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US consumers are paring back their vacation plans and delaying travel bookings until the last moment, in what economists warned could be a red flag for growth in the world’s largest economy.
Fewer passengers travelled through US airports in the past 90 days than in the same period last year, as air traffic declined for the first time since the height of the Covid-19 pandemic, according to analysis of figures from the Transportation Security Administration by TS Lombard.
Prices for airline tickets and hotel accommodation also dropped on a seasonally adjusted basis between April and May, according to figures published by the Bureau of Labor Statistics on Wednesday. Operators said it had been increasingly difficult to fill rooms, as President Donald Trump’s trade war stokes fears of inflation and unemployment.
“The uncertainty in the environment is creating cautionary behaviours from guests,” Joan Bottarini, chief financial officer at hotel group Hyatt, told an investor conference last week in New York.
US consumers across all income levels cut their spending on lodging and airlines in the year to May, compared with the same period in 2024, according to an analysis of credit and debit card spending by Bank of America.
The decline is a further blow to the US tourism industry, which is reeling from sharp drops in visitors from Canada and Europe amid political and economic tensions and some tourists experiencing hostile treatment at the US border.
Canadian air travel to the US fell almost a quarter in May compared with the same month in 2024, according to Statistics Canada. There were also more than 7 per cent fewer arrivals from France and Germany, the two largest US tourism markets in mainland Europe, in the year to April, according to the International Trade Administration.
The biggest pullback on travel spending was among lower-income households, according to Bank of America. Wealthier consumers only marginally reduced their spending, meaning that luxury hotels were mostly insulated from the slowdown.
“The higher end is still actually prioritising travel and experiences and it’s showing up in our numbers,” said Hyatt’s Bottarini.
Selling available rooms was “definitely more difficult” for “lower end” accommodation providers, added Ewout Steenbergen, executive vice-president and chief financial officer at Booking Holdings, the owner of travel agencies Booking.com, Kayak and Agoda. He said company data showed both “shorter stays” and more last-minute bookings in the US.
As reservations come in later and later, many hotels and campsites, which typically adjust their fees in line with demand, have been “unable to command the price increases they’d like”, according to Adam Sacks, president of research group Tourism Economics.
Sacks said the tourism industry’s slowdown was the result of low- and middle-income Americans choosing cheaper options, such as road trips, rather than cancelling their vacations altogether. “Travel remains a priority for households but they’re trading down. They’re still taking a trip but it’s just closer to home or its shorter.”
Jaime Chandra’s short-term rental property in the countryside near Durham, North Carolina, has been unusually quiet so far this year — even after she reduced her prices and cut the minimum booking duration from three nights to two.
“Normally by March we’d already have most of the summer weekends booked, but by that point this year we had next to nothing on the calendar,” said Chandra, who advertises on both Airbnb and Vrbo, and typically rents to road-trippers from nearby cities.
Business has slowed at Cozy Hills and Skyridge Trails, the two campgrounds Lelah Campo runs in Litchfield County, Connecticut.
Campo pinned part of the blame on an unusually rainy spring in the northeastern US but added that guests were also increasingly reporting “a lot of unease about the economy [and] about the political situation”.
Economists warned that slowing travel demand was a sign that, after years of robust spending, American consumer resilience was beginning to falter.
“Travel has always been one of the best early indicators of a turn in the economy, because it is an expense most easily deferred,” said Steven Blitz, chief US economist at TS Lombard.
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