The Tourism Industry and Economic Issues Affecting It

Publication Date: July 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Business

Type:

Abstract:

The measure of a country's international tourism receipts, also referred to as travel services exports, is the total amount of spending by visitors to that country. The United States is, by far, the world's leader in tourism receipts, accounting for approximately 16% of the world's total. The measure of a country's international tourism expenditures, also referred to as travel service imports, is the amount of spending by its visitors in foreign countries. The United States also leads the world in tourism expenditures. Travel services are a significant export in the U.S. economy, accounting for 32% of all private services exports.

The September 11 attacks, the downturn in the U.S. economy, the U.S. war with Iraq, and the outbreak of the SARS virus have affected sales and profitability of a number of industries, but travel and tourism are among the most affected industries. The airline industry has been struggling since the events of September 11, with nine of the ten largest U.S. carriers experiencing heavy losses over the past two years. The hotel industry is reporting its lowest occupancy rate in more than a decade. Travel agencies have been facing difficulties since the mid-1990s, primarily due to the increase in competition from online travel sites, but also from the factors mentioned above.

After September 11, 2001, the number of global travelers decreased for the first time since the 1980s. As a result, U.S. tourism receipts decreased by nearly 12% in 2001, and U.S. expenditures abroad decreased by 7%. Employment levels in the United States have fallen by a higher percentage in travel and tourism related industries than in most other major industries. Since the end of 2000, employment in travel-related industries declined by nearly 390,000 jobs, representing over 25% of the nation's non-farm job losses in that time period.

Some analysts believe that travel-related industries will recover from these events, as they have from past events, such as the 1991 Gulf War. Others believe that the combination of factors have been very damaging to the industry for the long term. They believe that recovery could be considerably slower than it has in the past, and that recovery may be more challenging for travel-related industries than for the economy as a whole. The travel industry, for example, has voiced concerns that impending regulations on visa requirements for visitors entering the United States are being implemented too quickly and could discourage international travel to the United States.

In the 108th Congress, two measures have been passed and several bills introduced to provide assistance to the airline industry and to help promote travel and tourism. The FY2003 omnibus appropriations act (P.L. 108-7, H.J.Res. 2) includes a one-time appropriation of $50 million for an international marketing campaign to encourage individuals to travel to the United States. The Emergency Wartime Supplemental Appropriations Act, 2003 (P.L. 108-011) includes a provision for $2.9 billion in assistance to the airline industry. H.R. 2002 would establish a pilot program for the promotion of travel and tourism in the United States. This report will not be updated.