Written by Yuhua Zhang, GEI Associate
During the past six months, US dollar showed a powerful appreciation trend among the world currencies. Based on the statistics from Oanda Corporation, US dollar appreciated about 12% against Euro , about 18% against Japanese Yen, and about 10% against Canadian Dollar and British Pound in the past several months.
Adam Sacks, the president of consulting company Tourism Economics, states that every 10% appreciation of US dollar may reduce international tourists by 2% in the whole year. The company predicts that the overall amount of international tourists traveling to US will grow by 3.5% in 2015, while the average growth rate in the past decade is 5.0%.
It is obvious that the decrease of foreign tourists may lead negative effects to US tourism and relevant industries such as airlines, hotels, retail,etc. Nevertheless, the appreciation of US dollar brings discounts to US tourists traveling to other countries.
(Source: U.S. Department of Commerce, ITA, National Travel and Tourism Office; Statistics Canada; Banco de Mexico. October 2014)
Based on the latest statistics from US department of commerce, up to October 2014, travelers from Japanese and Venezuela drops by 4% and 18% respectively compared with last year. Moreover, according to the forecast of international travelers to US, the growth rate of foreign tourists from most top origin countries will reduce in future several years. Japanese and Venezuela tourists, especially, will further decrease.
Although the exchange rate of dollar against Chinese Yuan has been relatively constant around 6.14 USD/CHY during the past six month, US dollar still presents appreciation against RMB compared with that in the beginning of 2014 (6.09USD/CHY). However, the amount of Chinese travelers to US presents sharply growth since the past year and is estimated to keep the trend in the next several years. According to the report by international trade administration, The growth rate of travelers from China will increase by striking 172% between 2013 and 2019, which outdistance that of the second top origin country Colombia (72%). The CEO of Attract China Evan Saunders considers that Chinese have deposited enough travel funds though the appreciation tendency of US dollar.
There seems to be two main reasons for the dramatic growth of Chinese tourists.
- The sharp growth of Chinese economy in the past decades increases Chinese income level bringing them higher consumption and savings. More and more Chinese residents are starting to pursue better and more colorful life quality. As a result, there is increasing international travel – especially to US, the world’s largest developed country.
- Due to high import tariff, more and more Chinese consumers prefer to travel outside of China to purchase goods – which are sold at double the price in China. In other words, although US dollar has increased in value, it is cheaper to buy imported products when travelling outside of China.