Tariffs Might Not Be the Biggest Headwind for Tourism

Yariv C. Ben-Ari, co-chair of Herrick's Real Estate Hospitality practice, spoke with GlobeSt. about different factors influencing the outlook of the hospitality industry, both nationally and in New York.

The article noted that despite a forecast from Bloomberg Intelligence stating that "$20 billion in national retail spending could be at risk due to a slowdown in foreign tourism," the hospitality industry has remained strong.

Since the pandemic, hotel prices have increased by almost 10 percent. Yariv said he has been seeing resilience from New York, which is a key market he focuses on. "I think people are seeing New York in particular as a very exciting and opportunistic place," he said.

"I'm seeing a lot more people looking back here to the place they would like to travel to, visit, see and potentially capture that American dream. You have three major airports. They're all within half an hour of getting to the city. It is one of the easiest places to get to if you want to come here."

"If the dollar is weakening, then travel to the US, and the cost of spending money in the US is reduced for international travel, so people are more inclined to come here and spend their money here, because they're getting more of a bang for their buck," he explained. So, he's not as concerned with tariffs in that regard.

However, there are a couple of other caveats. For one, don't lose sight of the impact of domestic traveling. The tariffs will likely come into play there and make things more expensive for Americans when vacationing in the country, according to Yariv. 

But one of the biggest concerns for hospitality is the Trump administration's crackdown on immigration and the border. That has a two-fold impact.

The first one is limiting international travelers. Recently, the Trump administration announced a full travel ban on 12 countries, with another seven getting partial restrictions.

"The tightening up of the borders and the rules about immigration and so forth have created some challenge [for] people who want to come here for either business or tourism, because they can't obtain visas generally, or in a timely manner," Yariv said. "Certainly, for hotels outside of New York City and other businesses that are in rural areas, that may be a bigger concern for a longer period, until the system figures out how to get them the labor they need," Yariv explained.

The industry will have to see what the near term holds. But as of now, Yariv generally describes the transactional side of hospitality as "lucrative."

Overall, Yariv expects to see "a bigger influx" of international travelers. We'll just have to see how much the immigration crackdown weighs on it and how domestic spending will impact tourism going forward.

Read the full article in GlobeSt. here. Access may require a subscription.