United States travel demand went through a major slump in the early months of 2025. International arrival numbers collapsed by 11.6% in March amid the U.S. government’s tariff policies and isolationist rhetoric, and businesses like Marriott and American Airlines pulled or lowered their guidance at the end of that quarter.
Inbound arrivals continue to drop. However, carriers like Delta Air Lines have now reinstated their full-year forecasts, arguing that demand has stabilised.
Consumers remain divided on their near-term travel prospects, according to an August poll from YouGov and The Points Guy. Around 39% of surveyed Americans said they planned to spend less on travel in 2026, while 43% said they would spend the same amount, and 18% said they would spend more.
So how stable is U.S. travel demand? It depends on travellers’ purpose in the country, spending levels, and the nation of origin.
Where is travel demand stabilising?
Travel demand has continued to rise in the business sector. Business travel bookings increased by 15% in the 12 months to July, according to a report by Navan.
“In the face of macroeconomic uncertainty, companies continue to prioritise face-to-face connections, driving 15% year-over-year growth in business travel activity,” said Navan CFO Amy Butte.
This is partly driven by a surge in business travel worldwide. The Global Business Travel Association (GBTA) projects that business travel spending will reach a record US$1.57 trillion this year, rising 6.6% from 2024.
The U.S. is also the current frontrunner for business travel spending, the GBTA said. It expects that the U.S. will represent US$395.4 billion of business travel spending in 2025.
Azzet has contacted the GBTA for comment.
Travel companies targeting high-income visitors have also remained resilient. Delta Air Lines beat LSEG estimates on both earnings per share and revenue last quarter, with CEO Ed Bastian saying bookings had stabilised. The average household income among Delta customers is above US$100,000 per year, according to the company.
Marriott saw a stark divide between its luxury and general properties in revenue last quarter. Revenue per available room at its company-operated luxury properties in the U.S. and Canada was up 5% year-over-year, while total revenue per available room in the region rose by just 1.6%.
Where is travel demand falling behind?
Meanwhile, inbound international travel to the U.S. continues to flag. Overseas arrivals in the U.S. were down 3.1% year-over-year in July, while non-U.S. citizen air passenger arrivals dropped by 4.9%.
The number of travellers from Canada has plummeted so far in 2025, amid U.S. President Donald Trump’s tariff policies and threats to annex Canada. Canadian visitors fell by 25.2% from January to July.
Australian visitors to the U.S. have similarly declined. The U.S. was the fourth-most visited country in 2024-2025, according to the Australian Bureau of Statistics, falling behind Japan. It was the only country in the top five to report fewer trips in 2024-2025 than 10 years ago.
“The sentiment drag has proven to be severe,” wrote Tourism Economics. “Last December, the forecast projected an approximate 9% increase in overall international arrivals to the US for 2025. Now, the revised forecast expects an 8.2% decline, with overseas visits remaining well below 2019 levels.”
Inbound visitors’ spending is expected to drop by 4.2% from 2024, which would represent a loss of around US$8.3 billion.
Domestic U.S. travel has also lagged in 2025. In June, the U.S.’ domestic revenue passenger kilometres increased by 0.1% year-over-year, compared with a rise of 2.6% globally. This was one of only three months in the first half of 2025 in which the U.S. reported growth.
North American carriers’ passenger load factor dropped by 1.7% year-over-year in June, a fifth month of consecutive declines. The number of seats flown by U.S. carriers domestically will have fallen by almost 1% year-over-year in September, Cirium has projected.
What impact has the uneven travel market had?
Amid these divides in travel demand, many companies in the travel sector have begun reinstating their full-year forecasts. However, these are typically lower than their expectations at the start of the year.
Both Delta Air Lines and American Airlines reinstated their forecasts in July after suspending guidance in April. In January, Delta projected full-year earnings per share of at least US$7.35, while American projected $1.20-2.70. Delta now expects earnings per share of $5.25-6.25, and the midpoint of American’s reinstated guidance is $0.30.
Travel prices in the U.S. have also dropped significantly this year. Total average U.S. travel costs were 1% lower year-over-year in July, according to NerdWallet’s Travel Price Index, despite a rise of 2.7% in the Consumer Price Index during that time.
Hotel room rates have seen a major year-over-year decline, falling by 4.8%. Airfare prices were down 3.1% in July from the previous month, though they grew by 0.7% from one year ago.
"Relative to pre-pandemic prices, July 2025 travel costs are up just 9% versus July 2019 (the last full equivalent month before the 2020 COVID-19 pandemic). That's far lower than the 26% price increase across all items,” according to NerdWallet.
Additionally, travel companies are now seeking to move ahead with initial public offerings. In August, travel booking service Klook hired Goldman Sachs, Morgan Stanley, and JPMorgan to arrange an IPO later this year, Reuters reported, which could see the company raise around US$500 million.
