SAN ANTONIO — Despite the ever-evolving landscape of macroeconomic headwinds, U.S. citizens still have a strong thirst for experiences and creating memories, and travel is still the best avenue for both.
At the recent Hospitality Sales and Marketing Association International's Commercial Strategy Conference, Tourism Economics Director Aran Ryan pointed to different tailwinds and turbulence affecting travel in the U.S. The hangover from tariffs, geopolitical uncertainty, inflation, fuel prices and a softening labor market are all dragging down the economy and consumers' ability to travel to some extent. However, consumers' interest in traveling and discretionary spending continue to rise.
"It's a pretty complex mix," Ryan said during his presentation. "Despite this turbulence, we expect the tailwinds to prevail. So, I think we have a constructive view of next year."
Breaking down the data
One of the elements of turbulence Ryan identified is the rising gas prices due to the ongoing war in the Middle East, but a spike in gas prices isn't unfamiliar territory. While gas prices are up 37.9% year over year, consumers were seeing similarly high prices only a few years ago. Ryan said that in light of what's happening with inflation, "it's almost surprising that gas is as cheap as it is."
He added that high gas prices are unlikely to affect travel as much as the media is reporting, and one thing helping balance the increased costs is the higher-income tax refunds that consumers have seen.
"It's hard to cut back on how much you spend on gas, so consumers are going to be spending more of their wallet in this category," he said. "And that means less that's available to spend for discretionary goods, and travel as a discretionary good does tend to get hit a little bit harder than things such as housing that you can't cut back on as easily."
Similarly, airlines have raised prices for flights due to the increase in jet fuel costs. While the airlines haven't reported a significant decrease in bookings due to this cost increase, Ryan said that more expensive airfare might cause travelers to look for other ways to cut spending in their travels.
Another factor that Tourism Economics keeps tabs on is the labor market, which is coming to a point of balance. Some job seekers, including recent college graduates, are having trouble finding jobs, but overall its a decent job market, Ryan said.
One economic disconnect is how consumer sentiment is at a record low, while consumer spending is continuing to grow disproportionately to income growth.
"The amount consumers are spending is growing faster than the amount that's coming into their wallets as disposable income. So this is concerning," he said, adding that spending has outpaced historic norms.
Spending continuing to grow signifies that consumers — despite their record low sentiment — still have faith economic headwinds are temporary. They're also benefiting from what Ryan calls a "buoyant stock market" that has been a tailwind for consumers.
Complementing these economic factors are some policy moves that are affecting consumers in different ways this year compared to 2027.
"The One Big Beautiful Bill was a benefit to this year," Ryan said, citing the higher than expected tax refunds that were part of that policy. "So, it's a boost this year, but next year we're going to move into a category where in the GDP accounting is a drag."
The sustaining interest in travel
With 2027 around the corner, Ryan looked at how some of 2026's macroeconomic headwinds have changed expectations for 2027. The reality is they really haven't evolved much.
He compared the 2026 and 2027 outlooks made both before and after the war in Iran began. While the outlook for U.S. inflation has increased and consumer spending expectations dipped in the 2026 forecast, the 2027 outlook is predicted to be essentially the same as it was before the war began.
In spite of all these macroeconomic factors leaving a mark on travel, Ryan said there is still a healthy interest in traveling.
"Travel is still growing. It's not like we bifurcated from the economy that way. There's still travel demand," he said. "Tourism spending we estimate is up 3.5% year to date through April — air passengers are positive relative to last year, hotel demand [is] positive relative to last year, and short-term vacation rentals [are] also positive."
The exception, of course, is inbound international travel, which continues to struggle. In North America, the drop in Canadians visiting the U.S. has been a significant hit, but the increase in Mexicans visiting the U.S. has increased to somewhat balance that out.
For the U.S. hotel industry this year, "it's been a really pretty strong run," Ryan said. However, that momentum is not expected to continue throughout the rest of the year.
Contrasting a lackluster 2025, gains in U.S. hotel revenue per available room has increased "across both weekends and weekdays, so nice to see some indicators that maybe some business travel is picking up, and that the weekends are also strong," he added.
In June, Tourism Economics and CoStar revised the U.S. hotel growth forecast up for 2026 due in part to this uptick in performance in the first half of the year. Ryan said that the 2027 forecast was also increased but is still "a pretty conservative view right now."
The silver lining in all of the data is that interest in travel among Americans is still strong. Ryan said consumers have a "thirst for creating memories, and travel is something that allows people to do that."
"Households have really prioritized travel, so as much as it's a discretionary good, it's also something they don't want to cut back on if they can avoid [it], so they see it as a budget priority, and it goes back to the idea of experiences," he said.