TREND WATCH: What’s Happening? Marriott CEO Arne Sorenson says that, in the wake of Donald Trump’s election, international travelers are shifting their trips to more “hospitable” locations like Toronto. These statements echo claims by many U.S. businesses and colleges that Trump is driving away international talent.
Our Take: For better or worse, America’s global reputation has taken a big hit since Trump took office, with foreigners less likely to see America as a positive force in world affairs or even as a likable place. Of course, this may not matter to a U.S. populace that is turning inward—or to a U.S. president who is trying to deliver on his promise: “I will always put America first.”
Canadian hotels are winners under the Trump administration. That’s according to Marriott CEO Arne Sorenson, who recently told Bloomberg Business that more businesses are changing venues for large international events to cities like Toronto because President Trump is making Canada seem more hospitable than the United States.
Is there any validity to these claims? And does this supposed “Trump effect” span beyond the travel industry? Let’s find out.
TRAVEL’S TRUMP PROBLEM
Sorenson is convinced that business travelers are shifting northward, a trend he says is rooted in new immigration restrictions, namely the president’s efforts to ban travelers from Muslim-majority countries. Trump’s America-first rhetoric, Sorenson maintains, is leading guests to consider Canada a “more hassle-free” destination. As head of Marriott, he would know: Earlier this year, Marriott reported a 30% drop in bookings from the Middle East, along with a 15% drop in bookings from Mexico.
Sorenson’s accounts of declining interest in U.S. travel (especially from Muslim-majority countries) are corroborated by other travel executives who cite President Trump’s platform as being bad for business. In a Q3 2017 earnings call, Jon E. Bortz, CEO of Paddlebrook Hotel Trust, said that the company’s Los Angeles market was down more than 25% last summer—a weakness that he attributes largely to a decline in travel from the Middle East. More broadly, he says, the travel ban and the surrounding public discourse have had an “impact seemingly on [all] travel to the United States.” In total, seven out of 15 hotel REITs monitored by Hedgeye’s Gaming, Lodging, and Leisure sector mentioned the travel ban explicitly in their Q4 2016 conference calls.
But that’s not all: Department of Commerce data indicate that the number of international arrivals to the United States in Q1 2017 was down 4.2% YOY, a decline of nearly 700,000 travelers. Tourism Economics, a travel industry data analytics firm, estimates that this decline represents a sobering $2.7 billion in lost revenue. In fact, on a year-over-year basis, the number of international arrivals has dropped in all but one month since Trump’s election—and is now falling at a faster pace than we’ve seen in recent memory.
To be sure, there are plenty of additional factors discouraging demand. Most importantly, the strong dollar earlier this year has recently made a trip stateside more expensive. And slow economic growth in many regions worldwide has constrained corporate travel budgets. These factors help explain why international travel started trending downward before the 2016 election. But there’s no question that, as Best Western CEO David Kong recently told Reuters, today’s political climate “sends a message that we are not welcoming.”
While Trump’s restrictive travel policies are clearly acting as a headwind for U.S. travel, it's not yet clear how big the impact has been. If, in the coming months, the dollar continues to weaken and the global economy continues to accelerate, the full impact of these policies will be revealed.
OTHER EFFECTS OF TRUMP’S AMERICA-FIRST AGENDA
The tension over these policies isn’t limited to the travel industry. Many U.S. businesses and colleges claim that Trump is driving away international talent.
Corporate America voices its disapproval. As it does on so many issues, Silicon Valley finds itself firmly entrenched against the travel policies coming out of the White House.
In April, more than 150 tech firms—including Google, Amazon, and Facebook—filed an amicus brief challenging Trump’s executive order, arguing that it would hinder their ability to recruit new employees and compete internationally. This came after Google in January created a $4 million crisis fund to help those affected by the travel ban, the largest amount ever awarded by Google to a humanitarian cause. More recently, following President Trump’s controversial decision to end the Deferred Action for Childhood Arrivals program, high-profile executives from Jeff Bezos to Satya Nadella have asked Congress to protect “Dreamers.”
