Can Obama Grow the American Tourism Industry by 54%?

The sky is the limit with President Obama throwing his weight behind an effort to dramatically increase the number of foreign visitors to the U.S.

Jun 5, 2014 at 10:19AM

What if I were to tell you that there was an industry that was projected to grow by 54% between now and 2021 and the president of the United States was personally spearheading an effort to turn this projection into a reality by bringing together powerful government agencies and top U.S. companies? What industry is this, you ask? It's not renewable energy. It's not health care. Believe it or not, it's the the travel and tourism industry. 

The recently released White House report, "Increasing Tourism to Spur Economic Growth: Progress on the President's National Travel and Tourism Strategy," details that in 2013 alone, this important industry employed 8 million Americans, raked in $1.5 trillion in revenue, made up 27% of all exported U.S. services, and generated a net trade surplus of $57 billion. The White House is indicating that if everything goes according to plan, these numbers are just the beginning. 

Brazil And China

Sources: U.S. Department of Commerce and National Travel and Tourism Office. 

"Travel and tourism is a major driver of the U.S. economy. It supports millions of jobs across the country and furthers U.S. strategic and diplomatic interests," the report explained. It goes on to detail "the many economic benefits to the United States from increased travel and tourism and the progress that the administration is making in implementing the president's strategy."

With this kind of projected growth, and the Federal government bending over backwards to help, it might behoove you to take a closer look at the travel and tourism industry as a long-term buy-and-hold opportunity.  

Obama's national travel and tourism strategy

Back in 2012, President Obama launched National Travel and Tourism Strategy with the goal of pushing the number of annual international visitors to the U.S. to 100 million by 2021. With the number of annual visitors in 2009 standing at 55 million, that number has grown to 70 million a year by 2013, a 27% increase in only four years, which means that the U.S. is on track to reach 100 million annual visitors a year by its stated goal.

With each international visitor spending an average of $4,500 once they are in the country, according to the report, that means that an additional $121 billion poured into the country in 2013, on top of the $225 billion that was already coming in annually as of 2009. If the government's goal of 100 million annual visitors is reached in 2021, an additional $104 billion annual revenue can be counted on, bringing the annual sum of international money being spent in U.S hotels, tourist attractions, shops, and other domestic businesses to $450 billion, a 54% increase from 2009. 

On a recent trip to Cooperstown, N.Y.'s Baseball Hall of Fame, Obama spoke about the ripple effect that travel and tourism to sites like the Hall of Fame has in communities like Cooperstown. "When visitors come here, they don't just check out the Hall. They rent cars, they stay in hotels, they eat in restaurants," Obama said. 

So how can you capitalize on the projected 54% increase in international tourism and travel revenue? There are plenty of companies that you could put your money into today and watch their stock value increase as their earning reports grow at a healthy rate year after year. A good place to start is with the companies that are directly partnering with Obama on his National Travel and Tourism Strategy. 

Private Partners

Since the president released his National Travel and Tourism Strategy in 2012, he has directed a number of government agencies to expedite the travel process for international visitors in a variety of ways, including dramatically reducing the time it takes to acquire a U.S. travel visa from emerging economies with large populations like China and Brazil.


Source: U.S. Department of State

Now the president is reaching out to private companies to help further implement the broader plan of increasing international tourism in order to bolster the U.S. economy and he is finding willing partners among some of the country's most important CEOs. Airlines, for instance, are especially intrigued by Obama's call to reduce the time it takes for travelers to get out of the airports once they arrive in the U.S.


Sources: Department of Homeland Security and U.S. Customs and Border Protection.

"We are particularly pleased about the firm commitment by the administration to cut down the growing delays for airline passengers entering the country," Doug Parker, CEO of American Airlines (NASDAQ:AAL), said in a statement. "We have been asked to participate in the public-private initiative announced [last month] to explore all means of expediting processing of travelers at our gateways and will enthusiastically do so."

Airlines like American will also benefit from the president's push to increase the number of Open Skies agreements, which currently stands at 113. According to the Department of State website, Open Skies agreements have "vastly expanded international passenger and cargo flights to and from the United States, promoting increased travel and trade, enhancing productivity, and spurring high-quality job opportunities and economic growth." 

Following the release of the travel and tourism report, Obama convened with 20 travel and tourism industry CEOs and senior executives, including Mark Hoplamazian of Hyatt Hotels (NYSE:H) and Arne Sorenson of Marriott International (NASDAQ:MAR). Major hotel chains obviously have a lot to gain by the increase in tourism to the U.S. and they stand to benefit as much as anyone due to their international reputations and presence in major tourist centers around the country. This meeting should be taken as a sign by investors that the hotel industry is a key component of the president's overall strategy. 

What Could Go Wrong?

Of course skeptics will note that one of the reasons the U.S. travel and tourism industry is growing at such a rapid pace is that it took a spectacular dive following the terrorist attacks on September 11, 2001. The wave of stricter airport security and travel restrictions did serious damage to the travel and tourism industry and it is only now finally regaining its momentum. Likewise, the long-term outlook for the U.S. travel and tourism strategy is largely dependent on the prevention of any more terrorist attacks that could derail the industry.

But if you are confident that the U.S. can prevent this type of event for the next decade -- as it has done for more than a decade since 2001 -- then investing in the travel and tourism industry for the long haul seems worth a look. The projections, coupled with the president's support, make this an industry worth watching.  

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