More than 7% fewer Australians travelled to the US in March compared to last year. This could boost the local tourism sector, with more international travellers picking Australia as their next holiday destination and more Australians opting to travel domestically.
According to The Guardian, 4,559 fewer Australians travelled to the US in March this year than last year. This is the largest fall since March 2021, when COVID-19 disrupted international travel.
Why has travel to the US slowed?
Travel analytics group Tourism Economics suggests the US travel sector currently faces several headwinds. These include negative sentiment, border and immigration policy, economic slowing in Canada and Mexico, reduced competitiveness with a strong dollar, and uncertainty in the domestic economy.
According to The Guardian, Australians are avoiding travel to the US under President Trump's second term. With the Australian dollar's relative value to the US dollar at a five-year low, travel to the US has become significantly more expensive.
James Kavanagh, Flight Centre's Chief Executive of leisure travel, told The Guardian:
We must acknowledge the political environment in the US and the fact that it may influence Australians' decisions on where they choose to travel..For example, looking at the first quarter of 2024 [compared with 2025], while we've seen a slight decline in bookings to the USA, we've seen a significant uplift in bookings to east Asia and northern Europe.
The data also shows that it's not just Australians who are cutting back on US travel. Many European visitors have mirrored these actions. This includes an 8% reduction in visitors from France, a 25% reduction from Spain, and a 28% reduction from Germany.
Tourism Economics now expects a 9.4% decline in international visitor arrivals for 2025 compared to 2024, driven by a 20% decline in Canadian travellers.
Will Australian tourism benefit?
The Australian tourism sector may benefit from declining enthusiasm for US travel. Tourism plays a critical role in the Australian economy. In 2023-2024, the Australian tourism sector contributed $78.1 billion to the national Gross Domestic Product (GDP), representing 2.9% of the total economy. Tourism also supported almost 700,000 jobs.
ASX travel shares Flight Centre Ltd (ASX: FLT) and Web Travel Group Ltd (ASX: WEB) could see an uptick in domestic travel as Australians decide to holiday locally. Both companies offer all-inclusive travel packages, meaning flights, hotels, cruises, and other travel experiences can be booked through their platforms. Popular Australian tourist destinations such as Sydney, Melbourne, and the Great Barrier Reef may see increased traffic this year.
International travellers coming to Australia may book their holiday through Booking.com, which is owned by Booking Holding Inc. (NASDAQ: BKNG). This could also provide a major boost for the many Australian hotels listed on their platform and support local jobs.
