Stephanie Stacey in Morehead City, North Carolina, and Mari Novik and Clara Murray in London
Mark Sonder was staring down a challenging summer.
His business operating boat tours on North Carolina’s Crystal Coast saw a drop in customers from last year, seemingly fulfilling predictions that US travel demand would plummet during the summer months amid economic uncertainty and a decline in visitors from Canada and Europe.
But Sonder says wealthier Americans have thrown him a lifeline. His H20 Captain charter company has been kept afloat by an abnormally large proportion of higher-priced bookings this summer, even as he’s hosted fewer customers in total. “That puts me on par with last year financially — not on the amount of excursions but on the income,” he says.
He attributes the trend to wealthier consumers being better insulated from economic uncertainty, and jet-setting Americans pulling back from international holidays out of fear of an unwelcome reception overseas. “They’re spending their dollars here,” he says. “It means I’m able to keep doing this.”
Sonder’s experience is not uncommon. Many of the big US travel groups scaled back their forecasts for 2025 after President Donald Trump launched his global trade war in April. But the likes of hotel groups Hilton and Hyatt and travel agency Expedia are now lifting these outlooks again, saying a recovery in leisure travel has been especially robust in the luxury segment.
“Obviously coming out of ‘liberation day’ and other things, there’s been a decent amount of noise in the system, but we are very optimistic,” said Hilton Worldwide chief executive Christopher Nassetta on an earnings call. “There are legitimate reasons to feel really, really good about demand.”
According to Expedia chief executive Ariane Gorin, her team has “seen an uptick in overall travel demand, particularly in the US”, since the beginning of July. The company says it now expects gross bookings to grow between 3 per cent and 5 per cent this year compared with last, up 1 percentage point from an earlier forecast. Elie Maalouf, chief executive of Holiday Inn owner IHG, is also upbeat, saying “the turbulence that we experienced in March and April is subsiding”.
The airlines Delta and United reported that bookings had stabilised after a sharp pullback in March and April, while passenger traffic through US airports ticked up year on year in July and August, offsetting a sluggish May and June, according to figures from the Transportation Security Administration.
The recovery was driven by strong demand from US citizens travelling internationally and a bounceback in domestic flights — while the number of foreign citizens flying into or out of the country has fallen in almost every month this year.
It is a relief for many in the travel industry, which was bracing for a sharp slowdown in the wake of Trump’s radical political and economic agenda.
“I would have thought given all the negative headlines, all the early accounts of cancellations, the government job cuts . . . that things would be much worse,” says Michael Bellisario, an analyst at investment bank Baird.
Still, the impact has been uneven, with persistent luxury hotel demand contrasting sharply with a slowdown across much of the rest of the lodging industry.
Revenue per available room — a key metric for growth in the hotel industry — was up 3 per cent for luxury hotels in the US in the year to July, but down more than 1.5 per cent for both economy and midscale accommodation, according to data analytics company CoStar.
Some say these kinds of statistics suggest the pain has been deferred, not avoided completely. The impact of Trump’s radical policies on trade, migration and government spending is only now beginning to bite the economy, and the outlook for international travel remains chilly, putting a cap on the sector’s potential for long-term growth.
“I think steady is a pretty good word,” says Deutsche Bank analyst Chris Woronka. “Without more international visitors . . . I certainly don’t expect meaningful growth.”
The summer tourism season has offered a mixed picture for businesses and investors — mostly sunny, but with clouds on the horizon.
The US is undoubtedly seeing fewer visitors from abroad. The number of foreign travellers arriving into US airports fell 3.8 per cent in the first seven months of 2025, compared with the same period last year, according to figures from the US National Travel and Tourism Office.
Cross-border travel by Canadians, in particular, dropped sharply amid a co-ordinated boycott of US goods and services over Trump’s tariff policies and threats to turn America’s northern neighbour into the “51st state”.
But for a country as large and wealthy as the US, international declines can be “easily offset by a stronger domestic market — and the domestic market is strong”, according to Paul Charles, chief executive of travel consultancy PC Agency. Domestic holidaymakers accounted for nearly 90 per cent of tourist spending in the country in 2024, according to estimates from the World Travel & Tourism Council.
At the higher end of the economic scale, there has been little change in demand. Brandt Montour, an analyst at Barclays, says wealthier Americans had “never stopped travelling” because they expected to be better shielded from the first-order impacts of Trump’s chaotic tariff rollout, such as higher consumer prices and a stagnant jobs market. “All of their wealth is in the stock market and their homes — and the stock market and home prices are just fine,” he says.
Adam Sacks, president of research firm Tourism Economics, says the strength of the luxury segment had been critical to preventing a broader slowdown in the US hotel industry this year: “You’ve still got very strong balance sheets among households at the upper end, which is where the travel industry makes its real money.”
At the other end of the spectrum, ultra-budget vacation operators also showed strength, as more cautious consumers choose to “trade down” rather than cancel their trips altogether, says Sacks. Spending at US campsites, for example, has been growing at the fastest pace since the Covid-19 pandemic began to wane in February 2022, according to card spending analysis by Bank of America.
Sean Vidrine, a Louisiana-based operator of RV, or recreational vehicle, campsites, credits an increase in occupancy at all seven of his sites across the central and eastern US to families trying to save money.
