TOURISM DEVELOPMENT
Industry Updates
International Travel
The U.S. tourism industry continued to face obstacles this summer, as U.S. government data confirms an overall decline in international arrivals during the first seven months of the year. The number of overseas visitors, a category that doesn’t include travelers from Mexico or Canada, declined by more than 3 million, or 1.6%, compared to the same period a year earlier, according to preliminary figures from the National Travel and Tourism Office, with similar data expected for August.
Canada remains the most significant drag on inbound performance, with July marking the seventh consecutive month of double-digit declines in land border crossings; air travel has also retreated. While nonstop international air service to California grew 1.3%, non-resident arrivals fell 10%—driven largely by steep declines from Canada—while Mexico stands out with arrivals up 5% for the month of July and 6% year-to-date. Meanwhile, higher visa fees, reduced Brand USA funding, and increased national park entrance fees for non-residents are rising concerns that the U.S. is becoming less competitive globally.
Domestic Travel
Domestically, economic uncertainty is reshaping travel behavior. Rising household costs, credit card debt, and softening consumer confidence are fueling demand for shorter, more affordable getaways. We are seeing families already choosing road trips over air travel, and overall summer vacation spending is expected to fall 25% year-over-year. Lower-income households are pulling back on travel altogether, while more affluent households continue to prioritize experiences, albeit with more selectivity and shorter booking windows.
Notably, the luxury segment continues to outperform. Travel Weekly and luxury consortia Virtuoso are reporting double-digit growth in upscale leisure sales, with advisors pointing to a resilient client base largely insulated from broader economic headwinds. Virtuoso anticipates 39% more sales and 30% more bookings this fall compared to 2024, fueled in part by the rise of “everyday millionaires” and a growing global pool of high-net-worth travelers. This divergence underscores a two-speed recovery, where affluent travelers sustain growth even as mass-market demand softens.
On a positive note, Visit Greater Palm Springs’ STR data show leisure occupancy pacing slightly ahead of last year while Visa cardholder data indicates year-over-year leisure growth in many of our key international and domestic markets.
Program of Work
Since our last board meeting, we have hosted over 20 clients on individual destination visits or FAMS along with attendance at the following events:
- Visit USA UK Client Event in London
- ASTA Northeast Summit in Boston
- ASTA New York Gala
- Brand USA & JATA webinars in Japan
- U.S. Travel’s ESTO in Phoenix
- Club California training events in Brisbane, Sydney, and Melbourne, Australia
- VIP client event in New York City
- ACTA Summit in Toronto
- Visit California India Sales Mission
- IFTM Top Resa in Paris, France
ABOVE: VGPS Tourism Development Manager Oleg Nakonechny with ASTA President, Zane Kerby at ASTA’s New York Gala.
ABOVE: Clients from the Flight Centre FAM visiting The Parker Palm Springs.
ABOVE: VGPS Sales & Marketing Coordinator Jeffrey Farnsworth hosting clients from Comptoir des Voyages.
Looking Ahead
Between now and our next board meeting, we will be connecting with clients across several domestic and global markets including Asia and Southeast Asia, where we have seen growth post-pandemic: Chicago, Edmonton, Singapore, Pennsylvania, London, Washington DC, Ottawa, Las Vegas, London, France, Seattle, Portland, New York, and Charlotte.
The tourism landscape is likely to remain uneven. Heightened costs, political dynamics, and funding challenges will continue to weigh on international competitiveness, while domestic travelers grow increasingly cautious. At the same time, the resilience of the luxury segment and demand for closer-to-home, shorter trips provide areas of opportunity. Strategic focus on value-driven offerings, targeted international engagement, and alignment with evolving consumer preferences will be critical to capturing demand and sustaining momentum in the months ahead.
