Now That US Borders Are Open, Who Will Benefit from Increased Tourism the Most?

With newly opened U.S. borders, retailers and trade groups have expressed optimism for the continuation of a rebound in the U.S. fashion market, which has been on the upswing for the last couple of months.

After over a year of borders being closed to visitors from over 30 countries, international travelers that show proof of full vaccination can enter the country again, as of today. Air travelers must provide a negative coronavirus test within three days of entering of U.S.

The news could have a major effect on retail centers and flagship stores that rely on tourism-induced sales, such as New York City, Los Angeles, Las Vegas, Chicago, and Miami. These areas, generally major tourist shopping destinations, were hit hard amid pandemic-related shutdowns and a lack of tourism in the U.S.

“Retailers have to be encouraged by the opportunity,” said Matt Priest, president and CEO of the Footwear Distributors and Retailers of America (FDRA). “Those cities in particular will probably see an increase that they haven’t seen in quite some time, particularly in the luxury space.”

While the border news is exciting, Priest said it still remains to be seen if pent up demand will drive tourism sales back to pre-pandemic levels.

“I think it will take time. I think that there’s a lot of caution globally and on the travel side,” he said. “It’ll be interesting to see what kind of demand and what kind of trepidation there might be from foreign tourists coming to the U.S.”

According to Neil Saunders, managing director of GlobalData, it could take as long as a year to get back to these levels, with large tourist cities seeing the most immediate benefits.

“Generally retailers are pleased because they have been without tourist spend for a year and a half, so the reopening of borders is very welcome,” he said. “However, they are cautious on two dimensions. First, they know they are not going to get back to 2019 levels anytime soon. Second, some may struggle to cope with an increase in demand as they are already struggling in terms of having sufficient stock and staffing to service domestic demand.”

In a call with investors in October to discuss Q3 earnings, Skechers CFO John Vandemore noted that “tourism-sensitive” store channels were still suffering from lower volumes of traffic.

Last week, Capri Holdings CEO John Idol said he expects to see positive gains U.S. tourism sales in the wake of the borders reopening.

“We do have some tourists that we believe will be returning to the U.S. market shortly when the borders are open, and we think that will be a positive for us,” he said. However, he noted that overall, this development will not change projections for the short term. He also does not expect the company’s airport and duty-free shopping business to recover until fiscal year 2024.

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