How U.S. policies are driving away foreign visitors, and harming the American economy.

Trade and job creation
Nov. 23 2010 4:47 PM

America's Looming Tourism Crisis

How U.S. policies are driving away foreign visitors, and harming the American economy.

Also in Slate: Martha C. White explores California's domination of  the international almond market, Boeing's push to  sell more aircraft overseas, an innovative air-conditioning company's efforts to break into the international cleantech market, how a small steel manufacturer  thrives on the world stage, how a small American software company can compete cheaply abroad, and how exports can  save the American economy.

Tourist. Click image to expand.
Foreign tourists bring in $120 billion to the U.S. economy

They stand in sidewalk-blocking clusters. They take pictures of the most ridiculous things. They don't tip enough. Grumble all you want about tourists, but the United States needs them. International tourism is not just a big business, it's also a huge export. Tourism makes up 8 percent of our overall exports, and 24 percent of all exports in the services category. People coming from abroad to see everything from the Golden Gate Bridge to the Grand Ole Opry poured $120 billion into our coffers last year, and tourism is one area where the United States runs a healthy trade surplus: $21 billion as of 2009, meaning that Americans spent $21 billion less overseas than foreign tourists spent here.

But the United States is on the brink of a tourism crisis. The United States is losing market share as a tourist destination. According to the U.S. Travel Association, our country's market share of global tourism dropped 31 percent from 2000 to 2009. That translates to 2.4 million fewer visitors in 2009 than at the beginning of the decade.

This is unfortunate, because tourism is a fantastic economic boon. People eat, drink, shop, and go home without consuming any of our finite resources, and they inject their overseas cash directly into our economy. Foreign visitors spend about $4,000 each during a visit. The growing middle classes of countries like China, Brazil, and Argentina mean we have a huge new pool of potential visitors, and with long-haul flights up 31 percent since 2000, our amusement parks, cities, and vistas have never been more accessible.

All of this growth in developing countries is a double-edged sword for American tourism, though. Upwardly mobile countries are realizing that they can lure many of our most dependable visitors for themselves. South Africa, for instance, has mounted a vigorous campaign to entice British travelers to come there instead of here.

Part of America's tourism problem is marketing. We don't have any at the national level. States and cities have tourism boards that create campaigns such as "What happens in Vegas, stays in Vegas" or California's "Find yourself here." Some big-city hotels hire employees who speak tourist languages, and some restaurants offer menus in multiple languages, but that's about it. There isn't any agency that promotes the entire U.S. of A, as there is for, say, Israel. Tourism industry pros tend to agree that a concerted campaign at the national level would be far more effective than the sum of these piecemeal parts.

Thanks to the Travel Promotion Act of 2009, though, that national tourism board should be coming soon. Signed in March of this year, the legislation establishes funding and marching orders for a new entity called the Corporation for Travel Promotion. An initial $10 million in seed money was raised from the $14 fee paid by travelers entering the United States via the Electronic System for Travel Authorization ($10 goes to travel promotion; the remaining $4 goes to homeland security efforts). In the future, more ESTA money can be "unlocked" when hotel companies and other travel companies make donations; the government will then match the donation with the ESTA dollars. The public-private agency includes 11 board members drawn from organizations such as NYC & Company and Walt Disney Parks and Resorts, and had its first meeting two weeks ago. Chairman Stephen J. Cloobeck, who is also chairman and CEO of Diamond Resorts International, says the board will be identifying countries where people might be eager to visit the United States and creating marketing campaigns to induce them to visit here.

"People have a perception of the U.S. as protectionist, arrogant and inhospitable, and I think we need to change that image," says Cloobeck. "We're going to jump-start the marketing of America."

Since different kinds of visitors want different things out of an overseas vacation, the CTP will have to do some investigative anthropology to figure out how best to catch the interest of prospective visitors. For instance, marketing to the Chinese market might revolve around cultural experiences, while ads aimed at Brazilians might focus on entertainment and nightlife. Caroline Beteta, president and CEO of the California Travel and Tourism Commission, and vice chairman at the CTP, says the national campaign might mirror her state's by using celebrity endorsers to sing the praises of America.

Marketing the country might sound like a challenge, but it's not the biggest one the new CTP faces. Even when foreigners want to visit here, our visa requirements can trip them up. Right now, there are just three dozen countries on a visa-waiver list. Since 9/11, citizens from countries not on that list must endure an onerous, expensive process involving an in-person interview just to come for a vacation. There are no exceptions, not even for people who live thousands of miles from the nearest office or for children.

Brazil is a great example of the hassles travelers have to endure to secure visas, says Melissa Froehlich Flood, vice president of government affairs at Marriott International. There are only four consular offices in the entire 3.3 million-square-mile country, and scheduling an interview at one of them can take upward of 90 days. The USTA estimates that a Brazilian family seeking to vacation in the United States would have to shell out $2,600 just to get visas if they lived in Manaus, a 2,054-mile drive from the Embassy in Brasilia. That's $2,600 spent on travel before the trip even begins. After that, there's another wait of two to three weeks while the visa is actually processed. Faced with these kinds of demands, it's perhaps not surprising that the rapidly growing middle classes in many emerging markets choose to vacation elsewhere. The slow process hurts hotels, restaurants, stores, and other businesses at which tourists spend their money. It's also a hindrance to American exporters, since there's no way to fast-track the visa of a businessperson who wants to come to the United States to purchase American-made goods.

Unfortunately, some of our biggest potential tourism markets—China, Brazil, Chile, Argentina, and India—aren't part of the visa-waiver program. One of the criteria the Department of Homeland Security and State Department uses when determining which countries to put on the visa waiver program is the refusal rate—the percentage of prospective travelers denied visas. Traditionally, only countries with a 3 percent rate or lower would be considered for the program, but the government decided in 2007 to allow countries with refusal rates of up to 10 percent join the program, provided they met the rest of the criteria. China and India, with refusal rates of about 16 percent and 29 percent, respectively, are probably off the table for now, but Brazil's rate is 7 percent, which leaves the USTA hopeful that the government might add it to the waiver list. It's not a guarantee, though. Raising the 3 percent refusal rate to 10 percent was a temporary relaxation, contingent on the planned implementation of a system to collect visitor biometric data upon exiting the United States, a project that's been stalled because of cost concerns. (Watchdog groups have also raised privacy objections.) Marriott's Froehlich Flood estimates that the number of Brazilian tourists would increase by 121 percent if the visa situation were improved. 

In the meantime, the CTP says it's going to work on a traveler-education program to guide visitors through the complex visa process. Long term, new technology seems to be the industry's best hope to break the visa logjam.

Neither the CTP nor USTA wants to be perceived as cutting corners on traveler safety, so nudging the State Department and the Department of Homeland Security to streamline their protocols will take the utmost in diplomacy. Videoconferencing tools exist that would theoretically let a consular officer interview a would-be traveler remotely. The technology is like a souped-up version of Skype, with biometric readers that could record and verify a person's fingerprints in real time. This kind of technology costs money, though, and even trying a pilot program would require congressional funding and approval.

If the United States gets this right, it has a chance to seriously boost exports. Helen Marano, director of the Office of Travel and Tourism Industries in the Commerce Department, says her agency projects that tourism could rise by 51 percent from 2009 through 2015, an increase of 27.9 million travelers, and more than $100 billion in exports.

Video: The Export Revolution

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Martha C. White is a freelance writer in New York.