U.S. schools lose their appeal. Also feeling the chill are colleges, which over the past decade have increasingly relied on foreign students to fill their ranks. The United States today hosts more foreign students by far than any other country, and their total number has more than doubled over the past decade. (Number one donor behind this growth: China.)
This too may be changing. According to new data from the Institute of International Education, the number of first-time international students dropped 7% in fall 2017, with new international enrollment declining at 45% of the 500+ campuses surveyed. On the whole, new international enrollment in U.S. schools dropped 3.3% during the 2016-’17 school year, the first YOY decline in at least a decade.
Another survey of business schools by the Graduate Management Admission Council found that interest among foreign students in U.S. programs has plunged by nearly two-thirds since the 2016 election. Just 32% of U.S. programs reported experiencing any growth in their international pipeline this year, down from 49% last year.
The deal is off! As Trump tightens the nation’s borders, he is also retreating from longstanding alliances and multilateral agreements. Following Syria’s recent announcement that it will embrace the Paris climate accord, the United States now stands alone in rejecting the 195-nation deal. Meanwhile, the president’s go-it-alone tendencies were on display during his recent trip to Asia, where he promoted unilateralist trade policies and remained on the sidelines during negotiations over the Trans-Pacific Partnership (the same deal from which he withdrew the United States shortly after taking office).
THE BROADER ISSUE: WORSENING REPUTATION ABROAD
Unsurprisingly, many of Trump’s policy decisions have met with disapproval from foreign leaders and travelers. But this discontent is only the tip of an iceberg revealed in recent surveys, which show that America’s reputation among people worldwide has tanked since Trump became president.
In a Pew Research Center study with respondents from 37 countries, a median of just 22% said that they trust Trump to do the right thing regarding world affairs. In contrast, 64% said the same about Obama at the end of his presidency. The only countries where ratings are higher for Trump than they were for Obama are Russia and Israel. Across many nations, confidence in Trump is the lowest for any U.S. president since Pew began this survey in 2002.
Astonishingly, Trump is viewed as less likely to do the right thing regarding world affairs than strongmen such as Xi Jinping and Vladimir Putin. Trump also receives low ratings for several of his signature policies, as well as for his “arrogant” and “intolerant” personality.
According to Pew, Trump’s unpopularity has directly translated into more negative views of America as a country. Since Obama left office, the median share of the global public who view America favorably has tumbled from 64% to 49%. Ratings in more than half of the countries surveyed saw double-digit drops.
It doesn’t end there. Separate Pew data show that, for the first time, America’s favorability rating is now barely above China’s and not far above Russia’s. The United States also didn’t fare well in the latest Anholt-GfK Nation Brands Index; it was replaced by Germany as the country with the best image internationally. America dropped to sixth place, trailing Germany, France, the United Kingdom, Canada, and Japan. Though it still ranks in the top five for certain categories, a steep drop in “governance” hurt its overall ranking.
To be sure, the "Trump effect" is larger in some parts of the world than others. Unquestionably, the negative jolt has been strongest in Western Europe—an amazing 70 percentage-point negative shift between the share of citizens there who had confidence Obama would do the right thing in world affairs and those who say the same about Trump. Western Europeans now have an overall unfavorable view of the United States. In Germany, the split is 62% unfavorable, only 35% favorable. In Latin America, the news is better: Most countries are somewhat net favorable to America or roughly balanced, with the conspicuous exception of Mexico (65 versus 30, due to widespread and intense dislike for Trump).
In many other regions, the United States fares much better. In most surveyed African countries, opinion is at least 2-to-1 pro-American. Ditto for East Asia and Eastern Europe. In South Korea, Vietnam, and the Philippines, opinion is roughly 5-to-1 pro-American. Poland and Hungary also tilt hugely pro-American. (Perhaps the closer you are to Russia or China, the more you have reason think well of Yankees.) India remains very pro-American and hopeful about relations with President Trump—no doubt because his anti-Muslim rhetoric played very differently to this 80% Hindu nation.
