Trump Tariffs & Travel; industry headwind or turbulence?

On 9 April President Donald Trump announced a 90-day pause on higher-rate tariffs levied on imports to the US from more than 50 countries just hours after they took effect, following a week of havoc for global financial markets. So where does this leave the travel industry? Are we heading back to another pandemic-style slump in travel bookings or is it just light turbulence? Let’s assess the wider impact on the travel industry.

Airlines:

According to CBC, planes and their engines are usually ordered by buyers years in advance, and tariff confusion risks delaying shipments of both, even if the industry has not been directly targeted for duties, sources told Reuters. The frequent changes and added costs are stressing a supply chain that has wrestled with shortages of parts and labour.

Delta Airlines’ current fleet strategy has been significantly disrupted by potential tariffs that could increase aircraft costs by 10-20%. This could result in increased airfares across all major global airlines.

Hotels & Accommodation:

Hotel owners and operators are planning how to manage increased costs of everything from breakfast roasted coffee beans to guestroom bedsheets. As costs go up on imported products for consumers around the world, discretionary spending goes down, eating into travel budgets. Beyond that, hoteliers in the US and around the world are dealing with guests deciding they may not want to change their travel plans to alternate destinations.

Business & Leisure Travel:

While the Trump administration’s policies have already disrupted travel through new immigration hurdles, the direct effect on corporate travel remains unclear. According to BTN Europe, few travel suppliers or organisations contacted by them could draw definitive conclusions on the impact of the tariffs, though most noted heightened monitoring of the situation. But there are fears of a slump in overall US-inbound holiday makers as a direct result of increased hotel costs and airfares. The travel forecasting company Tourism Economics, which late last year projected the US would have nearly 9% more international arrivals this year, along with a 16% increase in spending, revised its annual outlook to predict a 9.4% decline in arrivals.

One UK-based travel agent, accustomed to arranging luxury holidays for wealthy clients, said he had not seen any changes – yet. But it was still early days. “I think we’re going to feel it soon. People aren’t exhausted yet. But they’re clearly stressed – and will be, especially if their disposable income gets hit,” they said. Whether or not the tariffs are an act of ‘revenge’ or an ‘own-goal’, travel agents and tour operators need to prepare for any eventualities across the tourism sector.

About Portway Systems:

Portway Systems is a rapidly expanding travel technology company based in Birmingham, UK. Our products include Travel CRM, Mid & Back-Office, Reservations, ERP, and Business Management solutions for small-to-large travel businesses across the UK & Ireland, USA, EMEA, and Asia-Pacific. We are committed to delivering next-generation solutions to meet the evolving needs of the travel sector.

For more information about Portway Systems and its suite of products, visit www.portwaysystems.com