US elections also affect the travel industry

US elections also affect the travel industry

© Photographer: Scott Olson/Getty Images

Ten years ago, Dan Sherman could have told you that tourism was going to sink in 2020. But Sherman is not an epidemiologist with a crystal ball. He is a veteran of the travel industry who has been watching booking trends long enough to know that economic downturns occur in predictable four-year cycles.

It turns out that the fiscal uncertainty surrounding the US presidential election can reduce sales by more than 30% compared to a normal year, costing some companies billions of dollars in lost revenue.

Sherman, chief marketing officer for, gets away with the problem with relative ease. Skiers are committed travelers that hotel marketers consider almost unshakable; however, there are still small signs of waning devotion. “Typically, half of our reservations are completed before Thanksgiving,” explains Sherman.

But over the past four years of the presidential election, he says his Election Day sales have dropped 8.33% and are still 6.38% lower than other Thanksgiving years. “Regardless of circumstances like the covid, the economy or the personalities running for president, the travel industry always sees a recession during an election year,” he says.

The numbers become more dramatic when looking at conventional booking patterns such as winter getaways to the tropics.

Brady Binstadt, vice president of high-end travel consultancy Journey Mexico, says its third-quarter sales fell 34% year-on-year before the 2016 election. Group travel was its worst hit segment, down 43%, while his business focused on very high net worth individuals fell just 4%.

“In normal election years, people always think that the candidate’s policies will affect their checkbook,” says Sherman. This creates “a greater fear of a change in the economy.”

Both and Journey Mexico are members of the Virtuoso travel agency consortium, which, among its 20,000 advisers and 1,800 partners, sold transactions worth $ 30 billion in 2019. When examining the impact of the last three US presidential elections on travel bookings, Virtuoso Managing Director of Public Relations Misty Belles found that the company’s steady double-digit growth slowed to roughly 3% in election years, indicating more than $ 4 billion in lost revenue. projected for 2020, a figure that does not include COVID-related losses.

Belles attributes that more to the instability of the market in the election year than to the proposed legislative changes, although the two are intertwined. One reason traders expect volatility in the run-up to an election is anticipated changes in fiscal and regulatory policy. Daily spikes and drops in the stock market directly affect wealthy people’s spending, he says.

The drop tends to start three months before an election and lasts for weeks after results are declared, when stocks move twice as violently and average S&P losses of 1.8% are expected after Nov. 3.

Tom Foley, senior vice president at hotel marketing technology company Inntopia, believes the election-year drop in travel is also a mindset issue.

“Consumers get so distracted in the run-up to an election,” he says, explaining that potential voters get so consumed with issues that they stop thinking about future plans. There is one exception, according to Belles data: end-of-year vacation trips, which have less of an impact compared to other types of trips.

No matter why travel drops during election cycles, the effect does not end on the day the votes are counted. Spending lags continue through the period of lack of conviction and the early days of a new Administration, regardless of whether a Democrat or a Republican takes control of the White House. After the first 100 days of a new presidential term, Belles explains, clients are ready to set their sights on a much-needed summer vacation.

And there is another positive point that travel companies often count on: last minute reservations in October, which Belles has called “electoral breaks.”

“People were fed up with the confusion in October and we see them taking short getaways to get away from the noise,” says Belles. It points to increases in bookings from 3 to 5 days by travelers of generation X and millennials, generally to neighboring countries such as Mexico and the Caribbean.

This year, that will not be the case. The virus and its effects on the economy, as well as the high stakes associated with this year’s contest, will curb electoral leakage for all but the most committed travelers.

But Sherman sees reason to believe that reserves can improve after results are declared, depending on the winner. “People are waiting to see who gets elected because of each candidate’s covid policies,” he says. “If Biden wins, there will be more confidence that conditions will improve.”


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