U.S. Is About To Lose $12.5B, California's Entire Tourism Tax Revenue
The United States is the only country among 184 global economies, analyzed by the World Travel & Tourism Council and Oxford Economics, that is poised to lose a staggering $12.5 billion in international visitor spending this year. It is a 22.5% decline compared to 2024 and the equivalent of California's annual travel-related state and local tax revenue.
Nearly 90% of tourism spending in the U.S. comes from domestic travelers. Still, the impact of international travelers is far greater than its share suggests since each spends around $4,000 per trip on average, eight times more than the average domestic tourist.
In 2024, 72 million international visitors arrived in the U.S., 9.1% higher compared to 2013. However, based on the latest estimates, 2025 is shaping up to be a disappointing year.
In 2024, over 20 million Canadians traveled to the U.S., spending approximately $20.5 billion. Early signs of a slowdown emerged in March as Canadian travelers stayed away.
Summer flight bookings on Canada–U.S. routes have plunged more than 70% year-over-year, dropping from 1.5 million in March 2024 to just over 400,000 by March 2025, according to OAG.
In May 2025, Canada recorded 4.8 million international arrivals by air and car (returning residents and non-residents included), marking a 16.7% drop compared to May 2024. It was the fourth straight month of year-over-year declines.
U.S. Travel Association highlighted as early as February that these five U.S. states (Florida, California, Nevada, New York and Texas) would be hit hardest by a drop in Canadian visitors.
As of April, Visit California indeed reported an almost 16% year-over-year decline in Canadian arrivals, its top international source market. The state now forecasts a 9.2% overall drop in international visitation and a 4.3% decline in visitor spending for 2025. It estimates that the most significant decline in spending (17%) will come from Canadian travelers.
Canada is also Florida's top international source market, accounting for nearly 30% of foreign visitors last year. Unlike California, however, the decline has been less severe. Visit Florida reported only a 3.4% drop in Canadian arrivals by the end of the first quarter.
New York City has also revised its tourism forecast, now expecting 3.1 million fewer visitors and an estimated $4 billion in lost revenue, according to a report first published by The New York Times.
According to the U.S. Department of Commerce, visits from Western Europe fell 17% in March 2025. This is the first year-over-year decline since 2021.
Part of the drop came from two of the U.S.'s most important source markets: arrivals from the United Kingdom declined nearly 15%, while Germany plunged more than 28%.
Travel from Asia also continued its downward trend, marking a second consecutive monthly decline. The region remains 25% below pre-pandemic levels, with South Korea down nearly 15% year over year.
South America followed suit with a 10% decline in March after a flat February, driven by double-digit drops in visitors from Colombia and Ecuador.
U.S. accommodations are under growing pressure this summer, with booking volumes down 6.7%, a decline fueled in part by a steep 46% year-over-year drop in Canadian travelers and a 7.4% dip in visitors from Mexico, according to the latest data of SiteMinder, a hotel distribution and revenue platform.
Average daily rates (ADR) for U.S. accommodations have dipped to $317.29 for June–August, down 3.9% from $330.03 last year. However, not all regions experience a decline. Texas hotels reported a 6% increase in ADR, while Florida saw rates fall by nearly 8.8% year over year.
There is a silver lining. According to SiteMinder, the average booking window for summer stays made in April held steady at 80.4 days, virtually unchanged from 81.8 days last year. Meanwhile, the average length of stay increased slightly to 2.29 days for summer 2025, compared to 2.26 days in 2024.
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