US hospitality leaders are projecting a pronounced rebound by 2026, although current geopolitical tensions continue to dampen inbound arrivals and alter long-standing international demand for rooms. Ongoing tariff measures, compounded by deteriorating bilateral relations—most notably with Canada—have eroded customary travel flows, deferring the anticipated reversion to pre-COVID visitor levels. Consequently, the sector confronts a subdued outlook for 2025, characterized by diminished overseas visitation and restrained consumer sentiment. Yet the country plans a strategic pivot toward expansion by capitalizing on prospective megaprojects, including the 2026 FIFA World Cup and the 2028 Summer Olympic Games, both of which promise to re-engage overseas markets and accelerate the overall tourism recovery trajectory.
The trajectory of contemporary geopolitics is exerting a substantial and material influence on the American hospitality sector, manifesting primarily through sustained tariffs and accompanying state-sponsored rhetorical stances that are reshaping global travel tendencies. The observable dimensions of this disruption are no longer analytically confined to theoretical projections; they are present in the empirical record, where occupancy rates are retreating, indices of consumer confidence are receding, and the anticipated reversion of inbound international travel to pre-COVID benchmarks is, on present trajectories, postponed by an additional quadrennial window or longer.
Aran Ryan, the Director of Industry Studies at Tourism Economics, recently discussed the increasing influence of geopolitical instability on the tourism sector during the 2025 Hotel Data Conference. One of the key takeaways from Ryan’s discussion was that the effects of US tariff policies and anti-foreign rhetoric, particularly during the presidency of Donald Trump, have been seen in the sharp decline in international inbound tourism. Compared to previous growth trends, overseas visitor arrivals to the US have decreased significantly, with a noticeable drop following President Trump’s tariff policy.
For instance, international inbound travel to the US from countries outside of Canada and Mexico fell by 11.6% in March, immediately after the imposition of higher tariffs. While there was a brief recovery in April, the year-to-date trend as of June showed a 3.4% decrease in international arrivals compared to the same period in 2024. This marks a stark contrast to earlier projections, which had anticipated a recovery to pre-pandemic levels of international arrivals by 2025.
One of the most affected regions is Canada, the country with the largest negative impact on US tourism growth. Since the contentious political rhetoric and trade tensions emerged following Trump’s election in 2024, a strain has been placed on the historically strong relationship between the US and Canada. Notably, President Trump has repeatedly suggested that Canada should become the 51st state to avoid the looming threat of tariffs.
These political tensions are being mirrored in tourism statistics, where visitor arrivals from Canada to the US have plummeted. Tourism Economics projects a 20.2% drop in Canadian visits to the US this year, with visitor arrivals down 23.7% year-to-date in June. Of particular concern are the declines in land travel (down 28%) and air travel (down 13.3%).
Ryan points out that US destinations that traditionally attract large numbers of Canadian visitors will likely bear the brunt of these declines. Given that the US is geographically closer to many Canadians than some parts of their own country, these familiar and easy-to-plan trips to the US have historically been a major part of the tourism landscape. However, with increasing geopolitical tensions and tariffs, these short-haul travel plans have become more volatile, with travelers more likely to cancel their trips at the first sign of uncertainty.
While North America, particularly Canada, has seen significant declines in inbound tourism to the US, the same cannot be said for all regions. In fact, tourism from regions like Eastern Europe, Central America, and South America has seen slight increases, with visitor arrivals to the US up by more than 1% year-to-date through June. Likewise, tourism from Mexico, which represents a substantial portion of international travel to the US, has remained robust and generally ahead of where it stood in 2024.
This positive trend is partly influenced by fluctuations in the value of the US dollar. The dollar has remained above its historical average but has recently become cheaper, making travel to the US more affordable for international visitors. While the US may not be the bargain it was in the past, the depreciation of the dollar in recent months is seen as a short-term positive, encouraging more visitors to cross US borders.
