New Data Reveals Dramatic Bottom Line Impact
On Tuesday, the 9th U.S. Circuit Court of Appeals in San Francisco heard arguments from the Department of Justice and opposing attorneys from the states of Washington and Minnesota before they decide the fate of President Trump’s executive order banning travel to the United States from seven Muslim-majority countries.
They can ultimately choose to reinstate the travel ban or uphold the lower court’s ruling on the temporary stay, which would likely result in an appeal to the Supreme Court. However, both scenarios result in a loss for the travel industry and the economy.
Last week GBTA polled both its U.S. and European members to assess the impact of President Trump’s travel ban. In Europe, nearly half of travel professionals reported expectations for their company to reduce business travel over the next three months and 31 percent of U.S. respondents agreed.
Based on the most recent industry data available as of February 8, 2017, the following is the estimated impact:
- USA system-wide business travel transaction levels month-over-month (January 2017 vs. December 2016) decreased by up to 8 percent depending on industry and sector
- USA system-wide business travel transaction levels were increasing by +1.2 percent the week before the travel ban but decreased by -2.2 percent the week after the travel ban for a net negative industry impact of -3.4 percent in one week
- In that week, approximately $185 million in business travel bookings were lost as the uncertainty surrounding travel in general had a rippling effect on traveler confidence
- In 2016, 87.3 percent of USA business travel was domestic travel, 12.7 percent was international travel. This action had a significant disproportionate impact on international travel
- For every 1 percent impact on business travel spending annually, the United States gains or loses 71,000 jobs, nearly $5 billion in GDP, $3 billion in wages and $1.2 billion in tax collections
We say it time and again. Business travel drives lasting business growth and is a leading indicator for jobs and the economy at large. Upholding the travel ban will clearly cause a rippling effect through the travel industry, ultimately hurting the economy. It also unleashes travel disruption like we saw when the order was first implemented. While the White House’s stated goal was acting in the interest of national security, it did not give the civil servants responsible for implementing the ban any chance to do so effectively. There was too much uncertainty and a lack of clarity around the executive order, leading to general confusion. The net effect was that business travel bookings were delayed or canceled.
There is no question that security is of the utmost importance. However, instead of closing our borders, the United States should continue to pursue and focus on expanding security programs like the Visa Waiver Program, which facilitates information-sharing among governments to ensure properly vetted travelers, making us all more safe and secure.
Upholding the lower court’s ruling is also a losing situation for the business travel industry. The initial impact has already been felt and the uncertainty it will create as we await an appeal to the Supreme Court will continue to make its mark. Advanced bookings will likely slow as travel professionals cannot be sure if and when the ban will be reinstated. Meetings and events may be cancelled altogether.
The cloud of uncertainty could leave a lasting economic impact. Large corporations and small businesses alike will suffer. The biggest driver of our economic recovery of the past seven years from the most recent downturn was international outbound travel. U.S. businesses found top line growth and business opportunity from new markets all over the world.
We urge the Trump administration to pause this travel ban action, reassess its path forward with key stakeholders and preserve both our national security AND our economy for the future.