that effect and acorollary metric the opposite
direction of cooking at home.
It may have been a survey, butwe're seeing or at least I've
(15:05):
been reading that there is ashift of less dining out, more
self-service at home right now,and food price being supposedly
the real driver of that.
I saw an article written it wasan op-ed by a gentleman named
Martin Ferguson.
I've never heard of him before.
I read this just yesterday andit was kind of a silver lining
approach to this.
(15:25):
He said, on the face of thismeaning trade war, it's about
steel, semiconductors and solarpanels, but really, if you pivot
away from how this is going toaffect travel, it's going to
regionalize.
Globalization is not finished,it's not over with, but it will
more regionalize economies Withthat, though, because it will
(15:48):
become more difficult tointeract in a cross-border
manner with service.
Who knows local regulations,which are probably going to get
(16:14):
more disparate from place toplace to place, more difficult,
more challenging.
That it could put more emphasison the need for business travel
in the long run.
I love the optimism.
How does that resonate with you?
Speaker 2 (16:27):
I don't know.
I'm pretty optimistic too and Ilove scraping for the positive
in things.
I don't know that that one'sjiving with me.
Speaker 1 (16:36):
Yeah, I wonder where the rubber really hits the road
is when we start getting awayfrom physical products, and I'm
thinking about the impact onhotels, even for this or any
kind of tourism.
Once you start getting awayfrom physical imports, like the
steel and the semiconductors,and you start moving into tech
products, sas products, it'slike OK, now we're going to have
tariffs.
And like what if Europe comesback and says OK, here's 25
(16:59):
percent tariff on Salesforce, onNetflix, on MailChimp, you know
, let's go down the list of allthe things that are exports from
the US, but then also thingsthat I think are part of the
travel experience and the salesexperience for travel companies
in the US.
You know they're used every day, every minute.
I wonder how far this tariffsituation is going to go when it
(17:22):
comes to what is a product andwhat's not.
Speaker 3 (17:25):
You know, matt, I mean Europe has notoriously been
going after our tech industrywith fines, going after Google,
you know, billion dollar finesfor antitrust issues, apple for
tax issues in the tax haven inIreland, right, and the EU is
trying to suck some cash out ofthat, right.
So I think our tech industry,which is frankly without rival
(17:47):
globally, has been a target andI think again, just opinion the
tariffs that we're seeing onmanufactured goods are probably
retaliatory, even to yourquestion.
Right, you're attacking ourindustry, we're going to attack
your industry in some way.
I'm not at all trying tojustify the action, but I think
(18:08):
what you're saying, matt, isalready kind of playing out
right now, just in a little bitof reverse.
Not will they come afterservice industries?
It's they already have, and sonow we're going after the stuff
they make too.
One thing that really stands outto me I'd still love to hear
Aaron's take on here is lastweek's bloodbath was historic in
the marketplace S&P 10% plungeon a two-day cycle a Thursday
(18:35):
and a Friday to lose 10%, $11trillion since the Trump slump
began on Inauguration Day $11trillion.
Can you help us put intoperspective how the immensity of
an $11 trillion stock marketequities wipeout.
Doge is only going to claw backa few billion 20, 30, 40
(19:01):
billion, max 100 billion.
Right, we're still so far froman $11 trillion stock market
wipeout.
How does this come together?
Can you make sense of it for me?
Speaker 2 (19:13):
Yeah.
So there's one piece is howdoes the equity decline impact
household wealth and householdspending?
I think this episode is alittle bit different Sort of.
The focus is like we've seenthese stock market declines and
it's almost a message of howbusiness leaders are starting to
view the situation.
And some of that is even morethreatening than the sort of the
(19:36):
loss of numbers on a screen orin a retirement account that are
a little bit more abstract.
I mean, the stock market wasdoing pretty well, right?
So some of this is almost housemoney, right, yeah?
And so in and of itself,economists might say, look, the
economy can take that sort ofbump in the road, but if it's at
(19:57):
the same time, if it'shappening because everybody's
become a lot less certain aboutthe environment, then that's the
piece that gets me is moreconcerning.
Speaker 3 (20:04):
I see two things to that that bother me, and I don't
mean your answer by any means.
It's yes, the economy couldhave very well been overheating
At the same time, there was noreason to set fire to it, right?
If it was going to lose acouple of points, it didn't need
to lose 10 points in two days,right, we didn't have to do that
.
The other part that I findreally difficult is the treasury
(20:30):
secretary said I see no reasonthat we have to price in a
recession to all of this talk.
And I said well, but it'shappening.
That's the reason why you haveto.
It's already underway.
Radio silence, except for thedog.
Speaker 1 (20:47):
It's time for the lightning round.
A palate cleanser here afterall this tariff talk.
What's the best under-the-radarrestaurant in Philadelphia?
Speaker 2 (20:57):
If I get a choice, that's not a restaurant.
I'd say underrated lunch is tograb a sandwich and eat it in
Rittenhouse Square sitting onthe wall.
That's the best sandwich in mymind.
Speaker 3 (21:08):
Would it be a DeNicks sandwich, because then I'll
join you my mind Would it be aDanik sandwich Cause?
Speaker 2 (21:13):
then I'll join you.
Yeah, that's a little bit of awalk to do that.
You'd probably have to breakinto the sandwich before you got
there.
Speaker 1 (21:17):
As I mentioned earlier, you've done uh, you've
done a lot of work and a lot ofresearch on casino hotels.
What is the casino game you'vebeen luckiest at?
Speaker 2 (21:27):
I've probably lost money.
The slowest of craps.
Speaker 1 (21:34):
I hear you, I hear you and I see you.
Aaron, is it?
Speaker 3 (21:38):
impossible for people who are statistically minded to
enjoy gaming in a casino?
I think so.
Yeah, okay, wow, you can turnit off.
Speaker 1 (21:48):
So yeah, okay, wow.
Speaker 2 (21:52):
You can turn it off, you can leave the office and go
straight to a casino and thenactually enjoy doing what you
know is bad for you.
Yeah, I mean, it is primarily awork endeavor.
This is less about personalrecreation, but sure, of course.
Now I had somebody read my biolately and they said experience
and they named several sectorsand then casino gaming, and then
(22:19):
they sort of chuckled becausethey pictured that as being like
yeah, I just thrown in personalhobby there too.
Speaker 1 (22:21):
What is your favorite hotel amenity?
Speaker 2 (22:22):
I don't know, what am I happiest about when I see it.
Sure Gosh, I don't know, notgreat at these kinds of
questions.
No, I get it.
I get it.
I'll think of three answershere in two minutes, I know.
Speaker 1 (22:36):
Totally.
I thought you were just goingto be easy, like pool.
I was hoping for somethingreally obscure, the pool Like oh
right, there's a certain kindof coffee that's downstairs.
I'm going to really see that Iget it.
Speaker 3 (22:51):
I really love it when they give me two keys and I'm
only one person.
I just, I just love that, aaron.
Speaker 1 (22:57):
Ryan, thank you for being a guest.
Thank you for laying some truthdown in an era that needs truth
.
Speaker 2 (23:06):
Great.
Thank you, John.
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