The strength of the U.S. dollar is making trips abroad more affordable for Americans. Despite threats of a looming recession, the number of U.S. citizens traveling abroad in September was 2% higher than it was in September 2019.
Traditionally, Labor Day in the U.S. marks the end of the summer travel season and a slowdown in trips abroad. This year, with consumer spending strong and unemployment low, consumers have continued to spend on experiences, international travel among them. The International Trade Administration, part of the Department of Commerce, makes data available that allows analysis of international nonstop air passenger traffic to and from the U.S.
Outbound travel counts to the Caribbean, Central and South America are all over 20% higher than they were three years ago. Traveler numbers to and from the Middle East are also higher than they were in September 2019. This area stands out as it is the only one where inbound visit counts are higher than in the comparable month, reflecting a higher number of travelers from Turkey and Qatar entering the U.S.
The travel patterns in September show an increase in travel from three years ago to areas closest to the U.S. As transcontinental airfare has increased over the past few quarters, locations closer to the U.S. mainland are more attractive as shorter flights are more affordable. But while this travel pattern holds on the regional level, some countries are outlier destinations that continue to attract American visitors almost irrespective of distance or airfare.
Country-specific data reveals that destinations with a traditionally strong leisure appeal fared well in September compared to three years ago. Because of the favorable exchange rate, Turkey, Mexico, Greece and Portugal are all relatively cheaper now than they were at the beginning of the year or even a few months ago. For Americans who can book trips on short notice and who are not bound to school calendars, this perceived discount makes these countries very attractive.
On the other hand, China still has its zero-COVID protocols in place, which deters international travel. Likewise, travel to Japan just reopened in October and so was still very curtailed in September.
The global economic outlook will likely remain uncertain for the remainder of the year and into the first half of 2023. This should lead to a continued strong dollar in relation to other currencies, so we can expect more Americans to go abroad this winter.
The flip side of this travel flow is that these often higher-paying customers will be filling hotel rooms overseas rather than in the U.S., which will likely affect higher-class hotel performance this winter.