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Decoding the enigmatic ‘slump’ in the travel industry

After evaluating the facts from all possible angles, experts have come up with the final verdict: Trump Slump is a reality. The travel ban is one of the most controversial policy decisions taken by President Donald Trump after assuming office a year ago. The decision invited widespread criticism for its political ramifications and potential impact on the economy, which is estimated to run into several millions of dollars.

Though the focus of the regulation was on imposing restrictions on travelers from Muslim-majority countries, its impact has been widespread. Trump drew the ire of the international community for one of his most unpopular decisions, with many terming the selective travel ban as ‘racist’. Meanwhile, the financial loss caused by the ban in the first week of the announcement is pegged at around $200 million.
While it is yet to be ascertained whether the dip in tourist arrivals is entirely ban-induced, the announcement unfortunately came at a time when the travel industry was going through a tough phase.

Major destinations are witnessing a drop in activity due to dwindling tourist arrivals (Image courtesy: Maz Pixel)

The country has been witnessing a lull in international tourist arrivals for the past couple of years, both in the business and leisure categories. The trend is in contrast to the buoyancy seen in other destinations across the globe, especially in Europe. Adding to the travel woes was the widespread flight disruptions and holiday cancellations that followed the hurricanes. The overall impact is multifaceted, from erosion of revenue to the threat of several people working in the hospitality sector being rendered jobless. The sentiment in the tourism space is so downbeat that efforts are currently on to ease visa norms for certain select countries and to promote the U.S. as an interesting holiday destination.

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As for the primary stakeholders, analysts tracking the latest quarterly financial performance of industry leaders The Priceline Group and Expedia, Inc. predict a repeat of their not-so-impressive third quarter results, which had triggered a downturn in share prices. Reflecting the uncertainty shrouding the sector, both Priceline and Expedia had lowered their financial outlook for the final months of last year.

The aviation firms, meanwhile, remained largely unaffected by the multiple headwinds. American Airlines and Delta Air Lines, Inc. registered better-than-expected earnings numbers in the most recent quarter, by effectively tackling the drag exerted by rising operating costs and fuel prices on their profit. Data released by the aviation giants, whose core business is rooted on domestic operations, indicate they have limited exposure to volatilities in the overseas markets.

The aviation firms, meanwhile, remained largely unaffected by the multiple headwinds. The hotel industry, an integral component of the travel and tourism business, is poised to grow further this year, according to experts.

The quarterly performance of United Continental matched that of its rivals, with earnings numbers exceeding street expectations. The company is all set to expand its aircraft fleet in the next few years, signaling more intense competition and price cuts in the field.

The hotel industry, an integral component of the travel and tourism business, is poised to grow further this year, according to experts. Marriot International and Hilton Worldwide have entered the New Year with renewed spirit, encouraged by growing occupancy rates and a marked upswing in their stock prices.

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