The U.S. tourism industry is currently facing unprecedented challenges, with several major states like Las Vegas, New York, Florida, and California seeing a significant decline in international visitors. Despite a robust post-pandemic recovery, these popular destinations are struggling with a downturn in tourism numbers. Factors contributing to this decline are complex and varied, including high travel costs, stricter immigration policies, and wavering perceptions regarding safety and stability.
In recent projections, the country is expected to lose around $12.5 billion in foreign tourism revenue by 2025, making it the only nation anticipated to see a drop in international tourism spending this year. International arrivals are set to decrease by 9% in 2025, with June showing a year-on-year decrease of 3.4%, hitting merely 80% of June 2019 levels.
Originally, Tourism Economics had forecasted an uptick in inbound travel for 2025. However, revisions to the forecast now indicate an 8.2% decline from the previous year, corresponding to a revenue shortfall estimated between $25 and $29 billion. This downturn appears to stem from various factors, such as the strong U.S. dollar-enhancing the cost of traveling to the U.S., visa bottlenecks, and increasing competition from foreign destinations that offer better value and more streamlined entrance processes.
Looking forward to 2025, major tourist hubs face ongoing challenges. For instance, Las Vegas relies heavily on high-spending international tourists, while Florida maintains its reputation as a sought-after family vacation destination. The effects of the downturn ripple through various industries, from hospitality to retail sectors.
**The Fall of Las Vegas and New York: Hotel Industry Faces Revenue Drought**
In New York City, international visitor numbers are projected to drop by 17% in 2025, resulting in an estimated two million fewer foreign tourists and a corresponding loss of around $4 billion in spending. If international tourism falls by 25%, the five boroughs stand to lose a staggering $6 billion in direct revenue, alongside an additional $3 billion in multiplier effects.
Despite this downturn, hotel occupancy rates in New York City have remained steady. However, this stability masks a more troubling reality: diminished profitability. In 2023, the hotel market in NYC was performing well, with occupancy at 81.6%, an average daily rate of $301, and revenue per available room (RevPAR) reaching $246. Yet, the decline in international arrivals threatens to undermine this growth and stability.
Meanwhile, Las Vegas is experiencing a stark decrease in visitation rates, particularly in June, where numbers fell 11.3% year-on-year. Overall tourism figures have dropped by 7.3% for the year-to-date. June occupancy rates also fell to 78.7%, down from 85.2% the previous year. Visitor counts have plummeted by 400,000 compared to June 2024.
Several factors are contributing to this downturn in Las Vegas. High prices, such as $9 for a coffee and steep resort fees, have discouraged middle-class tourists. July showed an 8.1% decrease in occupancy rates, coupled with a 7.1% decline in the first half of the year. Furthermore, reduced Canadian tourism has compounded these issues, with some airlines reporting significant drops in traffic.
Union leaders attribute part of this downturn to stricter immigration enforcement and political instability, which dissuades not only tourists but also those in visitor-support roles.
**The Ripple Effect Across Major States**
The tourism downturn extends its impact beyond New York and Las Vegas, affecting diverse state economies that heavily rely on foreign visitors. While domestic tourism remains relatively stable, the void left by high-spending international travelers considerably impacts various sectors including hotels, restaurants, transportation, and retail.
In California, cities like Los Angeles and San Francisco are already feeling the repercussions due to drops in visitor numbers from critical markets such as the UK, South Korea, and Germany. Both cities’ popular attractions, including hotels, theme parks, and conference centers, are witnessing a downturn.
Florida’s allure as a travel destination for Latin American and European tourists is waning as higher airfares, a solid U.S. dollar, and competition from Caribbean locales providing cheaper all-inclusive vacations hurt tourism. Hawaii has also experienced a significant slowdown in arrivals, particularly in Maui, especially following the tragic 2023 Lahaina wildfire. While visitor spending per person has risen, total numbers remain below both pre-pandemic and pre-tragedy levels. Factors such as rising costs and perceived anti-visitor sentiment are also deterring potential travelers.
Border states, including regions in Montana, Texas, and Arizona, are witnessing a decline in cross-border visits from Canada and Mexico. For example, border points in Montana like Roosville and Sweetgrass reported declines of around 25 to 29% year-on-year, leading to a 20% reduction in Niagara Falls crossings on Independence Day compared to 2024. Canada’s car visits took a substantial hit, falling 38% in May 2025.
**Immigration Concerns and Visa Hurdles**
A combination of extensive visa processing times, complicated entry requirements, and high visa fees is discouraging potential international visitors. Coupled with a perception of stricter border enforcement and an unwelcoming political ambiance, these factors significantly affect travel decisions. Such high-profile discussions and debates regarding immigration have dampened the United States’ appeal as a travel destination. Destinations like Canada, Japan, and parts of Europe with simpler entry processes are increasingly attractive to travelers.
**The Business Event Paradox in Las Vegas**
While Las Vegas continues to attract large domestic crowds for conventions and business events, the city is struggling to compensate for the lost economic impact from international leisure travelers. Business tourists typically have shorter stays and tighter schedules, often resulting in less discretionary spending when compared to vacationing tourists. The rising costs of visiting Las Vegas, including airfare and upscale hotel rates, are making the city less competitive against international counterparts like Macau and Dubai, which provide similar high-end experiences at more appealing prices for targeted markets.
**Regulatory Changes Intensifying the Tourism Decline**
Recent policy changes impacting tourism include extended visa processing times due to staff shortages at U.S. consulates, increased visa application fees in certain categories, and expanded security screenings at ports of entry, contributing to longer wait times and traveler frustrations. Stricter ESTA rules for travelers from specific regions, which include reduced validity periods, and public health entry protocols that remain more stringent than in various other countries, continue to propagate barriers even as pandemic-related restrictions ease globally.
These measures, although aimed at bolstering security and operational efficiency, inadvertently render the U.S. a less favorable destination compared to countries maintaining more affordable and simplified entry systems.
**Looking Ahead: Challenges to Recovery**
The outlook for the U.S. tourism industry remains uncertain, as international recovery is not expected to regain momentum for years without decisive intervention. Ongoing challenges related to high travel expenses, visa delays, political unrest, and escalating competition from abroad threaten America’s share in the global tourism market. Major destinations such as New York and Las Vegas may continue to experience reduced visitor turnout unless strategic actions like marketing enhancements, visa reforms, and improved entry procedures are prioritized.
States along the borders that depend on Canadian and Mexican tourists could face enduring repercussions if cross-border travel trends remain stagnant. Without coordinated initiatives from federal authorities, state tourism boards, and the private sector, the U.S. could experience prolonged stagnation in inbound travel, impacting local economies and several industries, including hospitality and attractions. Prioritizing accessibility, enhancing visitor experiences, and rebuilding America’s image as a welcoming destination will be vital to reversing this decline and reclaiming competitiveness in the global tourism arena.
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