So, what does this shifting travel demand mean for the US hotel industry? As international inbound travel begins to recover more slowly than expected, the hotel industry is facing challenges in driving room demand growth. For 2025, both CoStar Group and Tourism Economics project that international hotel demand will be down by 0.6%. While the forecast for 2026 is more optimistic, predicting a 0.3% increase, 2025 is shaping up to be a year of stagnation.
Ryan stresses that even in markets where international tourism is typically not a significant contributor to hotel demand, every loss in international visitor numbers is being keenly felt. Hotels that once relied on strong international travel numbers to help drive pricing are now experiencing difficulty in securing marginal demand. This presents a significant hurdle for US hoteliers as they try to boost room rates and maintain profitability.
Not all US cities are being affected equally. Major metropolitan hubs like Miami, Dallas, Honolulu, New York City, and Los Angeles traditionally attract the highest share of international visitors. These cities typically have a large percentage of their room nights sold to international travelers, which makes them vulnerable to any decline in inbound tourism.
However, cities with a high concentration of Canadian travelers are feeling the effects of the downturn even more acutely. According to Ryan’s analysis, cities like Seattle, Portland, Oregon, Detroit, Louisville, Kentucky, and Cleveland are experiencing the largest declines in international overnight visitor arrivals. The lion’s share of these declines is attributed to the loss of Canadian visitors, whose trips have been canceled or postponed due to ongoing political tensions between the US and Canada.
Despite the setbacks caused by geopolitical uncertainty and tariff policies, there are reasons to remain hopeful. The US has two major global events on the horizon that could help reignite international travel demand: the 2026 FIFA World Cup and the 2028 Summer Olympics in Los Angeles.
Ryan notes that while the overall impact of these events on hotel demand will be limited, they present a unique opportunity for the US to regain momentum and showcase its stability to the world. The FIFA World Cup, set to take place across 11 US markets in 2026, and the Summer Olympics in 2028 will undoubtedly put the US back on the global tourism map. These events provide a chance for the US to communicate to the world that, despite the negative headlines, the country remains a safe and attractive destination for travelers.
As the US prepares for these major events, the tourism sector is already gearing up to capitalize on the influx of international visitors. Hoteliers and tourism authorities are likely to employ targeted marketing strategies and promotional efforts to attract both international and domestic visitors. By focusing on the positive aspects of the US, such as its diversity, cultural offerings, and hospitality, the country can continue to grow its tourism industry despite the ongoing geopolitical challenges.
An unpredictable geopolitical environment continues to influence the US lodging sector in complex, non-linear ways. Trade tariffs, discouraging public discourse, and escalating diplomatic tensions have collectively tempered overseas travel demand to the United States. Observational data indicate that the sharpest contractions have occurred in markets whose performance relies on Canadian arrivals. Nevertheless, emerging data identify growth trajectories in select regions—including Eastern and South-Central Europe, Central America, and South America—implying that the US remains capable of drawing travelers from disparate geographic spheres.
US hospitality executives project that a vigorous rebound will materialize in 2026, a timeline adjustment precipitated by recent geopolitical realignments and evolving tariff regimes that have deferred inbound visitation and moderated room-occupancy expectations for 2025. The significant decline in international visitors, particularly from Canada, has led to a decrease in average occupancy rates. Nevertheless, significant upcoming events like the FIFA World Cup and the 2028 Olympics in Los Angeles are anticipated to ignite a surge in travel demand, fostering considerable growth and rejuvenating the industry.
Prospective demand trajectories require that US operators maneuver within an environment of moderate forecasted growth in occupancy. Strategic near-term prospects remain constrained, particularly for the outlook horizon of 2025; however, macroeconomic and event-driven indicators signal the likelihood of demand inflections. The 2026 FIFA World Cup, the 2028 Summer Olympics, and complementary infrastructure enhancements collectively create a set of catalytic circumstances. By systematically leveraging these catalytic milestones in conjunction with focused brand messaging that reframes the United States as an attractive, hospitable travel environment, the national hotel economy can aim for sustainable recovery and increased operational resilience in the subsequent years.
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