“People are looking for an experience outdoors but they’re still conscious of price, and we’re more affordable than flying to a larger resort,” he says.
Cruises, too, have thrived as consumers seek all-inclusive packages “where you know exactly what you’re going to pay”, says Jan Freitag, a data analyst at CoStar. Royal Caribbean and Carnival, the two largest cruise operators in the world, both beat analysts’ earnings expectations for the second quarter and raised their outlooks on the back of continued booking strength throughout 2025.
For hotels, the real squeeze is being felt in the lower and middle end of the market. Higher-for-longer interest rates, persistent inflation and uncertainty around immigration and trade have created an environment of continuing economic volatility for economy and midscale guests, who remain especially sensitive to these dynamics, according to Geoffrey Ballotti, chief executive of Wyndham Hotels & Resorts, which owns more than 9,000 hotels worldwide, most of them in the mid-market.
“For some of these consumers, the ones who would usually stay at motels let’s say, if things are bad they just stop travelling, they just cut it right off,” says Richard Clarke, an analyst at Bernstein.
For the consumers still wanting to travel, the result is increasingly last-minute bookings, which weigh on hotels’ ability to command higher prices and plan staffing and expenses, according to Sacks. “People are booking literally two days out,” says Choice Hotels chief executive Pat Pacious.
Still, the industry as a whole has been buoyed by resilient domestic demand, especially in coastal towns like Morehead City, which local tourism chief Jim Browder says was particularly popular among tourists from the nearby North Carolina cities of Raleigh, Durham and Charlotte.
Local business owners shrugged off any fears of a slowdown. Chris Kimrey, who runs guided fishing charters and tours of the nearby barrier island system Shackleford Banks, says warnings on travel demand had been “politically driven”. He adds: “I think as long as people’s bills are being paid, they’re going to take a summer vacation.”
For some analysts, the US hotel industry’s broad resilience in the face of this year’s turbulence is a sign that consumers increasingly prioritise spending on vacations over other leisure pastimes. Chain restaurants such as IHOP and Applebee’s owner Dine Brands, Wendy’s and Denny’s have all warned investors in recent weeks that US consumers’ hesitancy to spend was hurting sales.
“Initially post-Covid people thought this was ‘revenge travel’ . . . but I think it’s becoming clearer and clearer that this is a permanent structural shift,” says Lizzie Dove, a leisure analyst at Goldman Sachs.
Dixon Putnam, director of sales at Crown Hotel and Travel Management, which manages 18 properties in North and South Carolina, including several hotels on the Crystal Coast, says he is now anticipating a better annual performance than last year — a far cry from how things seemed during an unusually bleak and rainy January.
“Everybody was worried earlier this year, with the economy on top of the torturous weather, but now we’ve pretty much caught up with where we were last year and I think we’re ultimately going to come out ahead,” says Putnam.
Travellers were showing “some signs of hesitation” by booking at the last-minute, he adds, but “they’re still coming”.
Not everybody is so confident, however.
One institutional investor, who asked to remain anonymous, notes that the average booking window for hotels and short-term rentals in the US has shortened this year to just a few weeks, leaving operators increasingly unable to anticipate shifts in demand. “All of them try to sound good about where things are headed [but] the truth is that hotel companies have very little visibility,” the investor says.
Some of the government’s policies — including the president’s deportation drive and deep federal budget cuts — are beginning to trickle through to the wider economy. The latest inflation figures suggest that tariffs are finally beginning to feed into higher consumer prices, which could weigh down travellers’ confidence.
At the beginning of August, analytics companies CoStar and Tourism Economics downgraded their US hotel performance forecasts for both 2025 and 2026 due to “unrelenting uncertainty and inflation”. Demand, which had been forecast in January to grow 1.1 per cent year on year, is now expected to be close to flat for 2025.
The decline in international tourism, too, may soon have a more pronounced effect. Baird analyst Bellisario warns that the impact of the Canadian boycott of goods and services in the first months of 2025 may have been blunted by the fact that people did not want to cancel pre-booked flights and accommodation. But that could set the stage for even steeper declines this winter as “snowbirds” trade trips to Florida and Arizona for Mexico and the Caribbean.
Government cuts may also limit the US’s ability to attract more overseas tourists in the future: Brand USA, which advertises travel to the country, faces an 80 per cent cut in federal spending under Trump’s flagship “big beautiful bill” passed on July 4.
Under the same legislation, foreign visitors ineligible for the US’s visa waiver programme will also have to pay an extra $250 “visa integrity fee”, which could further dissuade mid-market customers from visiting the country.
And while domestic holidaymakers might still help fill vacant rooms, US hotels and short-term rentals will probably struggle to command higher prices without more international guests, according to Glenn Fogel, chief executive of Booking.com and Priceline owner Booking Holdings.
“When you get people who come visiting from abroad, those people are usually spending a lot of money [and] they’re usually staying a longer time,” he says.
Still, after the predictions of doom earlier this year, many in the industry are glad they are no worse off than last year. “I’m not gonna say it’s an epic summer,” says Morehead City fishing charter operator Kimrey. “But it’s been steady, and steady is good.”
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