Another positive is that American pop culture, as opposed to American governance, remains popular almost everywhere in the world, with the singular exception of most Muslim-majority societies. The attractiveness of U.S. movies, TV, and music shows a large age gap: Millennials abroad are much more in love with this aspect of America than people over age 50. In France, for example, the age gap is 36 points; in Russia and Brazil, 39 points; and in Vietnam, 57 points.
And while the negative overall delta on American popularity is unambiguously bad for tourism and likability contests, it remains an open question whether it matters as much to population movement—that is, to migration. Combined with new nationalist policies coming out of the White House, one might suppose it may further restrain immigration at the margins. Net immigration (especially from Latin America) has already been falling in recent years—a trend that will continue if fewer people choose to come here, legally or not. But the jury is still out here, since (arguably) immigrants to America are motivated differently than other foreigners. Many immigrants like the idea of joining a “winner” that commands respect—and, more than any other country, America still represents that ideal. Research shows that immigrants to the United States are uniquely invested in assimilating and becoming American, as opposed to focusing (more true for immigrants to Europe) on other advantages like higher wages or social assistance.
WHAT ALL THIS SAYS ABOUT AMERICA
All these numbers paint a depressing picture. But it’s hard to argue they weren’t expected—or even that they matter to Trump or his constituency.
As unpopular as President Trump is overseas, keep in mind that he’s not all that popular in the United States either: His approval rate, hovering under 40%, is the lowest of any president in his first year of office ever measured by Gallup. The “Trump” commercial brand is similarly tanking both at home and abroad, according to a recent Brand Keys survey measuring the “added value” of Trump products. More revealingly, even Americans who voted for him often admit that they don’t like him: An Economist/YouGov survey conducted on the eve of inauguration found that just 48% of Trump voters like Trump “a lot” as a person, while another 36% like him “somewhat.”
So why was Trump elected at all? In part, no doubt, because voters had an unpleasant message to send to the rest of the world: We have to focus more on ourselves and less on you.
Few Americans liked to send this message, and few abroad liked hearing it. But it started way before Trump arrived. According to surveys, in fact, it has culminated a twenty-year retreat from globalism. (See: “Globalism in Retreat.”) By 2013, late into the globalist Obama presidency, Americans’ perception of their country’s power and influence in the world had reached a postwar low, as measured by Pew. In 2016, after recovering slightly, this perception was still dour: According to another Pew survey, fully 57% of Americans agreed we should let other countries deal with their own problems; nearly half considered involvement in the global economy a bad thing.
It could be said that Trump is simply the messenger for an America that wants to mind its own business—even if that seems chilling to other countries that have come to expect our permanent generosity and goodwill.
In fact, it’s likely that many of the developments critics dislike about the Trump era were destined to occur regardless of who was elected.
In light of Americans’ souring attitudes toward globalism and wavering faith in our status as a superpower, we’d probably be making similar moves even under a President Clinton or Sanders. Remember that both also considered the Trans-Pacific Partnership a bad deal. Ramped-up border enforcement, meanwhile, began in earnest during the Obama administration. And threats like North Korea’s nuclear program have raised the pressure on leaders in both parties to up defense spending. Though Trump’s abrasive governing style may be distinctively his own, the turn inward isn’t.
WHAT WILL HAPPEN NEXT?
At this point, theories about the long-term effects of Trump’s presidency on America’s reputation are only speculation. Previously, when global opinion toward the United States has soured, it’s always rebounded under a new leader. Carter, Reagan, and George W. Bush all faced backlash at different points during their presidencies. The especially low ratings for Bush, for instance, rose dramatically under Obama.
The difference this time is that Trump’s retreat leaves an opening for emerging economies whose stars are rising, most notably China. His administration has decided that it’s better to be feared than loved—and that (maybe also like China) nations that don’t favor their own interests get left permanently behind.
